Republic of Türkiye
Ministry of Finance
Istanbul Tax Office
Directorate of Income Laws – Income and Corporate Taxes Group
Date: March 24, 2022
Number: E-62030549-120[89-2021/728]-325092
Subject: Taxation of income earned from graphic design services provided abroad
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Upon examining your exemption request form, it is understood that you provide services to a company engaged in graphic design, content sales, and illustration work via websites, that individuals and institutions located abroad benefit from the services you provide, and that payments are received in foreign currency to your account. You requested clarification on whether the income obtained from your design service activities can be deducted from the income tax base under Article 89, paragraph 1, item 13 of the Income Tax Law, and our Directorate’s opinion on this matter is outlined below.
Article 89 of the Income Tax Law, titled “Other Deductions,” lists the deductions that income tax payers can claim from the income they declare in their annual tax return. Paragraph 13, which was added to this article by Law No. 6322 and entered into force on June 15, 2012, states:
“Income earned from services provided in Turkey to individuals not residing in Turkey, or to institutions whose workplace, legal, and business centers are abroad, exclusively utilized abroad in the fields of architecture, engineering, design, software, medical reporting, bookkeeping, call centers, product testing, certification, data storage, data processing, data analysis, and in areas of professional training determined by the Ministry of Finance with the approval of the relevant ministries, is subject to a 50% deduction of the income earned exclusively from these activities. For this deduction to be applicable, an invoice or similar document must be issued in the name of the customer located abroad.”
Additionally, explanations related to this matter are included in the General Communiqué on Corporate Tax No. 1:
- In the section titled “10.5.2.1. Main activities of companies that can benefit from the deduction,” it states that the main activities written in the articles of association of the relevant companies should include architecture, engineering, design, software, medical reporting, bookkeeping, call center, product testing, certification, data storage, data processing, data analysis, professional training, and education and health services.
- In the section titled “10.5.2.2. Services must be performed for persons and/or institutions residing exclusively abroad from Turkey,” it indicates that architecture, engineering, design, software, medical reporting, bookkeeping, call center, and data storage services must be provided to individuals not residing in Turkey or institutions with workplaces, legal, and business centers located abroad, and that these services must be actually provided, and assistance, consultancy, and brokerage services provided in these areas cannot be evaluated within this context.
- In the section titled “10.5.2.3. Invoices must be issued in the name of persons and/or institutions residing abroad,” it states that invoices related to the services performed must be issued in the name of individuals and/or institutions residing abroad.
- In the section titled “10.5.2.4. Services provided from Turkey in the fields of architecture, engineering, design, software, medical reporting, bookkeeping, call centers, and data storage must be utilized abroad,” it specifies that the services must have been utilized abroad, and that the services provided for persons and/or institutions residing abroad must not relate to their activities in Turkey.
According to the provisions and explanations above, upon examining your exemption request form and system records; it is understood that your area of activity is “Activities of Specialized Graphic Designers (Including Brand and Trademark Design)” and that, based on a similar code job commencement inspection dated May 18, 2021 (No. 1660827853), you declared your activity to be graphic design activities. Since these activities fall within the activities listed in Article 89, paragraph 1, item 13 of the Income Tax Law, it is possible for you to deduct 50% of the income you earned from these activities when determining your income tax base in your annual income tax return.
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(Note: The 50% deduction has been increased to 80% effective January 1, 2023.)
Source: Revenue Administration
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