Business and taxes

Taxes in Turkey: a complete guide for individuals and companies

In Turkey, individuals pay an income tax on a progressive scale of 15 to 40% and are entitled to tax deductions.

Companies do not pay a corporate tax if registered in one of Turkey’s eighteen economic free zones. There are also reduced VAT rates of 1 and 8%.

Taxes in Türkiye: a full guide

Who pays Turkish taxes?

The residency criterion is the key point for taxes in Turkey. Residents are taxed on their global income, whereas non-residents are taxed on Turkish-sourced earnings only.

Tax residents. Individuals become Turkish tax residents if they reside in Turkey for more than six months in one calendar year. But there are some exceptions. Foreigners who stay in Turkey for six months or more for employment, business, study, or treatment are treated as tax non-residents.

Companies become Turkish tax residents if their registered head office is in Turkey or the centre of all their business transactions is in Turkey.

Tax non-residents can be individuals who spend less than six months in one calendar year in Turkey and get income from Turkey. Legal entities are also considered non-residents if their income source is in Turkey, but their head office is registered in another country.

Taxes for individuals

There are no national wealth taxes in Turkey. However, Turkish tax residents and non-residents pay the following types of taxes:

  • a personal income tax;
  • social security contributions;
  • unemployment insurance;
  • dividends and interests tax;
  • inheritance and gift taxes.

Personal income tax (PIT) is the central tax for individuals in Turkey and is regulated by Law No.193, Official Gazette No. 10700 dated 06.01.1961. 

PIT is levied on different types of individual income: from employment to nonrecurring income.

Subjects to income tax in Turkey

Income tax basisExamples
Income from business activities
Commercial or industrial activities with permanent establishments or representatives in Turkey and income must result from business carried out in this permanent establishment or through such representatives.

Business in selling goods, services, food or in transportation, manufacturing, production, etc
Agricultural profitsIncome derived from agricultural activities such as activities performed on land, sea, lakes and rivers in the forms of cultivating, planting, breeding, fishing, hunting, etc. For example, farmers
Salaries and wagesAll types of salaries, where there is an employer-employee relationship
PensionsRetirement, disability, widow and orphan pensions
Independent personal services’ incomeAll kinds of self-employment activities. For example, freelance writers
Immovable property and rights’ incomeBuildings

Permanent leasehold rights

Land

Mines and quarries

Ships, boats, aircraft, and other types of vehicles

Machinery, installations and their attachments

Patent rights

Copyrights

Trade mark, brand, trade name

All technical drawings, design, model, plan, cinema and television films, sound and image tapesInformation acquired in the fields of industry, commerce and science

Secret formula or production method
Capital investmentThe interest, dividends, rent and similar revenues
Non-recurrent incomeIncome derived from execution of commercial transactions or from acting as an intermediary for such transactions on occasionIncome received in return for stopping or vacating an activity of a commercial

Agricultural enterprise or independent professional service and in return for not bidding for contractsIncome received in return for transferring leasehold rights or for evacuating leased immovable propertyIncome received in return for independent professional services rendered on the occasion

Post-derived earnings of the taxpayers from their previous business;Income derived by the limited liable taxpayers from transportation activities performed on the occasion

PIT is charged at a progressive scale of 15 to 40% after certain deductions and allowances. 

The PIT rate depends on the annual income amount. The maximum rate will be set if the income for the year exceeds TRY 880,000, which is about $49,000.

Salary and income tax rates in Turkey

Annual incomeIncome tax rate
Up to TRY 32,00015%
TRY 32,000
to TRY 70,000 
20%
TRY 70,000 to TRY 250,000 27%
TRY 250,000 to TRY 880,000 35%
Over TRY 880,00040%
In September 2022, the value of 1 US dollar is 18 Turkish Liras (TRY). Check exchange rates for today

Social security contributions are calculated on salary limits of a minimum of TRY 166 and a maximum of TRY 1,251 per day and must be paid by the employer and the employee. The general rates are 20.5% for the employer and 14% for the employee.

Foreign nationals who remain under the protection of their country's social security system are not required to pay Turkish social security contributions for three months. If there is a treaty between their country of origin and Turkey, the exemption period may be longer. 

Foreign workers pay total contributions if they are not subject to foreign social security.

Unemployment insurance contributions are calculated over an upper earnings level of TRY 1,251 per day. The contributions are paid by the employer, employee, and the state, where for an employer, the rate is 2% and for the remaining two is 1%.

Interest tax is 0 to 15%, while non-resident investors always pay it at the maximum rate. In other cases, the tax rate depends on the maturity of bonds and deposits: the longer the maturity, the lower the interest.

Dividends tax is 10%, which is charged only on half of the dividends total. If the income from dividends and income from other sources of an individual exceeds TRY 70,000, or about $4,000, they are included in the annual tax return. In some cases, tax on dividends may be credited against calculated income tax.

Inheritance and gift taxes rates depend on the object cost. The inheritance tax rate ranges from 1 to 30% and from 1 to 10% for gift tax.

Inheritance and gift taxes are paid over three years. Except for lottery prizes, the relevant taxes are collected by withholding at the time of payment.

Tax deductions for individuals

For individual employees, no deductions are permitted. But contributions to social security may be deducted. 

The annual cumulative amount of personal deductions cannot exceed the minimum yearly gross salary.

Deductions for Turkish taxpayers

TermsRates
Insurance premiums such as life, death, accident, illness, disability, maternity, birth and education, belonging to the taxpayers themselves and their spouses and children underage15% of the declared income and the total amount of minimum wage
Education and health expenditures related to the taxpayers themselves, their spouses and children underage10% of the declared income
Donations and charities made against a receipt, to the public administrations under government budget or with a particular budget, to special provincial administrative bodies, to municipalities and villages, to foundations that are granted tax exemption by the President, to associations that work for the public interest5% 
Expenses, donations and charities made and given against receipt in respect of activities which are realized by the institutions or supported by the Ministry of Culture and Tourism for the promotion, development and preservation of cultural, artistic and historical values100%
Amateur sports branches100%
Professional sports branches50%
Charitable contributionsDepends on the contribution amount 
All kinds of expenses made for the construction of schools, medical facilitiesDepends on the contribution amount 
Student hostels and child care centresDepends on the contribution amount 

Business tax rates in Turkey

The main taxes for companies in Turkey are taxes on corporate income and a value-added tax. Also, companies pay banking and insurance transactions tax, digital service tax, special consumption tax, and social security contributions.

Corporate income tax is levied on the income and earnings derived by corporations and corporate bodies such as:

  • capital companies and similar foreign companies;
  • cooperatives;
  • public enterprises;
  • enterprises owned by foundations and associations;
  • joint ventures.

The taxed net corporate income is defined as the difference between the net worth of assets owned at the beginning and the end of the financial year.

The tax on profit is paid at a standard rate of 20%. However, the rate has temporarily increased to 25% for income received in 2021 and 23% for income received in 2022. The current rate will return to 20% from 2023 if the legislation is not changed. The income tax rate for companies in the financial sector is 25%.

20%
The standard corporate income tax rate in Turkey

The standard value-added tax (VAT) rate is 18%. For comparison, the average base VAT rate in the European Union is 23.1%. VAT is levied if a company provides services, exports and imports goods. 

Also, there are reduced VAT rates of 1 and 8% that are valid for some deliveries and services in Turkey.

Reduced VAT rates for deliveries and services in Turkey

1%8%
Wholesale supply of some agricultural products

Livestock and meat

Certified seeds

Bread Supply of houses with a net area of up to 150 m²

Funeral services Leasing of machinery and equipment covered by the Investment Incentive

Certificate pursuant to the financial leasing legislation
Basic foodstuff

Clothing products

Some furniture 

Health care services

Pharmaceuticals and medical devices

Care services for the young, elderly, sick or disabled provided by nursing homes and orphanages

Educational services and related services

Admission charges for cinema, theatre, opera, operetta, ballet, museum

Restaurant and catering services

Accommodation services

The transactions of banks and insurance companies are exempt from VAT but are subject to banking and insurance transactions tax (BITT).

Transactions carried out by licensed banks and insurance companies are subject to BITT at a rate of 5%. But some transactions are subject to 1% or 0% BITT — the rate depends on corporations’ profit from their trades.

The digital service tax rate is 7.5%. The taxpayer of the DST is a digital service provider. For example, in the digital environment, sales of any audible, visual or digital content like computer programs, applications, music, video, games, and in-game applications.

Special consumption tax is levied only once at one stage of the consumption process of four main product groups:

  • petroleum products, natural gas, lubricating oil, solvents, and derivatives of solvent;
  • land, air and sea vehicles;
  • alcoholic beverages and cola soda pops, cigarettes and other tobacco products;
  • luxury products, such as caviar, furs, mobile phones, etc.

The tax amount is defined by the kilogram, litre, cubic metre, or other goods’ units.

Social security contributions for both employer and employee are 34.5% of the employee's salary: 14% for the employee and 20.5% for the employer. 

The unemployment contribution of 3% of wages is paid in addition to social security contributions: 1% for the employee and 2% for the employer.

Tax benefits for businesses in Turkey

Turkey has eighteen free zones with a special tax regime. Thus, the government stimulates the development of industry and trade.

The advantages of free economic zones in Turkey are:

  • no income and corporate tax;
  • no stamp duty;
  • no real estate and property taxes;
  • no VAT on logistics services supplied to third countries.

To work in the free zones of Turkey, individuals and legal entities receive a license from the Ministry of Commerce of Turkey. Permitted activities include production, storage and packaging of goods, research, trade, banking and insurance, and software development.

Tax benefits for businesses in Turkey
The free zones are located near major Turkish ports along the Black, Aegean and Mediterranean Seas. This location provides quick access to major international trade routes. Source: Turkish Ministry of Trade

Property taxes in Turkey

Taxes and government fees are related to buying, owning and selling real estate. The tax base is the cadastral value, which is usually indicated in the certificate of ownership, TAPU.

Buying real estate in Turkey comes with a property transfer tax, VAT, stamp duty, and government fees.

The property transfer tax rate is 4%. By law, the buyer and the seller pay it in equal shares of 2% each, but, in practice, the buyer takes over the payment of the total amount of tax.

The VAT rate depends on the housing area:

  • 1% — for housing with an area of ​​less than 150 m²;
  • 8% — for housing with an area of ​​more than 150 m²;
  • 18% — for commercial properties.

Foreigners are exempt from paying VAT when buying real estate from a developer. After the transaction is concluded, buyers have the right to apply for a tax deduction, while they have to keep the object in the property for at least one year after receiving the TAPU.

Stamp duty is paid upon signing real estate purchase and sale contracts in the amount of 0.1 to 0.6%, depending on the property value.

The state duty for issuing TAPU — Döner Sermaye — is $130 for non-residents of Turkey and $45 for residents. It is paid at the Cadastral Chamber upon receipt of a certificate of ownership.

Taxes and fees when buying property in Turkey

Cost itemAmount of taxes and fees
Property transfer tax4%
VAT1 to 18%
Stamp duty0.1 to 0.6%
State fee$45+

Real estate ownership tax is paid at a rate of 0.1 to 0.6%, depending on the property type and location. 

The increased rate is valid for properties in major cities such as Ankara, Istanbul, Trabzon, Bursa, and Izmir.

The annual property tax in Turkey

Property typeStandard tax rateIncreased tax rate in major cities
Residential real estate0.1%0.2%
Commercial real estate0.2%0.4%
Industrial real estate0.1%0.2%
Land plot0.3%0.6%

Tax on the sale of real estate. Individuals pay a tax on the sale of real estate if they have owned the property for less than five years. The tax is paid on the difference between the cadastral property value specified in the TAPU and the market value at the time of the transaction. The rate varies from 15 to 35%.

A legal entity pays a tax of 23% when selling a property in Turkey.

Tax rates on the sale of real estate in Turkey

Difference between the market and cadastral valuesTax rate for individualsTax rate for legal entities
Up to TRY 13,00015%23%
TRY 13,000 to TRY 30,00020%
TRY 30,000 to TRY 110,00027%
Over TRY 110,00035%
In September 2022, the value of 1 US dollar is 18 Turkish Liras (TRY). Check exchange rates for today

Tax on rental income. Individuals do not pay tax on income received from the rental of real estate if it does not exceed TRY 6,600 per year for residential properties and TRY 49,000 for commercial properties. In other cases, the tax is calculated on a progressive scale of 15 to 40%.

Legal entities pay the tax on income from real estate rental at a rate of 23%.

High-value residence tax applies to Turkish real estate worth over TRY 5,000,000 or about $275,070. The tax rates vary between 0.3 to 1%, depending on the value of the real estate.

Türkiye citizenship by real estate investment

Apartments and villas in a luxury project of an eminent hotel brand cost from $500,000. The project offers apartments with 1—3 bedrooms and villas with 3—5 bedrooms. The rental income is 3 to 5% per annum. The buyer of this property will pay a tax of 5.5% and a state fee, which totals $26,045

Türkiye citizenship by real estate investment

Apartments and villas in a luxury project of an eminent hotel brand cost from $500,000. The project offers apartments with 1—3 bedrooms and villas with 3—5 bedrooms. The rental income is 3 to 5% per annum. The buyer of this property will pay a tax of 5.5% and a state fee, which totals $26,045

Türkiye citizenship by real estate investment

Apartments and villas in a luxury project of an eminent hotel brand cost from $500,000. The project offers apartments with 1—3 bedrooms and villas with 3—5 bedrooms. The rental income is 3 to 5% per annum. The buyer of this property will pay a tax of 5.5% and a state fee, which totals $26,045

Türkiye citizenship by real estate investment

Apartments and villas in a luxury project of an eminent hotel brand cost from $500,000. The project offers apartments with 1—3 bedrooms and villas with 3—5 bedrooms. The rental income is 3 to 5% per annum. The buyer of this property will pay a tax of 5.5% and a state fee, which totals $26,045

Türkiye citizenship by real estate investment

Apartments and villas in a luxury project of an eminent hotel brand cost from $500,000. The project offers apartments with 1—3 bedrooms and villas with 3—5 bedrooms. The rental income is 3 to 5% per annum. The buyer of this property will pay a tax of 5.5% and a state fee, which totals $26,045

Türkiye citizenship by real estate investment

Apartments and villas in a luxury project of an eminent hotel brand cost from $500,000. The project offers apartments with 1—3 bedrooms and villas with 3—5 bedrooms. The rental income is 3 to 5% per annum. The buyer of this property will pay a tax of 5.5% and a state fee, which totals $26,045

How to file taxes in Turkey

Paying taxes in Turkey is a two-step process:

  1. Registering for the tax on the Turkish Revenue Administration website.
  2. Filing tax returns on time.

Registering on the website requires a tax number from a home country and all business details like the phone, email, and address.

Filing tax returns differs and depends on the tax type and payment deadlines. For example, for legal entities, the last payment date of the corporate income tax payment is the 30th day of the fourth month following the fiscal year-end. The Turkish tax year is a calendar year. 

Individuals. The income tax is withheld monthly from wages paid through the Turkish Payroll under the Pay As You Earn (PAYE) system.

The filing tax on any outstanding obligation following the above principles is payable in two equal instalments at the time of filing and within the fourth month. Non-residents leaving Turkey must pay full liability within 15 days before departure.

Taxpayers filing income tax returns for their commercial or professional income must pay an advance income tax. A so-called ‘temporary tax’ is calculated as 15% of their gross income at the end of each quarter during the calendar year.

This tax is submitted before the 17th day of the second month following the end of the respective quarter and must be paid before the 17th day of the submission. The tax paid in advance is credited against the amount of income tax calculated in the annual tax return for the same year.

Legal entities. A self-assessment system is used in Turkey.

Residents and non-residents with a permanent establishment in Turkey are required to register for all taxes in Turkey and file annual income tax returns.

The last date of submission of the CIT return is the 30th day of the fourth month following the fiscal year-end. This date will be 30 April if CIT returns are filed on a calendar-year basis.

The taxable income is declared quarterly as an advance tax on the 17th day of the second month following each quarter, and corresponding taxes are payable on the 17th day of the same period. The advance CIT paid is offset against the final CIT calculated in the annual CIT return.

The last payment date of CIT is the 30th day of the fourth month following the fiscal year-end.

Rates and due dates for filing taxes in Turkey

TaxesRatesSubmission deadlines
Corporate income tax (CIT)23%30th day of the fourth month following the fiscal year-end

The quarterly advance tax is due on the 17th day of the second month following each quarter
Personal income tax 15 to 40%Monthly

The advance income tax must be reported by the 17th day of the second month following the end of the related quarter and must be paid by the 17th day of the filing month

How not to pay taxes
in two countries

Turkey has valid double tax treaties (DTTs) with 85 countries. Individuals and companies can apply for a tax deduction and not pay taxes on the same income twice. 

The withholding tax is counted as a tax paid in the country of tax residence.

Countries with double tax treaties with Turkey

Albania Algeria Australia Austria Azerbaijan Bahrain
Bangladesh Belarus Belgium Bosnia and Herzegovina Brazil Bulgaria
Canada China Croatia Cyprus Czech Denmark
Egypt Estonia Ethiopia Finland France Gambia
Georgia Germany Great Britain Greece Hungary India
Indonesia Iran Ireland Israel Italy Ivory Coast
Japan Jordan Kazakhstan Kuwait Kyrgyzstan Latvia
Lebanon Lithuania Luxembourg Malaysia Malta Mexico
Moldova Mongolia Montenegro Morocco Netherlands New Zealand
North Macedonia Norway Oman Pakistan Philippines Poland
Portugal Qatar Romania Russia Rwanda Saudi Arabia
Singapore Slovakia South Africa Spain Sudan Sweden
Switzerland Syria Tajikistan Thailand The Republic of Korea Tunisia
Turkmenistan UAE Ukraine USA Uzbekistan Vietnam
Yemen          
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How to live in Turkey legally to become a country’s taxpayer

A regular tourist visa does not allow you to spend more than six months a year in Turkey. To live in the country, you need a residence permit, permanent residence or citizenship.

The Turkey citizenship by investment program allows investors to get Turkish passports in 6—8 months. Family members such as spouses and children can get second citizenship in Turkey along with the investor.

By investing $400,000+ in the country’s economy, cosmopolitans get Turkey citizenship. There are five investment options available:

  • real estate purchasing for $400,000;
  • business investment — from $500,000;
  • opening a bank deposit — from $500,000;
  • buying government bonds — from $500,000;
  • buying shares of investment funds — from $500,000.

The purchase of real estate is the most demanded option. Investors can return the money they invested into real estate three years after obtaining Turkish citizenship.

Real estate prices grow by 15 to 25% per year, and rental income reaches 15% per annum in Turkey. It means that an investor will receive additional profit by renting out the objects for three years and then when selling the property.

Frequently asked questions

Are taxes high in Turkey?

In Turkey, individuals pay an income tax of 0 to 35% and are entitled to deductions and allowances. The rate depends on the amount of annual income.

A business pays a tax on profit at a standard rate of 20%. But there are eighteen free economic zones with a special tax regime in Turkey. Companies working in these zones do not pay corporate tax, stamp duty, property taxes, or VAT on logistics services supplied to third countries.

The standard value-added tax (VAT) rate is 18%. But some deliveries and services have reduced VAT rates of 1 and 8%. For comparison, the average base VAT rate in the European Union is 23.1%.

Do foreigners pay taxes in Turkey?

Yes, if they get income in Turkey. Residents are taxed on their worldwide income, whereas non-residents are taxed on Turkish-source earnings only. 

Also, non-residents, just like residents, pay property taxes: when buying, owning and selling real estate in Turkey.

How to calculate the income tax on salary with an example?

The personal income tax is charged at progressive rates of 15 to 40%. The rate depends on the amount of annual income.

For example, the minimum rate will be set if the income for the year does not exceed TRY 32,000, which is about $1,760. In this case, a resident will pay the tax in the amount of TRY 4,800 or $264.

The maximum rate will be set if the income for the year exceeds TRY 880,000, which is about $49,000. The tax for this income will be TRY 352,000 or about $19,365.

What is the VAT rate in Turkey?

The standard value-added tax (VAT) rate is 18%. But for some deliveries and services, Turkey has reduced VAT rates of 1 and 8%.

The reduced VAT rates are valid for companies engaged in deliveries and services of basic foodstuff, agricultural products, health care, educational services, etc.

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Taxes in Turkey: a complete guide for individuals and companies