A Guide from CPA in Istanbul Accounting and Law Office
1) What does tax liability in Turkey cover?
In Turkey, tax liability is determined within the framework of the Income Tax Law and the Tax Procedure Law. Generally, real and legal persons can be taxpayers. The tax liability of foreigners varies according to their residence status and income sources.There are two different tax statuses in Turkey: full tax liability and limited tax liability. While full taxpayers are responsible for all income earned both inside and outside of Turkey, limited taxpayers are only taxed on their Turkey-sourced income.
For foreigners living in Turkey, tax liability varies depending on factors such as duration of residence and source of income.
Full Tax Liability: A foreign individual who resides in Turkey for 183 days or more within a calendar year is considered a full taxpayer and is taxed on income earned worldwide.
Limited Tax Liability: Foreigners, although not resident in Turkey, are subject to tax on income earned here.
Incomes subject to limited tax liability:
Wages earned in Turkey,
Rental income,
Income from movable capital,
Income of companies engaged in commercial activities in Turkey.
3) Tax Rates and Practices for Foreigners in Turkey
Tax rates for foreigners vary according to the type of income.
Income Tax: A rate ranging between 15% and 40% is applied.
Corporate Tax: The rate is 25% and is applicable to foreign companies subject to limited tax liability.
VAT (Value Added Tax): The general rate is 20%, but for some services, a rate of 1% or 10% may be applied.
Stamp Tax: It is charged on contracts, documents, and commercial transactions.
In tax practices, double taxation avoidance agreements should also be considered.
4) Double Taxation and Tax Agreements
To protect foreign investors and individuals from double taxation, Turkey has entered into double taxation avoidance agreements with more than 80 countries. These agreements ensure that foreigners are not taxed separately both in Turkey and in their home countries.
5) Taxation of Foreign Companies in Turkey
Foreign companies engaged in commercial activities in Turkey are taxed on a limited tax liability basis. These companies have additional liabilities such as corporate tax at a rate of 25%, value added tax (VAT), and withholding tax.
6) Tax Declaration and Payment Processes for Foreigners
Foreign individuals and companies must file a tax declaration when they earn income. Declarations are submitted to the Revenue Administration, and taxes must be paid on the specified dates.
7) Tax Exemptions and Incentives
Turkey offers tax exemptions and incentives to foreign investors. Within this scope, there are applications such as:
Investment Incentive Certificates,
Tax Advantages in Free Zones,
VAT exemption on real estate purchases.
For more detailed information about tax liabilities in Turkey and to get legal support, we provide professional assistance through CPA in Istanbul Accounting and Law office.
Please send an email to info@cpainistanbul.com we get back to you within 2 business days to navigate you in Turkish market.
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CPA in Istanbul – Professional Accounting and Legal Services in Istanbul info@cpainistanbul.com