On 1st January 2014, the Malta-Turkey double tax treaty, which was signed in July 2011 by the governments of Malta and Turkey, came into force.

The income tax treaty for the avoidance of double taxation between the governments of Malta and Turkey provides a 10% withholding tax on dividends paid by a Turkish resident company to a Maltese company in which it has at least a 25% shareholding. Otherwise the maximum Turkish withholding tax rate will be 15%. Another provision for the treaty is a 10% withholding tax on interest and royalties paid by a Turkish resident to a Maltese resident beneficial owner. Dividends paid by a Maltese resident company to a Turkish resident company will be exempt from tax chargeable on dividends in Malta, in addition to the tax chargeable in respect of the profits of the company.

This treaty is based on the internationally recognised Organisation for Economic Cooperation and Development (OECD) Model Tax Convention.

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