Some of the questions in the minds of foreign investors who want to invest in Turkey are about corporate tax in Turkey. In this article, We will answer the most important of these questions. In my previous article, we gave general information about taxes in Turkey, we recommend you to take a look.
Which types of companies are subject to Corporate Tax in Turkey?
1- Capital Companies (Joint Stock Companies and Limited Liability Companies)
2- Cooperatives (Including foreign cooperatives)
3- Others (Other organizations unrelated to foreign investors)
What types of income form the subject matter of Corporate Tax in Turkey?
1- Commercial incomes
2- Agricultural incomes
3- Wages
4- Professional incomes
5- Real estate capital incomes
6- Securities capital incomes
7- Other gains and incomes
Which types of foreign companies are exempt from Corporate Tax in Turkey?
Except for foreign companies established for scientific research, it is not easy to be exempt from Corporate Tax. Exemption can be granted in some specific industries subject to many conditions. Many public and state institutions, as well as some local authorities, are exempt from corporate tax, and none of them are related to foreign investors.
What is the Corporate Tax rate in Turkey (2024)?
For 2024, the corporate tax rate in Turkey is 25%. On the other hand, the corporate tax rate for banks, companies under Law No. 6361, electronic payment and money institutions, authorized exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies, and pension companies on corporate gains is 30%. Additionally, exporter companies receive a 5% corporate tax reduction, and companies with an industrial registry certificate engaged in actual production activities receive a 1% corporate tax reduction.
When is Corporate Tax declared and paid in Turkey?
Corporate tax in Turkey is declared once a year. Companies with a fiscal year that corresponds to the calendar year declare and pay corporate tax by the end of July. Companies with a special accounting period declare and pay corporate tax by the end of the fourth month following the end of the accounting period. However, corporate tax in Turkey is collected in advance three times a year (1st quarter, 2nd quarter, and 3rd quarter). This is called Corporate Temporary Tax. The previously applied 4th quarter temporary tax declaration has been abolished. Temporary tax is declared and paid by the 17th day of the 2nd month following the relevant quarter. The deadlines for the last declaration falling on weekends or official holidays are extended to midnight on the next business day.
How is Corporate Tax declared in Turkey?
Corporate tax, like all other tax returns, is declared electronically by uploading it to the tax portal of the Revenue Administration. The declaration can be made by a third-party certified tax advisor contracted with your company or by a certified tax advisor employed within your company. No one, including the top authorized signatory of any company, can declare any tax return on their own.
How is Corporate Tax calculated in Turkey?
Let me say from the beginning that it is not possible to explain this in just a few sentences or even a few paragraphs. Due to the specific practices unique to Turkey, such as “Finance Expense Restriction” or “Inflation Accounting,” which have emerged in recent years, the calculation has become somewhat more complex in addition to various data, including deductions based on the sector and activities of your company. If you need a detailed corporate tax calculation table specific to your company, you can contact me.
[OUR SERVICES] Expert Corporate Tax Services for Businesses in Turkey
Understanding corporate tax obligations in Turkey is crucial for foreign investors aiming to maintain compliance and optimize their tax position. With intricate regulations and frequent updates, navigating corporate tax can be challenging. Our services provide the expertise and strategic insights necessary to manage your corporate tax effectively.
- Preparation and submission of corporate tax returns in alignment with Turkish tax regulations
- Sector-specific tax feasibility reports to help assess corporate tax obligations before investing
- Financial statement analysis to ensure accurate corporate tax reporting and compliance with Turkish GAAP
- Monthly management reporting for in-depth insights into corporate tax liabilities and opportunities for optimization
- Risk management strategies tailored to identify and mitigate potential corporate tax risks
Don’t hesitate to reach out for assistance in making your corporate tax processes efficient, accurate, and compliant in Turkey.
FAQ
1. What is the current corporate tax rate in Turkey?
Answer:
The current corporate tax rate in Turkey is 25%. This rate applies to both resident companies, which are taxed on their worldwide income, and non-resident companies, which are taxed only on income derived from Turkey. The rate may vary for certain incentives or sectors.
2. How is corporate tax calculated in Turkey?
Answer:
Corporate tax in Turkey is calculated based on the company’s taxable income, which is the difference between total revenue and allowable expenses. Deductions can include business expenses, depreciation, and losses carried forward. After deductions, the taxable income is multiplied by the corporate tax rate to determine the amount owed.
3. Are there any tax incentives or exemptions for corporations in Turkey?
Answer:
Yes, Turkey offers various tax incentives and exemptions for corporations, particularly in special investment zones, technology development areas, and for R&D activities. These incentives may include reduced tax rates, tax holidays, and exemptions from certain taxes like VAT and customs duties.
4. When are corporate tax returns due in Turkey?
Answer:
Corporate tax returns in Turkey are due by the end of the fourth month following the close of the fiscal year, typically April 30th for companies using the calendar year. Corporate taxes must be paid in advance in four installments throughout the year.
5. What is the withholding tax on dividends for corporations in Turkey?
Answer:
The withholding tax on dividends distributed by Turkish corporations is 15%. This rate applies to both resident and non-resident shareholders, but it may be reduced under Turkey’s double taxation treaties with other countries.
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