The new income tax treaty between Korea (Rep.) and Turkey entered into force on 21 July 2024, replacing the 1983 treaty between the two countries. It aims to enhance tax cooperation and prevent double taxation between the two nations in line with modern international tax standards.
Key provisions
- Withholding tax rates: According to the Ministry of Economy and Finance, the revised convention, which will take effect on Sunday, reduces the maximum withholding tax rate on income payments in the source country from the current 20% to 15%.
- Residence: If a person other than an individual is considered resident in both countries, the competent authorities will determine its residence for treaty purposes through mutual agreement.
- Capital gains: Gains from the alienation of property may be taxed by the other state if the time period between acquisition and alienation does not exceed one year.
- Double taxation relief: Both countries apply the credit method for eliminating double taxation.
- Entitlement to benefits: A treaty benefit may be denied if obtaining the benefit was one of the principal purposes of an arrangement or transaction, unless granting the benefit would be in accordance with the treaty’s object and purpose.
The new treaty was signed on 22 October 2021.
