Corporate Tax Exemptions in Turkey: Which Institutions are Exempt and What Are the Obligations?

• Corporations, like individuals, are required to pay taxes on their income and earnings, which are referred to as “corporate income” or “corporate profits”.
• The fact that a corporation is either a public institution or a private enterprise does not affect its tax obligations.
• However, due to the nature of some of the activities carried out by certain public institutions and the benefits they provide to society, some corporations have been granted tax exemptions by the legislature.
• Under Article 4 of the Corporate Tax Law, certain corporations are exempt from paying corporate taxes. For some of these exempt corporations, all of their income is covered by the exemption, while for others, only certain types of income are covered. Some exemption conditions are also foreseen.
• Being exempt from corporate tax does not eliminate the obligation of corporations or economic enterprises to maintain records, keep records, document records, and fulfill notification obligations introduced by the Turkish Commercial Code and Tax Procedure Law.
• For exempt corporations, sales of goods and services may be subject to VAT or exempt from VAT. Exempt corporations or economic enterprises do not file Corporate Tax returns as long as the exemption conditions are maintained. They may be subject to withholding tax liability due to payments subject to withholding tax and may also be VAT taxpayers due to transactions that are not exempt from VAT.
• Exempt corporations include various types of institutions, such as schools, libraries, museums, hospitals, social aid institutions, retirement funds, and trade unions, as listed in Article 4 of the Corporate Tax Law.

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