Corporate taxes in Turkey 2023

Before establishing companies in Turkey, you need to know the types and value of corporate taxes in Turkey and how to obtain corporate tax exemption in Turkey. Read at Gars Consulting Company.

Types of corporate taxes in Turkey

Taxes in Turkey vary according to many factors that we will detail in this article, and Turkey is an encouraging country to invest in the reasonableness of taxes compared to other countries. Taxes include various imports, profits and income from many sources, whether real-estate or non-real-estate sources, such as other property and commercial activities.

Expense taxes in turkey

Turkey's corporate expense taxes include several types, including value-added tax, consumer tax, bank transaction tax, and stamp taxes, the latter of which is also called stamp tax. We shall set aside the types of taxes under expense taxes in Turkey, and each of these taxes shall contain different special clauses and details.

VAT in Turkey

In Turkey, VAT is a basic tax, imposed on various goods, even imported from outside Turkey, and on various commercial, industrial and agricultural services. It also includes services of an autonomous literal nature, the amount of which is divided between three types, there is a VAT of 1%, there is an 8%, and there is an 18% tax. Depending on the type of goods and activities, for example, goods associated with nuts, seeds, vegetables and newspapers are taxed at 1%, Food and leather, for example, are 8%, and communication services are 18%.

Special consumption tax (SCT) in Turkey

This tax is a one-time tax, the proportion of which is always changed, by issuing detailed regulations every term. This is in four groups subject to a different tax consumption tax according to which each product belongs to one of the following groups:

• Petroleum and petroleum products, natural gas, lubricants, as well as various solvents and their derivatives.
• Various vehicles, from cars, motorcycles, planes, helicopters, and yachts.
• Tobacco products and alcohol.
• Recreational products.Bank transaction tax and insurance transactions

Bank transaction tax and insurance transactions are linked to banks, commercial banks and insurance companies . This tax is applied to the proceeds from loans and interest for commercial banks at the rate of 5%; the tax on bank deposit transactions and insurance transactions is 1%, and there is no currency exchange tax in Turkey.

Stamp Tax in Turkey

Stamp tax is a tax imposed on various transactions containing written documents or papers, such as contracts, incorporation documents, financial and accounting statements of payroll schedules. In addition to letters of credit, guarantees, etc., the value of the stamp tax or stamp tax is calculated at a fixed rate specified for certain documents, and at between 0.189% and 0.948% for others.

Wealth and property taxes in Turkey

In Turkey, this type of tax covers three types, and the tax ratio varies according to each of the following types:

Property taxes in Turkey

Property taxes in Turkey include various buildings and apartments in addition to loans held in Turkey for the real estate tax , the proportion of which is between 1.0% and 6.0%, while real estate taxes on the immovable cultural property are 10%.

Car taxes in Turkey

There are two criteria for determining the car tax ratio in Turkey. The first relates to cars registered before 2018 and the tax ratio is according to the age of the car and the size of the engine. The second criterion relates to cars registered after 2018. The ratio is according to the size of the engine and the value of the vehicle. If the vehicle registered after 2018 is between one and three years old and the engine is 0-1300, the value of the vehicle does not exceed 51,000 and 800 lire, its tax will be 1051 lire in 2021, and if the value of the vehicle is between the previous figure of 9000 and 800 Turkish lira, its tax will be 1155 lira. If the value of the vehicle is 90 thousand and more, it is taxed at 1261 lira.

Inheritance and donation taxes in Turkey

The tax tariff rates mentioned in article 16 of Act No. 7338 have been determined by increasing the rate of revaluation provided for in Act No. 7338. Accordingly, the inheritance and relocation taxes imposed are calculated according to the value of the property (taxed). In transfers through inheritance, or free transfer (donation, donation, prizes, etc.) As of 1/1/2021 as follows:

• If the value of the property amounts to 380,000 Turkish lira, the tax rate is 1% through inheritance, and the same amount is 10% if through donation or awards.
• If the value of the property amounts to 900,000 Turkish lira, the tax rate is 3% through inheritance, and the same amount is 15% if through, donation or awards.
• If the value of the property is 3.600.0000, the tax rate is 7% through inheritance, and the same amount is 25% if through donation, or award.
• If the value of the property is 6.780.0000, the tax rate is 10% through inheritance, and the same amount is 30% if through donation or awards.

What are the tax incentives?

The tax incentive system is made up of four different schemes, allowing for a level playing field between foreign and domestic investors. These schemes can be utilized through the General Investment Incentive System, the Strategic Investment Incentive System, the Regional Investment Incentive System and the Broad Investment Incentive System. The incentive system was designed to encourage investments; By reducing reliance on the import of vital goods for certain strategic sectors. This reduces current account deficits, increases investment support in less developed regions, upgrades the means of support, encourages cluster activities, and supports investments in technology transfer.

Exemption from customs duties

The Turkish Government has promoted investment through the investment incentive system and has therefore approved several provisions for the activation of investment incentive regulations, including duty-free tariffs. Machines and equipment imported for projects with that certificate are exempt to stimulate investment.

VAT exemption

Provisions approved by the Turkish Government for the activation of investment incentive regulations include VAT exemption; machines purchased from Turkey are exempt, and the exemption from VAT is not only linked to the incentive system rather, it includes goods and services exported from Turkey, oil exploration activities, port and airport services for ships and pilots, transit transport, etc.

Targets for tax incentives

The incentive system is designed to encourage investments; by reducing reliance on the import of vital goods for certain strategic sectors, to achieve several targets for fiscal incentives, including helping to support investments that transfer technology, promoting agglomeration, reducing current account deficits, upgrading support and increasing investment support in developing regions.

What investments are supported within the application of tax incentives?

There are several types of investments supported by the tax incentive system, including:

• Mining investments.
• Integrated investments in flat aluminum production.
• Tourism-related and cultural investments, both for tourism residencies in tourism and culture protection zones and for temperature-related tourism.
• Maritime and rail investments.
• Investments in engine and generator production for renewable energy generation and fans for wind power generation.
• Investments associated with the production of carbon fiber and composite materials made from carbon fiber.
• Investments associated with the production of technological industries.
• Investments related to the development of spare parts and the manufacture of products within the research and development project.
• Investments related to the automotive, aviation, defense and space industries.
• investments in liquefied natural gas (LNG) and underground gas storage.
• Investments in day-care centers and kindergartens.
• Investments in educational institutions.

Edited by Gars Consulting Company

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