TKEG Expat™ (Test) Turkey Corporate Tax Guide

In Turkey, the standard corporate income tax (CIT) rate is 25% for companies (other than those in the financial sector), with financial sector companies subject to a rate of 30%. Resident entities are taxed on worldwide income; non-resident entities are taxed only on Turkish-sourced income. A domestic minimum CIT rule took effect on 1 January 2025, requiring that CIT payable may not be less than 10% of taxable income before certain exemptions and deductions. Turkey has implemented the OECD Pillar Two global minimum tax framework: the Income Inclusion Rule (IIR) applies for tax years from 1 January 2024; the Undertaxed Profits Rule (UTPR) applies for tax years from 1 January 2025; a 15% Qualifying Domestic Minimum Top-Up Tax (QDMTT) applies for tax years from 1 January 2024. These rules apply to multinational groups with consolidated turnover of EUR 750 million or more. A top-up tax is due when the effective tax rate in a jurisdiction falls below 15%. CIT returns are due on the 30th day of the fourth month following the fiscal year end; advance tax payments are made quarterly by the 17th of the second month of each quarter. There are no provincial or municipal income taxes on corporations in Turkey.

Turkey taxes residents on their worldwide income; non-residents are taxed only on Turkish-sourced earnings. Income tax is levied on taxable income at progressive rates after deductions and allowances. From 1 January 2026, the following personal income tax (PIT) rates apply to employment income (rates in parentheses apply to non-employment income): 0-190,000 TRY: 15%; 190,000-400,000 TRY: 20% (excess over 190,000); 400,000-1,500,000 TRY: 27% (excess over 400,000); 1,500,000-5,300,000 TRY: 35% (excess over 1,500,000); above 5,300,000 TRY: 40% (excess over 5,300,000). Certain income from financial instruments is subject to withholding tax at rates ranging from 0% to 20%, depending on the instrument type. There is no special tax regime for expatriates. There are no local income taxes in Turkey. PIT returns are due by 31 March of the following year, with final payments in two equal installments by 31 March and 31 July.

Capital gains in Turkey are subject to the same rate as the corporate income tax for businesses, which is 25%. For individuals, capital gains are taxed at 40%. This applies to profits made from the sale of assets and investments. Turkey ensures that both corporate entities and individual investors contribute fairly to the economy by imposing these tax rates on capital gains.

Turkey's Value-Added Tax (VAT) applies to the sale and import of goods and services at rates ranging from 1% to 20%, with the standard VAT rate set at 20%. VAT on local purchases and imports is considered 'input VAT' and can be offset against 'output VAT,' which is calculated on sales. Turkey also applies a reverse-charge VAT mechanism for transactions between resident entities and foreign persons. This VAT system supports both domestic and international trade within Turkey, ensuring proper tax management for businesses involved in the movement of goods and services.

In Turkey, a stamp tax is levied on a wide range of documents, including agreements, financial statements, and payrolls. The stamp tax is calculated as a percentage of the value stated on the documents, with rates ranging from 0.189% to 0.948%. For salary payments, the tax rate is 0.859% of gross salary.