Turkey is an attractive destination for foreign investors who are interested in opening companies in countries with low corporate taxes. These taxes in Turkey are regulated by Corporate Tax Law No. 5520 since 2006. The rates from present days are among the most competitive in the region of OECD (Organization for Economic Cooperation and Development). The mission of this organization is to promote policies for economic and social well-being for people, as it states in its statute.
The corporate tax legislation from Turkey is harmonized with the international standards, which is very important for foreign entrepreneurs who want to invest in this country. The development of industry and services in the recent years attracted many foreign investors, so as the authorities who offered important incentives for doing business in Turkey.
The tax regime is a very important issue for foreign entrepreneurs. One of the most important taxes for businessmen is corporate income tax which is 20% calculated on business profit.
Other types of taxes for entrepreneurs are 15% on dividends and 0% interest for treasury-bill, treasury bonds and other types of bonds and bills.
For personal incomes, the taxes start from 15% (up to 10,700 TRY) to 35% (for 60,001 TRY and over).
Exemptions for VAT
The lowest VAT rate is 1% and the highest reaches to 18%. The transactions made by banks and insurance companies are exempt from VAT. In these cases, it is mandatory to pay a banking and insurance transaction tax calculated on the income. The rate is 5% generally, but for foreign exchange transactions there are no taxes.
Other exemptions from VAT are for certain transaction and activities, such as: exports, petroleum exploration, international transportation, research and development allowances etc.
The special consumption tax is to be paid for different types of goods and services, such as: petroleum, gas, automobiles and other vehicles, tobacco, alcohol and luxury products.
The investors have to pay also the stamp duty for some of the documents they need for their companies, such as: contracts, letters of credit, payrolls etc. The rate for stamp duty is between 0.189% and 0.948% and is calculated related to the value of the acts (in certain situations) and as a fix amount (for others).
If you need more information about the taxes in Turkey and how to obtain a legal minimization of the amount you have to pay, you may contact our Turkish lawyers.