The main tax a foreign company has to pay for its activities in Turkey is the corporate tax that is calculated on the income obtained in this country, according to the Corporate Tax Law. The foreign companies that have their headquarter in Turkey or that are managed from Turkey are required to pay the corporate tax on their total income obtained all over the world, at the rate decided by the Turkish authorities – 20%. For companies that have the headquarters abroad and that are managed also from abroad, the corporate tax is owed only for the income obtained in Turkey.
When a foreign company wants to calculate its net taxable income, it is important to know there are some deductions from the gross income, such as expenses related to different activities (issuing shares and stocks, mergers, liquidations, meetings of the general board etc.) etc.
If the foreign company has research and development activities, it can benefit from a 40% deduction applied on the expenses with these activities.
Another benefit is the corporate tax return and the application for it must be filed until April 25th or on the same day of the fourth month after the end of the fiscal year.
A more attractive tax rate for foreign investors
The rate of the corporate tax decreased in the last years from 30% to 20% and this made Turkey an attractive destination for foreign investors. The foreign citizens from certain countries, with which Turkey has signed double tax treaties, have other important advantages because they benefit from the double tax avoidance.
Turkey has signed over 60 double tax treaties with: Albania, Algeria, Austria, Azerbaijan, Belarus, Bangladesh, Belgium, Bulgaria, Czech Republic, Croatia, China, Denmark, Egypt, Estonia, Finland, France, Germany, Greece, Hungary, India, Indonesia, Israel, Italy, Japan, Jordan, Kazakhstan, Kyrgyzstan, Kuwait, Latvia, Lithuania, Luxemburg, Macedonia, Malaysia, Moldova, Mongolia, the Netherlands, Norway, Pakistan, Poland, Romania, Russia, Saudi Arabia, Singapore, Slovakia, Slovenia, South Korea, Spain, Sudan, Sweden, Syria, Cyprus, Tajikistan, Thailand, Tunisia, Turkmenistan, Ukraine, United Arab Emirates, UK, USA and Uzbekistan.
For further information about the taxes for foreign companies with activities in Turkey you may contact our lawyers in Turkey. Our Turkish attorneys also provide company formation services for businessmen interested in opening a company in Turkey.