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Turkey  Income Taxes and Tax Laws













Last partial update, April 2016.
  • The tax system in Turkey is progressive. In other words, the higher your income, the higher the rate at which you will pay tax.
  • The 2016 individual tax rates vary from 15% - 35%.
  • in 2016 the standard rate of Turkey corporate tax is 20%.
Income Tax for an Individual in Turkey
  • An individual in Turkey is liable for tax on his income as an employee and on income as a self-employed person. In the case of an individual who answers the test of a "permanent resident", the tax will be calculated on his income earned in Turkey and overseas. A foreign resident who is employed in Turkey pays tax only on his income in Turkey.
  • To be considered Turkish resident, residence of over 6 months in Turkey during any calendar tax year must be established.
  • An employer is obligated to deduct, immediately, each month, the amount of tax and national insurance due from a salaried worker.
  • A self-employed individual is obligated to make advance payments on income tax that will be offset on filing an annual report. In the case of a new business, the advance payments will be calculated according to the estimates of the owner of the business. The advance payments will be made 4 times in each year.
  • The standard rate for payments in advance of income tax in Turkey is 15% of the net profit.
  • Certain payments are deducted from taxable income as detailed below.
  • Capital gains are usually added to the normal income.


Turkey individual income tax rates 2016 (employment income)


Tax % The Tax Base (YTL)
15 0-12,600
20 12,601-30,000
27 30,001-110,000
35 110,001 and over


Turkey Corporate Tax
  • The 2016 tax rate applicable to corporations in Turkey is 20%.
  • Capital gains tax in a corporation is usually added to the regular income of the corporation.
  • There is a participation exemption for dividend received from a non-resident company by a Turkish company, subject to terms.




Capital Gains in Turkey

In general, capital gains in Turkey, whether for an individual or for a company, is added to the regular tax.

Capital Gains (for an individual)
  • The rate of standard tax is identical to the rate of normal income tax on the income of an individual - that is from 15% - 35%.
  • A capital gain from the sale of Turkish securities, traded on the Turkish stock exchange, that were held by the vendor for at least 1 year before the date of sale, or sale of shares of resident companies held for at least 2 years is exempt from tax.
Turkey Capital Gains (for a corporation)
  • The standard rate of tax for a corporation is 20%.
  • On the sale of foreign participations by a resident international holding company if held for more than 2 years the capital gain is exempt from tax.
  • Under certain terms sale of local participation shares is taxed at 25% of the general 20% rate.
Reporting Dates and Payment in Turkey

The tax year in Turkey is the year ending on December 31.
Advance payments of income tax are made as specified below:
  • An Individual - An individual whose income is only from a wage is not obligated to file an annual return. The employer deducts tax from the employee and transfers it to the Tax Authority every month.
                - A self-employed individual must make 4 advance payments, one every quarter. A temporary tax of 15% of the net profit must be paid on making each advance payment.
                - A self-employed individual must file a tax return by the end of the month of March in the year following the end of the tax year.


  • A Limited Company A Limited Company - It is compulsory to submit the financial statements by April 30.
                The advance payments are paid for the quarter.
                - A delay in submitting the annual return beyond the date prescribed is liable to a fine.
Deduction of Tax at Source in Turkey

Taxation of Employee
The employer is obligated to deduct tax at source from an employee and to make additional contributions to social security.


Turkey Social Security
  • The employer's contribution is 20.5% of the salary (to the limit specified in law). The employee's contribution is 14% of the salary.
    Employers pay additional 2% to unemployment fund, employees pay additional 1%.
  • Turkey has signed a Double Taxation Prevention Agreement for social security with a number of countries.


Other Tax deductions in Turkey

Tax, in Turkey, must be deducted at source from the following payments to non-residents according to the following table:

  • Dividend - 15%.
  • Interest - 10%.
  • Royalties - 20%.
  • Technical Fees -20%.
Comment:
Deduction at source for payments to foreign residents is subject to the Double Tax Prevention Treaty.


Note: An additional detailed artice by "Independent Accountants" firm about Turkey taxes.






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