As a citizen residing in Turkey or thinking of establishing a project in it, you will be subjected to some taxes in Turkey for foreigners, which are imposed by Turkish law on foreigners residing in Turkey, and residency here means staying in Turkey for more than 6 continuous months during the year inside Turkey. Learn with us about The types of taxes in Turkey for foreigners imposed on foreigners in Turkey in detail.
Types of TAXES IN TURKEY FOR FOREIGNERS:
Taxes in Turkey for foreigners which are imposed on foreigners are divided into three main types of taxes, and they are as follows:
- Income taxes.
- Taxes on expenses.
- Taxes on wealth.
First, taxes in Turkey on income:
They are divided into two types of taxes:
Individual income taxes, corporate income taxes
1. Individual income taxes:
It is a type of taxes in Turkey for foreigners imposed on people’s actual income and the income of the individual is determined that it includes all his earnings and revenues during the year, and these are examples of the profits and gains of the individual that are subjected to income tax:
Agricultural profits.
Salaries and wages.
Independent personal services income.
Income of immovable rights and property (rental income).
Movable property income (capital investment income).
Entry of other gains.
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- Income taxes are imposed on residents who spend more than 6 months in Turkey during the year on their earnings and income earned from inside and outside Turkey.
- As for non-resident individuals (who spend less than 6 months in Turkey), it is imposed on their earnings and income derived in Turkey only.
The income taxes in Turkey for foreigners rate for individuals varies in different income sections and with different types of income, whether it is employment income or non-employment income.
We find that:
| Employment income tax scale | Employment income scale | Non-employment tax scale | tax |
| 13.000 | 15% | 13.000 | 15% |
| 13,001 to 30,000 | 20% | 13,001 to 30,000 | 20% |
| 30,001 to 110,000 | 27% | 30,001 to 70,000 | 27% |
| 110,000 and more | 35% | 70,001 and more | 35% |
2. Corporate income taxes:
The income taxes in Turkey for foreigners rate imposed by Turkish law on corporate profits in Turkey is 20%.
- The following are taxes deducted from the source from payments to companies residing in Turkey:
Taxes on distributed profit 15%
Taxes on interest on cabinet permissions 5%
Bank deposits 10% -18%
Taxes on repurchase agreements 15%
- As for withholding taxes at source from payments of non-resident companies in Turkey:
Taxes on distributed profits 0%
Taxes on interest on cabinet permissions and bonds 5%
Taxes on bank deposits 10% -18%
Taxes on repurchase agreements 15%
The law has defined corporate tax payers as follows:
Capital companies.
Cooperative Organization.
Public economic establishments.
economic establishments owned by organizations and institutions
mutual projects.
If the legal and commercial status of the companies is not determined as resident or non-resident in Turkey, they will be considered as a non-resident companies and they will be subjected to taxes only on incomes earned in Turkey.
The legal status of the company: It is the place stipulated in the company’s incorporation contract
As for the company’s commercial center: it is the place where the focus is on commercial activities and their management.
Second: Taxes in Turkey on expense:
It is the second type of tax in Turkey on foreigners, and this type is divided into 4 types of taxes:
- Value added Taxes (VAT).
- Special Consumption Tax (SCT).
- Insurance and banking transactions taxes.
- Stamp drawing.
1. Value Added Tax (VAT):
Its price is set at 1%, 8%, and 18% and it is applied to goods, commercial services, industry, agriculture, goods and services imported to the country, as well as the process of delivering goods and services for other activities.
There are many exemptions applied to the value-added tax (VAT):
- Goods and services prepared for exportation.
- Roaming services provided in Turkey to non-resident customers in Turkey in accordance with international roaming agreements, which require reciprocity between Turkey and other countries.
- Manufacturing services for others, which are services provided to customers in the free zones.
- Oil exploration activities.
- Services provided at ports and airports for ships and aircraft.
- Supplying machinery and equipment in accordance with the investment incentives document.
- Transit transport (transit freight).
- Operations of delivering goods and services to diplomatic representatives and consulates on condition of reciprocity between the two countries.
- Banking insurance transactions that are subjected to taxes of insurance transactions and taxes transactions.
2. Special Consumption Tax (SCT):
There are 4 main groups of products subjected to special consumption taxes in turkey for foreigners.
- Petroleum products, natural gas, lubricating oil, solvents, and solvent derivatives.
- Cars, motorcycles, airplanes, helicopters, yachts, and other vehicles.
- Tobacco and its products and alcoholic drinks.
- Leisure products.
Special consumption taxes in turkey for foreigners are applied once.
3. Taxes of insurance and banking transactions:
This tax applies to some transactions that are exempt from VAT, such as:
- Income earned from banks, especially interest on loans, 5%
- Deposit transactions in banks 1%
- Sales from foreign exchange transactions are tax-exempt.
4. Stamp:
It is the last type of taxes in turkey for foreigners which is applied on expenditures and this type of tax is imposed on a large group of documents such as:
- Contracts, payment papers, capital contributions, accreditation letters, letters of guarantee, financial statements, and payroll.
The stamp duty tax rate is a percentage of the value of the document itself, and its percentage ranges between 0,189% – 0.948%, and there are some documents on which fixed-rate taxes are applied.
Third: Taxes in Turkey on wealth:
There are 3 types of taxes on wealth:
- Inheritance and gifts taxes: their percentage from 1-30%.
- Property taxes or real estate taxes: If you are a foreign person residing in Turkey and you have buildings, apartments or lands owned in Turkey, you will be subjected to real estate taxes ranging from 0.06% – 0.1%,
In addition to the preservation fee of cultural real estate, which is 10% of the real estate tax value,
The fee for the title deed extraction fee has been reduced recently from 4% to 3% according to the 2018 tax amendments.
Vehicle taxes: It is a tax imposed on cars and other vehicles, and it has fixed amounts that vary annually depending on the age of the car and its engine capacity. As for cars used for commercial purposes, the taxes imposed on them have been reduced (tax amendments 2018) from 18% to 1%, As for cars less than “1300CC”, their price will be reduced by 15 points.
And to encourage investments, tax incentives have been applied on investment:
It was implemented on January 1, 2012 and it includes four different plans and it does not differentiate between local and foreign investors and it is applied on:
Priority development areas.
Areas of technological development.
Organized industrial zones.
Free Zones.
research and development.
Private educational institutions.
Cultural projects and investments.
Loan allocation.
Turkish international maritime sector incentives.
