What are the taxes in Turkey?
Turkey is considered one of the countries known for the diversity and variety of taxes imposed therein.
Consequently, each type of tax is subject to specific mechanisms, each type imposes a certain tax according to the prevailing laws.
It is essential indeed to be familiar with the laws and types of taxes in Turkey if you intend to reside, invest, own properties, or participate in any economic or commercial activity in the country.
Types of Taxation in Turkey
According to the tax system in Turkey, specific values and rates are applied to various factors, reasons, and details related to different types of taxes.
Here, we will explain the types of taxes in Turkey for the year 2023 and the different systems to which these taxes are subject.
- Firstly – Income Taxes: These include taxes on individuals and corporations.
- Secondly – Expenditure Taxes in Turkey: These include the tax on banking transactions, insurance tax, value-added tax (VAT) in Turkey, special consumption tax, and stamp duty.
- Thirdly – Wealth Taxes in Turkey: These include property taxes, vehicle taxes, inheritance taxes, and gift taxes.
- Fourthly – Tax Incentives: This system consists of four distinct plans, where foreign investors are granted the same opportunities available to local investors. Investors benefit from the General Investment Incentive Scheme, the Regional Investment Incentive Scheme, the Large-Scale Investment Incentive Scheme, as well as the Strategic Investment Incentive Scheme.
Types of Turkey corporate tax
Turkey imposes a diverse range of taxes on companies, and these taxes vary in their reasons and objectives. Turkey is considered an attractive investment destination for investors due to its favorable tax rates compared to many other countries.
Among the types of taxes imposed on companies in Turkey are:
1. Income Tax
This includes corporations, associations, economic establishments, joint ventures, and others. These companies are subject to corporate income tax based on their income earned from Turkey and other countries when classified as residents. A tax rate is applied to profits distributed to shareholders.
2. Value-Added Tax (VAT) in Turkey
This is a tax at a rate of 1%- 8%-18 on goods and services.
3. Stamp Duty / Stamp Taxes in Turkey
This tax is imposed on various types of documents, including contracts, agreements, deeds, and invoices.
4. Banking and Insurance Transactions Tax
This is a separate tax on insurance premiums, while the banking transactions tax aims to collect fees on transactions conducted by companies in the country.
5. Special Consumption Tax:
This is a one-time tax that includes luxury goods, vehicles, petroleum products, alcoholic beverages, and tobacco products.
These are some of the taxes applicable to companies in Turkey, along with the Value-Added Tax and the Stamp Duty.
Turkey corporate tax rate
Currently, businesses in Turkey are subject to a new corporate income tax rate of 25% on their profits. Started on January 2023
While the standard corporate tax rate will be increased to 25%, there is a significant exemption for exporter companies. In order to promote exports, exporting companies will continue to enjoy a reduced rate of 1 percentage point on the profits derived solely from exports. Additionally, this reduced rate will be further decreased by 5 percentage points. This means that, starting from 2023, regular companies will be required to pay a 25% tax rate, whereas exporters will benefit from a lower rate of 20% only on the income they earn from exporting activities.
What is VAT in Turkey?
Value-Added Tax (VAT) is imposed on all commercial, industrial, and free trade activities in Turkey.
It applies to all products sold within the country, as well as goods imported into Turkey.
The rate of this tax varies depending on the type of products, ranging from 1% to 8% and 18%, according to the VAT Law numbered 3065 of 1984.
The aim of the Value-Added Tax is to collect a certain amount from the final consumers of goods, based on the need for the consumed goods. It is abbreviated as “KDV” and is levied on all goods and services purchased in Turkey.
VAT is a significant source of revenue for the Turkish government, contributing to financing public services and development projects in the country. This tax is an effective mechanism for revenue collection and stimulating the national economy.
Under the VAT Law in Turkey, companies and individuals participating in the tax system are obligated to collect this tax and regularly remit it to the tax authorities, ensuring their tax compliance and sustaining the tax process in the country.
Types of Turkey income tax rate
Income taxes in Turkey are divided into two main categories:
1. Individual Income Tax
This is calculated based on the net gains and revenues an individual receives within one year. The elements subject to taxation in Turkey include:
– Business and agricultural profits.
– Monthly salary.
– Income from freelance services not tied to a specific salary.
– Rental income from immovable properties.
– Income from movable properties (financial investments).
– Other gains and revenues.
Turkish residents and individuals staying in Turkey for more than six months during the year are subject to individual income tax. Non-residents or those who spend less than six months within the country are exempt.
2. Corporate Income Tax
If the income is derived from companies or entities in Turkey, taxes are imposed on the legal entities representing the company. The tax rate for corporations with commercial profits ranges between 20% and 25%, but the Turkish government often applies the lower rate. Companies residing in Turkey are subject to a 15% income tax, paid when distributing profits to shareholders. Non-resident companies are also subject to a 15% income tax, payable when transferring profits to their headquarters in Turkey.
This tax is only applied to distributed or transferred profits and does not include the capital, only the profits.
Income tax in Turkey
The system of income taxes in Turkey is a type of tax imposed on individuals’ or corporations income, deducted from their earnings, profits, and net returns obtained during a yearly period. This tax is considered an essential mechanism for collecting state revenues and financing public services and development projects in the country.
The amount of income tax is determined based on an individual’s total income after excluding personal expenses and investments.
The income elements include monthly salaries, business and agricultural profits, income from freelance services not tied to a specific salary, returns from properties and financial investments, and other sources of income.
Income taxes in Turkey is categorized into specific brackets that determine the tax rates applied to each income bracket.
This tax is collected periodically by tax authorities to maintain government budget stability and achieve tax fairness among citizens.
Income taxes in Turkey is an important tool to support economic and social programs and promote comprehensive development in the country.
The Turkish government provides tax incentives and exemptions for certain categories to alleviate tax burdens and encourage investment and economic growth.
How to know taxes in Turkey?
The amount of taxes owed by individuals or companies in Turkey can be determined through the e-government portal.
The Turkish Tax Authority, “Gelir İdaresi Başkanlığı,” has provided a dedicated link on that portal to check for tax liabilities in Turkey. This makes it easier for you to access the tax inquiry service for the year 2023 from any country through the Turkish tax website on the e-government portal.
This step aligns with technological advancements, as the Turkish government has made this electronic service available to facilitate the process of tax inquiries.
Now, you can obtain the required information quickly and easily from anywhere in the world.
You can access the official website of the Tax Authority “GELİR İDARESİ BAŞKANLIĞI” by entering your user code and password, or by using the official “GİB” application specific to the Turkish Tax Authority. Once logged in, you will see all your tax obligations and the amounts you need to pay according to the laws of taxes in Turkey.
This electronic service is a convenient and efficient way to manage taxes in Turkey, allowing you to make tax payments quickly and accurately, ensuring compliance with tax regulations without the need to physically visit tax offices.
Knowledge of car taxes in Turkey
According to the Turkish newspaper “Sözcü,” owners of motor vehicles registered at traffic departments in Turkey are required to pay the “Motor Vehicle Tax,” also known as “MTV,” twice a year, as stipulated in the Traffic Law.
The first payment is made in January, and the second in July each year.
To initiate the tax payment process, vehicle owners must go to the tax department in the region or province where the vehicle is registered after the registration process at the traffic department.
Paying the Motor Vehicle Tax, can also be done online or through mobile applications contracted with some banks through the “MTV Ödemeleri” (Motor Vehicle Tax Payments) service.
Banks contracted with this service include AKBANK, DENİZBANK, FİNANSBANK, HSBC BANK, ŞEKERBANK, ZİRAAT BANKASI, and İŞ BANKASI.
Additionally, payment can be made through the official website of the Revenue Administration “GİB,” where the amount of tax due on the vehicle can be determined by entering the national identification number “TC” or the tax number “Vergi Numarası” along with the vehicle’s plate number.
These electronic services provide convenience and flexibility in the process of paying the Motor Vehicle Tax, making it easier for vehicle owners to comply with the legal requirements with ease.
Ways to pay taxes in Turkey
Turkey facilitates the electronic payment of taxes through the “GELİR İDARESİ BAŞKANLIĞI” website, which saves a lot of time and effort for citizens and residents in the country.
The website allows individuals, companies, and property owners to easily and conveniently check and pay all their due taxes through the Turkish Tax Authority’s website and application.
Tourist tax Turkey 2023
As of January 1, 2023, Turkey has implemented a 2% Accommodation Tax, which is applicable to overnight services offered by accommodation facilities and related services.
The tax will be collected by accommodation operators either directly from their guests or through travel agencies.
Property tax in Turkey
Real estate transactions in Turkey involve various taxes and government fees related to buying, owning, and selling properties.
The tax base is determined by the cadastral value, typically indicated in the certificate of ownership, known as TAPU.
When purchasing real estate in Turkey, buyers encounter property transfer tax, VAT, stamp duty, and government fees.
The property transfer tax is set at 4%. According to the law, both the buyer and the seller should split the tax equally, paying 2% each.
However, in practice, the buyer usually assumes the entire tax payment.
The VAT rate varies depending on the housing area:
– 1% for housing with an area less than 150 m2,
– 8% for housing with an area exceeding 150 m2,
– 18% for commercial properties.
Upon signing real estate purchase and sale contracts, a stamp duty ranging from 0.1% to 0.6% is paid, depending on the property’s value.
The state duty, known as “Döner Sermaye,” is applicable for issuing the TAPU (certificate of ownership). For non-residents of Turkey, the state duty is $130, while for residents, it is $45. This fee is paid at the Cadastral Chamber upon receiving the certificate of ownership.
Property tax in Turkey for foreigners
Foreign buyers purchasing real estate from a developer are not required to pay VAT. Once the transaction is finalized, these buyers are eligible to request a tax deduction. However, they must maintain ownership of the property for a minimum of one year from the date they receive the TAPU (certificate of ownership) to be eligible for the deduction.
Turkey tax on foreign income
Certainly! Individuals earning income in Turkey are subject to paying taxes in Turkey.
Residents are required to pay taxes on their income from all sources worldwide, whereas non-residents are only taxed on the earnings they generate within Turkey.
Additionally, non-residents and residents must pay property taxes when purchasing, owning, or selling real estate in Turkey.
How to pay property tax in Turkey?
Property taxes in Turkey is a tangible amount imposed on properties and is due when owning or transferring property ownership in Turkey.
These amounts are paid by the seller, the buyer, or both to the Turkish Tax Collection Department or the tax payment location in Turkey.
Various types of property taxes exist, with details differing for each type.
Some are paid only once, such as the Value Added Tax (VAT) on properties, which is determined based on the type, area, and location of the property.
There is also a title deed registration tax, imposed when registering the title deed at the Land Registry Office, which is divided between the seller and the buyer.
Additionally, there are annual taxes paid by property owners, such as earthquake and natural disaster insurance tax and the annual municipal tax. Some other taxes are imposed during property sales and are known as capital gains tax.
To pay property taxes in Turkey, property owners can use dedicated government applications or seek assistance from esteemed real estate companies or brokerage firms.
Opening a bank account can also facilitate tax payments, and proof of payment can be obtained through bank receipts.
Edited by : VAAL Real Estate