Taxes in Turkey

There are a number of taxes that are applicable in Turkey. In this short introduction, we would like to mention each tax type, provide some general information about it and give the applicable rate or amount of tax in short.

Taxes on Income

Personal Income Tax Scope and Taxpayer
Personal income tax is levied on the income of individuals. The term “individuals” means natural person. An individual’s income may consist of below income elements:
– Business profits,
– Agricultural profits,
– Salaries and wages,
– Income from independent personal services,
– Income from immovable property and rights (i.e. rental income),
– Income from capital investment,
– Other income and earnings without considering the source of income.
Rates on Ranges of 2018 ;
15% : on earnings up to 14.800 TL
20% : on earnings after 14.800 TL until 34.000 TL
27% : on earnings after 34.000 TL until 80.000 TL (for salary earnings until 120.000 TL)
35% : on earnings after 80.000 TL (for salary earnings after 120.000 TL)
Corporate Income Tax Scope and Taxpayer
Corporate Income Tax is levied on the income and earnings derived by corporations and corporate bodies. The income elements of the Corporate Income Tax (CIT) Law are determined as the same as listed for the PIT Law (see above). Corporations and corporate bodies specified by the Law as taxpayers in respect to the corporate tax are:- Capital companies and similar foreign companies,- Cooperatives,
– Public enterprises,
– Enterprises owned by foundations societies and associations,
– Joint ventures.
Rate:
20% standard rate by law. (raised to 22% for FY 2018-19-20 with a temporary article added to the law)

Taxes on Transaction

Value Added Tax (VAT) Scope and Taxpayer
VAT Law entered into force in 1985. In general, VAT is applied on the supply of goods and services in Turkey. Additionally, the importation of goods and services into Turkey is also subject to VAT. There are different rates applicable and some transactions are exempted from VAT.
Rate:
18% is the general VAT rate. All services and deliveries, except for the ones that the rate is reduced, are subject to 18%.
8% Reduced VAT rate is applied on generally food and beverages, textiles, books, education, hotel accommodation etc.
1% Reduced VAT rate is applied on raw agricultural products, bread, newspaper and magazines etc.
Exemptions:
Export Exemption: Export of goods and services is exempted from VAT. Please note that service export is limited by special requirements. This exemption is an exemption with deduction right.
Special Consumption Tax (Excise Duty) Scope and Taxpayer
Excise Duty is applicable on certain products defined under 4 lists. Excise duty is collected on these specific goods only once. Depending on the list or product and except special cases, it is generally collected on importation or on the delivery of importer/producer. For the motor vehicles, it is collected on traffic registration (if subject to).
Rate and Taxation Principle:
List I – Petroleum products and mineral oilsTax is fixed per unit of product generally vary between 1,5 to 2,5 TL. Some products are taxed by lower than 1 TL.Tax is levied on the delivery of the importer or the producer.
List II – Motor vehiclesTax is calculated ad-valorem up to 160%.
Tax is levied on the importation or traffic registration.
List III – Tobacco Products, Alcoholic Beverages and some Non-Alcoholic Beverages
Tax is calculated by a mixture of fixed per unit fee and ad-valorem rates.
Tax is levied on the importation or delivery of the producer.
List IV – Other Products / Luxury Consumption
Tax is calculated mostly by an ad-valorem rate (some products have minimum defined tax amount).
Tax is levied on the importation or delivery of the producer.
Stamp Tax Stamp tax applies to a wide range of documents, including but not limited to, contracts, letters of credit and letters of guarantee, financial statements and payrolls. Stamp tax is levied according to the type of documents at different tax rates or as a fixed fee listed in Annex I of the Stamp Tax Law.
Rate and Taxation Principle:
In the attachment of Stamp Tax Law, there is a list of documents that are subject to Stamp Tax. Stamp Tax rate is generally between %0,148 to %0,948. Some documents are taxed with a fixed fee (i.e. 20,30 TL for Origin Documents).
Contracts: Contracts are subject to Stamp Tax over the highest value indicated on the contract at the rate of %0,948.
Customs Taxes Goods imported from abroad to Turkish Customs territory is subject to Customs Tax according to tariff determined per HS code of the product. This tax is determined by tariff, origin and value of the import product. Turkey is party to several Free Trade Agreements, so reduced tariff is applied on imports that are originated of those countries. Please note that the HS code used in Turkey (GTIP) consists of 12 digits.
Customs Union with EU: Turkey is a part of Customs Union with EU for industrial products. Accordingly, Customs Tax is not applicable for those imported from EU to Turkey if imported with A.TR movement document. However, other customs taxes (i.e. additional customs duty, additional fiscal obligation etc.) may still apply on importation especially for products that are originated from other countries that Turkey applies sanctions.
Banking and Insurance Transactions Tax Transactions and services performed by banks, bankers and insurance companies are subject to BITT. Taxpayers of this tax are banks, bankers and insurance companies. All transactions and services performed by these are subject to BITT regardless of the nature of the transaction. Please note transactions that are subject to BITT is exempted from VAT.
The general BITT rate is 5% but some specific transactions are taxed at 1% or even reduced to 0 (zero).
Special Communication Tax Telecommunication services are subject to special communication tax.
Rate of this tax generally vary between 5-25%.
Gambling Tax Betting, lottery and other forms of gambling are subject to Gambling tax. Organizers of gambling activities are taxpayer of this tax.
Municipal Taxes There are different types of municipal taxes applicable in Turkey.
These fees are applied at different rates or as fixed fee.
Fees There are different types of fees such as Judgment Fee, Notary Fee, Title Deed Fee, Consulate Fee, Ship and Harbor Fee, Permit of License and Certificate Fee, Traffic Fee, Passport, Visa and Ministry of Foreign Affairs Certification Fee.
These fees are applied at different rates or as fixed fee.

Taxes on Wealth

  • Inheritance and Transfer Tax
  • Real Estate Tax
  • Motor Vehicles Tax

Final Note:

Please keep in mind that this list may not be updated on the day that you see this page, or there may be special taxation treatments for the case that you are looking this information for. Therefore, before taking an important decision about the provided information, we recommend you to receive professional advise about your special case. You may contact us here.