The foreign entrepreneurs who invest in Turkey must pay a few indirect taxes, according to the activity they choose. The most important indirect tax, which is paid by the majority of the investors, is VAT. There a few exemptions from paying VAT for entrepreneurs in certain fields and regions of Turkey. When a foreign entrepreneur chooses to open a company in Turkey, he should know exactly what taxes he will pay for his business.
Besides VAT, foreign and local entrepreneurs must pay taxes also for:
- properties they have in Turkey
- motor vehicles
- banking and insurance transactions
- customs duty
- communication etc.
In Turkey, VAT is called “Katma Değer Vergisi” (KDV) and came into force in 1985. The VAT is mandatory to be paid by companies that are running agricultural, industrial, commercial and independent professional activities. The obligation of paying is also mandatory for companies that import goods and services into Turkey. The firms pay VAT every time they product or distribute a good/service and the consumer is the last who pays for this tax. The rates for VAT are subject to change any time and the Turkish authorities can operate the legal modification. There are different rates for certain goods and services according to the law.
The entrepreneurs or companies who own land and/or buildings in Turkey must pay annually property taxes calculated according to the tax values of properties and the rates are between 0.1% and 0.3%. Another tax is to be paid when somebody buys or sells a property and the rate is 1% from the value of that property.
For vehicles, the owners must pay a motor vehicles tax calculated according to the category they belong (cars; minibuses, buses and trucks; yachts and motor ships; planes and helicopters).
For a wide range of documents necessary for a company, it is mandatory to be paid the stamp tax. The entrepreneurs should know this tax is applied for contracts, letters of credit and of guarantee, agreements etc. The rates for this tax are between 0.15% and 0.75% of the value mentioned on the documents.
Other indirect taxes that must by paid by entrepreneurs in Turkey are for:
- banking and insurance transactions (paid by banks and insurance companies)
- gambling (for companies involved in betting and gambling activities)
- inheritances or gifts
- communication services
- customs duty (for importers)
- special consumption.
For more information about the indirect tax system and how you can open a company in Turkey, you can contact our local agents in company formation.