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Turkey has one of the most competitive corporate tax rates in the OECD region. The Turkish corporate tax legislation has noticeably clear, objective and harmonized provisions which are in line with international standards.

The Turkish tax legislation can be classified under three main headings:

1.1. Income Taxes

The Turkish tax legislation includes two main income taxes, namely individual income tax and corporate income tax. Although individual income tax and corporate income tax are governed by different laws, many rules and provisions pursuant to individual income tax also apply to corporations, particularly in terms of income elements and the determination of net income.

1.1.1. Individual Income Tax

Real persons’ income is subject to individual income tax. Income is defined as the net amount of all earnings and revenues derived by an individual within a single calendar year. As per the Income Tax Law, income may consist of the elements listed below:

  • Business profits
  • Agricultural profits
  • Salaries and wages
  • Income from independent personal services
  • Income from immovable property and rights (rental income)
  • Income from movable property (income from capital investment)
  • Other income and earnings

According to the Turkish tax legislation, there are two main types of tax statuses regulated on the basis of residence: resident taxpayers and non-resident taxpayers. Resident taxpayers (those who reside in Turkey, and those who spend more than a continuous period of six months in Turkey within a calendar year) are taxed on their earnings and incomes derived in and outside Turkey, whereas non-residents (those who do not reside in Turkey and those who do not spend more than a continuous period of six months in Turkey within a calendar year) are taxed only on their earnings and incomes derived in Turkey.

Individual income tax rate varies from 15% to 35%.

Individual income tax rates applicable for 2017 are as follows:

Income Scales (TRY)

(Employment Income)

Rate (%) Income Scales (TRY)

(Non-Employment Income)

Rate (%)
Up to 13,000 15 Up to 13,000 15
13,001-30,000 20 13,001-30,000 20
30,001-110,000 27 30,001-70,000 27
110,001 and over 35 70,001 and over 35

1.1.2. Corporate Income Taxes

In case income elements specified in the Income Tax Law are derived by corporations, taxation is applicable on the legal entities of these corporations. Corporate taxpayers defined in the law are as follows:

  • Capital companies
  • Cooperatives
  • Public economic enterprises
  • Economic enterprises owned by associations and foundations
  • Joint ventures

Corporations with legal or business centers located in Turkey are qualified as residents and are subject to tax on their income derived in Turkey and other countries. If both the legal and business centers are not located in Turkey, then these corporations are qualified as non-residents and subject to tax only on their income derived in Turkey. The legal center is the place stipulated in the Articles of Association or the incorporation law of corporations that are subject to tax, while the business center is defined as the place where business activities are concentrated and managed.

In Turkey, the corporate income tax rate levied on business profits is 20%.

Resident corporations are subject to a 15% withholding tax when dividends are paid out to shareholders. However, dividends paid by resident corporations to resident corporations are not subject to withholding tax. As a share capital increase by the corporation using the retained earnings is not considered to be a dividend distribution, no withholding tax applies to dividends. Similarly, non-resident corporations are subject to a 15% withholding tax during remittance of such profits to the headquarters. Withholding tax is applied on the amount after the deduction of corporate income tax from taxable branch profits.

1.2. Taxes on Expenditure

1.2.1. Value Added Tax (VAT)

The generally applied VAT rate is set at 1%, 8%, and 18%. Commercial, industrial, agricultural, and independent professional goods and services, goods and services imported into the country, and deliveries of goods and services as a result of other activities are all subject to VAT.

VAT exemptions include, but are not limited to, the following:

  • Exports of goods and services
  • Roaming services rendered in Turkey for customers outside Turkey (i.e. non-resident customers) in line with international roaming agreements, where a reciprocity condition is in place
  • Contract manufacturing for clients operating in free zones
  • Petroleum exploration activities
  • Services rendered at harbors and airports for vessels and aircrafts
  • Supply of machinery and equipment within the scope of an investment certificate
  • Transit transportation
  • Deliveries and services made to diplomatic representatives and consulates on condition of reciprocity, international organizations with tax exemption status and to their employees
  • Banking and insurance transactions which are subject to Banking and Insurance Transactions Tax

1.2.2. Special Consumption Tax (SCT) 

There are four main product groups that are subject to SCT at different tax rates:

  • Petroleum products, natural gas, lubricating oil, solvents, and derivatives of solvents
  • Automobiles and other vehicles, motorcycles, planes, helicopters, yachts
  • Tobacco and tobacco products, alcoholic beverages
  • Luxury products

Unlike VAT, which is applied on each delivery, SCT is charged only once.

1.2.3. Banking and Insurance Transaction Tax 

Banking and insurance company transactions remain exempt from VAT but are subject to a Banking and Insurance Transaction Tax. This tax applies to income earned by banks, such as loan interest. Although the general rate is 5%, some transactions, such as interest on deposit transactions between banks, are taxed at 1%. No tax is levied on sales from foreign exchange transactions since 2008.


1.2.4. Stamp Duty

Stamp duty applies to a wide range of documents, including contracts, notes payable, capital contributions, letters of credit, letters of guarantee, financial statements, and payrolls. Stamp duty is levied as a percentage of the value of the document at rates ranging from 0.189% to 0.948% and is collected as a fixed price (a pre-determined price) for some documents.

1.3. Taxes on Wealth

There are three kinds of taxes on wealth: 

  • Property taxes
  • Motor vehicle tax
  • Inheritance and gift tax

Buildings, apartments and land owned in Turkey are subject to real estate tax ranging at a rate between 0.1% and 0.6%, while Contribution to the Conservation of Immovable Cultural Property is levied at a rate of 10% of this real estate tax. Motor vehicle taxes are collected on the basis of fixed amounts that vary according to the age and engine capacity of the vehicles every year. Meanwhile, inheritance and gift taxes are levied at a rate of 1% to 30%. 


Effective as of January 1, 2012, the investment incentives system comprises four different schemes. Local and foreign investors have equal access to:

  • General Investment Incentives Scheme
  • Regional Investment Incentives Scheme
  • Large-Scale Investment Incentives Scheme
  • Strategic Investment Incentives Scheme