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How Does the Turkish Tax System Work?

Written by: Bridgewest

Investors and foreign citizens coming to Turkey see the taxation system here as one of the main reasons for doing business, respectively living and working. Turkey offers many incentives to foreign investors; however, employees of Turkish companies also have several benefits from a taxation point of view. Below, our company formation agents in Turkey have prepared a brief overview of this country’s taxation system.

The Turkish tax system is based on residency

This is the first important thing to know when choosing to open a company in Turkey or to relocate here. In the case of individuals, nationals, resident permit holders and those who live in Turkey for more than 6 months are regarded as residents and will be taxed on their worldwide earnings. Then, are the non-residents who are taxed only on the income they generate in Turkey.

The same criteria apply to the profits earned by Turkish companies. Foreign companies with seats in Turkey will also be subject to taxation here.

The main taxes levied in Turkey

There are three main types of taxes applied in Turkey:

  • - the income taxes;
  • - the indirect taxes;
  • - the wealth tax.

These taxes are computed by gathering all the incomes from the all sources. The tax will be applied on the aggregate value of all incomes and will be levied once a year.

Tax categories in Turkey

There are 7 large categories on incomes which are taxed in Turkey. These are:

  • - the salary and other wages;
  • - the business profits;
  • - the sole trader income;
  • - the agricultural earnings;
  • - the income generated by immovable property;
  • - capital investments earnings;
  • - other sources of income, such as capital gains, interest, dividend payments;

Our company registration advisors in Turkey can explain how companies are taxed in this country. We also remind investors they can benefit from accounting services with us.

With respect to the rates of these taxes, the income tax is applied on a progressive basis with the lowest rate of 15% for an income of 13,000 TRY and a maximum rate of 35% for an income above 110,001 TRY. In the case of business profits, the corporate tax is levied at a rate of 20%.

We can help investors who want to open companies in Turkey with the registration process, so do not hesitate to contact us.

 

 

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