​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Tax System And Rates In Turkey

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Tax System And Rates In Turkey

Turkey has one of the most competitive corporate tax rates among OECD member countries. Turkish corporate tax legislation is regulated with clear, objective and international standards. Turkish tax legislation can be grouped under three main headings.

Income Taxes

Income taxes in Turkish tax legislation are personal income tax and corporate tax.

Personal Income Tax

Income of real persons is subject to personal income tax. Income is the net amount of earnings and revenues earned by a natural person in a calendar year. An individual's income may include one or more of the following income elements: ​

  • Agricultural earnings​
  • Commercial earnings​
  • ​​Salaries and wages​
  • Self-employment earnings
  • ​Real estate income (rental income)
  • ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Revenues from securities (revenues from capital investments
  • Other earnings and revenues

Corporate

Personal income tax rates vary between 15% and 40%. The personal income tax rates for 2021 are as follows:

Earnings and Income                                             Tax Rate

Up to 32.000 TL                                                       15%

From 32.000 TL to 70.000 TL                                   20%

From 70.000 TL to 170.000 TL                                 27%

From 170.000 TL to 880.000 TL                               35%

More than 880.000 TL                                              40%

In the event that the income elements defined in the Income Tax Law are obtained by the institutions, taxation is made through the legal personality of these institutions. The corporate taxpayers defined in the law are: 

  • ​Capital companies​
  • ​Cooperatives​
  • ​Public economic enterprises​
  • ​Economic enterprises owned by associations and foundations
  • Business partnerships

The corporate tax rate levied on commercial profits in Turkey is 25% for 2021 and 23% for 2022.​

Taxes on Expenses 

Value Added Tax (VAT)

VAT rates applied in general; 1% is 8% and 18%. Commercial, industrial, agricultural and independent professional goods and services; Goods and services imported into the country and all deliveries of goods and services generated through other activities are subject to VAT.

Special Consumption Tax (SCT)

There are four main product groups subject to SCT at various tax rates:

  • ​Petroleum products, natural gas, machine oils, solvents and solvent derivatives
  • Automobiles and other vehicles, motorcycles, airplanes, helicopters, yachts
  • Tobacco and tobacco products, alcoholic beverages
  • Luxury goods

Unlike VAT, which is applied on each delivery, SCT is only applicable once is applied specifically.

Banking and Insurance Transactions Tax

Although transactions made by banking and insurance companies are still exempt from VAT, these transactions are subject to Banking and Insurance Transactions Tax. This tax applies to income earned by banks, such as interest on loans. The tax rate is usually 5%, but for some transactions, such as deposit transactions between banks, it is 1% for interest. Since 2008, no tax is applied to sales amounts from foreign exchange transactions.

Stamp Duty

Stamp duty; It applies to a variety of documents, including contracts, debt securities, equity participations, letters of credit, letters of guarantee, financial statements and payrolls. Stamp duty is levied at rates ranging from 0.189% to 0.948% of the document value, and is also collected as a fixed (predetermined price) for some documents.

Wealth Taxes

There are three types of wealth taxes:

  • Property tax
  • Motor vehicle tax
  • Inheritance and gift tax

Buildings, flats and lands owned in Turkey are subject to real estate tax at rates ranging from 0.1% to 0.6%, and 10% of this accrued tax is paid as Contribution for the Protection of Immovable Cultural Heritage. Motor vehicle taxes, on the other hand, are collected every year in the amount of fixed prices determined according to the age and engine volume of the vehicles. Inheritance and gift taxes are collected at the rate of 1-30%.​

 

**This study is prepared by Kula Law Office. Please contact by e-mail ([email protected]) or call at +902324350604 for publication of the article in other channels, detailed information and questions about the subject.

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