GENERAL INFORMATION ON TURKEY’S TAX REGIME
We advise foreign investors to always consult to and coordinate with a tax expert and/or an accountant while conducting its activities in Turkey. Following is general information on the tax regime in Turkey:
There are three types of taxes in Turkey: i) Income Tax, ii) Taxes on Expenditure (VAT, Special Consumption Tax, Banking and Insurance Transaction Tax and Stamp Tax) and iii) Taxes on Wealth (inheritances, property, etc.)
Non-residents earning income in Turkey through employment, ownership of property, business transactions, or any other activity which generates income are also subject to taxation, but only on the income earned in Turkey.
In Turkey, the basic corporate income tax rate levied on business profits is 20%. Dividends are subject to 15%. The personal income tax rate varies from 15% to 35% depending on the income of the individual.
As for the VAT, the generally applied VAT rate varies between 1%, 8%, and 18%. Commercial, industrial, agricultural, and independent professional goods and services, goods and services imported into the country, and deliveries of goods and services as a result of other activities are all subject to VAT.
Regarding the taxes on wealth, real estate owned in Turkey are subject to tax ranging at a rate of 0.1% and %0.06, while Contribution to the Conservation of Immovable Cultural Property is levied at a rate of %10 percent of this real estate tax. Motor vehicle taxes are collected on the basis of fixed amounts that vary according to the age and engine capacity of the vehicles every year. Inheritance and Gift Taxes are levied at a rate of %1-30.
Turkey has signed Double Taxation Prevention Treaties with 80 countries. This enables tax paid in one of two countries to be offset against tax payable in the other, thus preventing double taxation.