Turkey has published Presidential Decision No. 5422 of 18 April 2022 in the Official Gazette, which includes that the amending protocol to the 1997 income and capital tax treaty with Kuwait entered into force on 10 November 2021. The protocol, signed 14 September 2017, is the first to amend the treaty and includes the following changes:
- The title and preamble are replaced in line with BEPS standards;
- Article 4 (Resident) is amended with respect to the meaning of a "resident of a Contracting State" for Kuwait, including the additional provision that an individual is a resident if present in Kuwait for a period or periods totaling in the aggregate at least 183 days in the fiscal year concerned;
- Article 7 (Business Profits) is amended to remove a restriction on the deduction of certain amounts in determining the profits of a permanent establishment (PE), which included amounts paid by a PE to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the PE;
- Article 10 (Dividends) is replaced, including a withholding tax rate of 5% if the beneficial owner is the Government of the other Contracting State, any governmental institution created in the other State, or an entity established in the other State that is wholly owned by the other State; otherwise, 10%;
- Article 26 (Exchange of Information) is replaced in line with the OECD standard for information exchange;
- Article 27 (Mutual Agreement Procedure) is replaced, including the introduction of a three-year time limit for a case to be presented, and a provision that any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States; and
- A new Article 29A (Entitlement of Benefits) is added, which provides that a benefit under the treaty shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit would be in accordance with the object and purpose of the relevant provisions of the treaty.
The protocol applies from the date of its entry into force, 10 November 2021.