Taxation and Incentives in Turkey and Frequently Asked Questions

What is the corporate tax ratio?

The current corporate tax ratio is % 20 of the yearly profit.

What is the income tax ratio?

Income tax ratio has a gradual system. The tariff is determined every year in accordance with the 103th article of the Income Tax Law.

What is commercial income? What are the deductible expenses?

All the earnings from a commercial and industrial activity is regarded as commercial income. Net income is determined by deducting all the necessary expenses related to the commercial and industrial activity from the commercial income.

What is agricultural income? What are its exemptions?

All the earnings from an agricultural activity is regarded as agricultural income. The taxation of the agricultural income mostly depends on the size of the facility and the type of agricultural machinery. If these indicators are below a certain level, agricultural income is taxed by withholding a predetermined percent of the yearly yield.

What is income from self-employment? What are the deductible expenses?

Income from self-employment can be described as income earned by utilizing self-labor, scientific or professional knowledge or expertise in non-commercial activities and without being subject to an employee. All the expenses incurred during self-employment can be deducted from the income to determine the net income.

 What are earnings on movable assets? How are they taxed?

Dividend, interest, rent or similar earnings generating from capital in cash or cash substitutes excluding commercial, agricultural or self-employment activities are earnings on movable assets. If the total amount of these earnings exceed an annually determined threshold, it is mandatory to make a tax return.

What is income from immovable property? How is it taxed?

The rent income generating from renting immovable assets and rights is called income from immovable property. It has variable tax ratios depending on the type of the rented immovable, the tenant and the landlord. It is mandatory to declare its tax on March.

What are other types of income?

All the income not specified under income from commercial, agricultural, professional, on movable assets and on immovable property are considered as other (occasional) income. They are taxed depending on their type.

What is the ratio of the Value Added Tax?

The general ratio of the Value Added Tax is % 18. Other ratios are % 8 and % 1. Which ratio will be applied to which goods and services are determined by decrees of the council of ministers.

What is Motor Vehicle Tax? How is it calculated?

Motor Vehicle Tax is determined in accordance with the vehicle’s type, age and engine capacity and paid in two installations every year.

What is stamp tax? What are the ratios of these taxes?

Stamp Tax originates from valuable papers determined by law and it is either proportional or fixed. The ratios are determined in the supplementary list of the Stamp Tax Law. This list is updated yearly.

What is Special Consumption Tax? What are the ratios of these taxes?

It is an expenditure tax accrued either as fixed or proportional during the consumption of certain goods and services. The ratios are determined for every single good and service according to their hs codes.

What is inheritance and transfer tax? Who are charged with this tax?

This tax has two separate parts. First is the cash, assets and rights obtained through inheritance and the second is through donation. In both situations, the obtained cash, assets and rights are taxed based on different tariffs. Also, the exemption amounts are different for each one.

What are the tax exemptions and incentives for companies within a technocity?

In accordance with the law no. 4691, companies operating within technocities and their employees are granted exemptions from corporate tax, income tax, stamp tax and value added tax. Issues regarding these exemptions are exemplified and explained in our numerous articles about this subject.

What are the deductions and exemptions of corporate tax?

The corporate tax has many deductions and exemptions. Some of them are: affiliation privilege, exemption from the sale of immovable and shares, building and restoration made abroad, exemption from income obtained by assembly and technical jobs etc.

For other questions regarding taxation and incentives, please get in contact with us.