Turkey: FAQs on Consultants’ Taxation
Applicability: For the Financial Year 2023-2024
How is my income taxed as a consultant?
Personal income tax is a tax levied on the income of individuals in Turkey. This includes income from employment, self-employment, and business activities including consultancy services
What would be the tax rate applicable to me?
With the inflation adjustment, for tax year 2023, the income tax rates for taxpayers are:
40% for incomes over ₺ 1,900,000.00
35% for incomes over ₺ 370,000.00
27% for incomes over ₺ 150,000.00
20% for incomes over ₺ 70,000.00
The lowest rate is 15% of incomes for individuals with incomes of ₺ 70,000.00 or less.
What tax benefits are available to me?
There is a notable tax exemption available for contractors providing engineering or software development services from Turkey to clients abroad.
Under the Turkish Income Tax Code, engineering and software development services rendered outside Turkey are eligible for a 50% income tax reduction. Furthermore, if the contractor is below 29 years of age, their first ₺150,000 of income will be exempt from income tax for the initial three years.
Pursuant to Article 89 of the Income Tax Law No. 193, the following provisions apply to individuals and businesses providing specific services from Turkey to non-resident clients with business, legal, and operational centers located outside Turkey:
Scope of services: The provisions are applicable to services provided in the fields of architecture, engineering, design, software, medical reporting, accounting record-keeping, call centers, and data storage. Additionally, the provisions cover businesses operating in education and healthcare sectors under the authorization and supervision of the relevant ministry, providing services exclusively to non-resident individuals.
Tax incentive: Service providers are entitled to a 50% tax exemption on their income derived exclusively from the aforementioned activities.
Documentation requirements: To benefit from this tax incentive, it is mandatory that invoices or similar documents be issued in the name of the foreign client.
What are the other income tax compliances which need to be followed by me?
As a contractor operating in Turkey, the establishment of a sole proprietorship is crucial for the appropriate taxation of your income. In compliance with the Turkish tax code, the income tax payment deadlines are as follows:
| Advance tax Instalment | Tax Rate | Due date |
| First | 15% | May 17 |
| Second | 15% | August 17 |
| Third | 15% | November 17 |
| Yearly Income tax | Calculated due to amount | March 31 |
How will my foreign income be converted into Turkish Lira for taxation purposes?
Your foreign income shall be converted into Turkish Lira utilizing the official exchange rate promulgated by the Central Bank of the Republic of Turkey at the conclusion of the applicable taxation period. Ensuring accurate conversion and compliance with all relevant tax regulations is crucial for maintaining proper tax obligations.
Am I liable to pay Value Added Tax? What are the compliances?
In the context of providing services to international clients, you are not subject to Value Added Tax (VAT) obligations in Turkey for these specific transactions.
Will I pay taxes on my income in dollars or TRY?
Taxes will be paid in Turkish Lira in Turkey. You can pay your taxes with your credit card.
Which government do I pay my taxes to?
You will be paying taxes to Turkish Government.
Should you have more questions on tax matters, you may please contact us
info@ozmconsultancy.com
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