The rate for dividend tax in Turkey is 15% for residents and non-residents (natural persons and legal entities) that receive dividends from companies incorporated in Turkey. The legal entities can be limited or full taxpayers according to the part of the income subject to taxation in Turkey. The limited ones will pay taxes, including dividend tax, for their income obtained in Turkey, while the full taxpayers are subject to taxation for their income gained all over the world.
Companies that have their main/registered office in Turkey are considered full taxpayers and this rule applies also for Turkish subsidiaries of foreign companies and the branches are limited taxpayers. The foreign companies that have economic activities in Turkey are limited taxpayers and they have to pay taxes on their income
(dividends) obtained in Turkey.
Special taxation situations
For dividends obtained in Turkey by foreign companies there are some particular situations in which other rules are applied. A company based in the Netherlands that receives dividends from a Turkish company has to pay a tax of 10% in Turkey, if it doesn’t pay the corporate income tax in the country where it is registered.
The same rate for the dividend tax is applied for the dividends received by Belgian companies in the same conditions.
As a general condition, the dividend tax is 15% for foreign companies, if there is no other mention regarding the rate in a tax treaty signed by Turkey and the other country.
The transfer of dividends
The foreign companies are allowed to repatriate their profits and some limitations exist only for the companies monitored by entities such as Capital Market Board or the Banking Regulatory and Supervisory Board that approve the transfer of the dividends. The dividends can be transferred from Turkey to other countries according to the Foreign Direct Investment Law and the new Turkish Commercial Code.
Foreign companies pay a dividend tax lower than 15% if there are double taxation treaties already signed between their country of residence and Turkey. Until now, Turkey has signed over 70 double tax treaties. The dividend tax must be paid before the profits are repatriated.
If you need more information about the dividend tax and the other legal obligations for your company in Turkey, you may contact our lawyers in Turkey.