Overview
Turkey operates a modern, comprehensive tax system administered by the Revenue Administration (Gelir İdaresi Başkanlığı). Foreign-owned companies registered in Turkey are subject to the same tax obligations as domestic companies — there is no separate foreign investor tax regime.
Understanding the Turkish tax system is essential for budgeting, compliance, and taking advantage of available incentives. This guide covers the key taxes that affect foreign-owned businesses operating in Turkey.
Corporate Tax (Kurumlar Vergisi)
The standard corporate tax rate in Turkey is 25% on taxable income.
Corporate tax applies to:
- All income earned by companies registered in Turkey
- Worldwide income for companies with their tax residence in Turkey
- Only Turkey-sourced income for branches of foreign companies
Key rules:
- Tax year follows the calendar year (January 1 – December 31)
- Advance tax payments (geçici vergi) are made quarterly at 25%
- Annual corporate tax return is filed by the last day of April of the following year
- Tax is paid in a single installment by the end of April
| Item | Rate / Detail |
|---|---|
| Standard corporate tax rate | 25% |
| Advance quarterly payments | 25% of quarterly profit |
| Annual return deadline | April 30 |
| Payment deadline | April 30 |
Value Added Tax (KDV)
Turkey’s Value Added Tax (Katma Değer Vergisi, or KDV) is applied to most goods and services.
Standard VAT rates:
| Rate | Applies to |
|---|---|
| 20% | Standard rate — most goods and services |
| 10% | Certain food products, tourism, health services |
| 1% | Basic food items, agricultural products, newspapers |
VAT obligations:
- Companies must register for VAT during the tax office registration
- VAT returns are filed monthly by the 28th of the following month
- Input VAT (paid on purchases) can be offset against output VAT (collected on sales)
- Excess input VAT is carried forward — cash refunds are available only in specific cases (exports, certain investments)
VAT for exports:
Exports from Turkey are zero-rated (0% VAT). Export companies can claim VAT refunds on their input costs, making Turkey competitive for export-oriented businesses.
Withholding Tax (Stopaj)
Withholding taxes apply to certain payments made by Turkish companies:
| Payment Type | Withholding Rate |
|---|---|
| Dividends to non-residents | 10% |
| Interest payments to non-residents | 10% |
| Royalties to non-residents | 20% |
| Service fees to non-residents | 20% |
| Employee salaries | 15%–40% (progressive) |
| Rent payments | 20% |
| Professional service fees (domestic) | 20% |
Note: Withholding rates may be reduced under double tax treaties. Always check the applicable treaty rate before making cross-border payments.
Income Tax (Gelir Vergisi)
Individual income tax applies to salaries, professional income, and personal business income. Turkey uses a progressive rate structure:
| Taxable Income (TRY) | Rate |
|---|---|
| Up to 110,000 | 15% |
| 110,001 – 230,000 | 20% |
| 230,001 – 580,000 | 27% |
| 580,001 – 3,000,000 | 35% |
| Over 3,000,000 | 40% |
Foreign directors receiving salaries from their Turkish company are subject to these rates. The company withholds and remits the tax on their behalf.
Social Security Contributions (SGK)
All employees — including foreign nationals with work permits — must be registered with the Social Security Institution (SGK). Contributions are shared between employer and employee:
| Contribution | Employee | Employer |
|---|---|---|
| Pension | 9% | 11% |
| Health insurance | 5% | 7.5% |
| Unemployment | 1% | 2% |
| Short-term insurance | — | 1%–6.5% |
| Total | 15% | 21.5%–27% |
SGK contributions are calculated on gross salary and capped at a monthly ceiling (updated annually).
Tax Incentives and Exemptions
Turkey offers several tax incentives to attract and support investment:
Technology Development Zones (Teknokent)
- 100% corporate tax exemption on income from R&D and software development
- VAT exemption on software deliveries
- Income tax exemption for R&D personnel
- Available in designated technoparks across Turkey
Free Trade Zones (Serbest Bölge)
- Corporate tax exemption for companies producing for export
- VAT and customs duty exemptions on imports and exports within the zone
- Income tax exemption for zone employees (for manufacturing companies)
Investment Incentive Certificates
- VAT exemption on machinery and equipment purchases
- Customs duty exemption on imported equipment
- Reduced corporate tax rates for strategic investments
- Employer SGK contribution support for certain regions
R&D and Design Centers
- 100% R&D expense deduction from taxable income
- 50% income tax exemption for R&D employees
- 50% SGK employer contribution exemption for R&D staff
Double Tax Treaties
Turkey has signed double tax treaties with over 85 countries. These treaties prevent the same income from being taxed in both Turkey and the investor’s home country. Common treaty provisions include:
- Reduced withholding rates on dividends, interest, and royalties
- Tax credits for taxes paid abroad
- Permanent establishment rules defining when business activities trigger tax obligations
- Exchange of information between tax authorities
Key treaty rates (dividend withholding):
| Country | Treaty Dividend Rate |
|---|---|
| United States | 5%–15% |
| United Kingdom | 5%–15% |
| Germany | 5%–15% |
| France | 5%–15% |
| Japan | 5%–15% |
| China | 10% |
| India | 10%–15% |
| Canada | 5%–15% |
Tip: The lower rate typically applies when the dividend recipient holds a significant ownership stake (usually 25%+). Consult with a tax advisor to determine the applicable rate for your specific situation.
Tax Calendar
| Deadline | Obligation |
|---|---|
| Monthly (28th) | VAT return and payment |
| Monthly (26th) | Withholding tax return and payment |
| Monthly (end of month) | SGK contribution declarations and payments |
| Quarterly (14th of following) | Advance corporate tax payment |
| April 30 | Annual corporate tax return and payment |
| January 31 | Annual withholding tax reconciliation |
E-Filing and Digital Requirements
Turkey has a highly digitized tax system. Companies are required to:
- E-Invoice (e-Fatura): Mandatory for companies exceeding a gross revenue threshold (currently 3 million TRY). All invoices must be issued and received electronically through the GİB (Revenue Administration) portal.
- E-Ledger (e-Defter): Companies using e-Invoice must also maintain electronic accounting ledgers.
- E-Archive Invoice (e-Arşiv Fatura): For transactions with individuals or companies below the e-Invoice threshold.
- E-Dispatch Note (e-İrsaliye): Electronic dispatch notes for goods shipments, mandatory for companies using e-Invoice.
Practical Tips
- Hire a local accountant (mali müşavir) from day one. Turkish tax compliance is detailed and time-sensitive. A licensed financial advisor handles filings, ensures compliance, and saves you from penalties.
- Keep records in Turkish. Accounting records must be maintained in Turkish and in Turkish Lira.
- Monitor treaty benefits. If your home country has a double tax treaty with Turkey, ensure your accountant applies the correct withholding rates on cross-border payments.
- Budget for SGK. Social security costs are significant — factor employer contributions into your payroll budget.
- Meet deadlines. Late filing penalties and interest charges accumulate quickly. Set up automated reminders for all tax deadlines.