​​​​​​​​​​​​​Turkey has one of the most competitive corporate tax rates among OECD member countries. The Turkish corporate tax legislation has noticeably clear, objective, and harmonized provisions that are in line with international standards. The Turkish tax legislation may be classified under three main headings:

1. Income Taxes 

The Turkish tax legislation includes two main income taxes, namely personal income tax and corporate income tax.

1.1. Personal Income Tax

Real persons’ income is subject to personal income tax. Income is defined as the net amount of all earnings and revenues derived by an individual within a single calendar year. An individual’s income may consist of one or more income elements listed as follows:  ​

​​

Individual income tax rates vary from 15% to 35%. Individual income tax rates applicable for 2019 are as follows:

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:

In Turkey, the corporate income tax rate levied on business profits is 20%. The rate for corporate income tax has been increased to 22% for the tax periods 2018, 2019, and 2020; however, the Council of Ministers is authorized to reduce the 22% rate to a rate as low as 20%.

2. Taxes on Expenditure 

2.1. Value Added Tax (VAT)

The generally applied VAT rates are 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.

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 to each delivery, SCT is charged only once.

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 has been levied on sales from foreign exchange transactions since 2008.

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% or is collected as a fixed price (a pre-determined price) for some documents.

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 each year. Meanwhile, inheritance and gift taxes are levied at a rate of 1% to 30%.​

Source: Republic of Turkey Investment Office (link: https://www.invest.gov.tr/en/investmentguide/pages/tax-guide.aspx)
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

I will establish a foreign-capitalized company.
How does the taxation procedure work for Multiple Network Marketing system (the sales model of companies such as avon, amway, herbalife)?

There isn’t any difference in the taxation of the company you mentioned.
There isn’t any application as a taxation model. Full taxpayer companies that are established in Turkey are subject to taxation in accordance with Corporate Law and VAT Law.

Source: İSMMMO
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

It is possible to categorize the Turkish taxation system as follows;

I-    Income taxes

• Individual Income Tax
• Corporate Income Tax

II-   Taxes on Expenditure

• Value Added Tax
• Special Consumption Tax
• Banking and Insurance Transaction Tax

III-  Taxes on Wealth

• Property Tax
• Inheritance and Gift Tax
• Motor Vehicles Tax

Source: İSMMMO
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

Article 6 of the Agreements mainly deals with income from leasing of immovable properties and related rights, and provides that the State where the immovable property is situated has the right of taxation. Accordingly, taxation of the rental income from the immovable property situated in Turkey of individuals resident in the other State will be in accordance with the procedure and principles of domestic legislation of Turkey and in these Double Taxation Agreements there is not any provision limiting the domestic legislation.

For example, Taxpayer (D) who is living in Germany will be taxed in accordance with the domestic legislation of Turkey in case he rents his property in Bodrum.

Turkey has a limited right of taxation from the rental income of nonresident taxpayers obtained by leasing royalties defined in Article 12 of Double Taxation Agreements.

Rate of withholding to be made on the mentioned income may vary from state to state in the Agreements. If the rate specified in Article 12 of the Agreement and the rate defined in our domestic legislation differs, the calculation should be made according to the lower rate.

For example, Taxpayer (E) who is a musician and living in Netherlands had given the copyright of her music album to a music production company in Turkey. The payments of copyright fees that would be done to Mrs. (D) by the music production company are subject to 10% withholding tax according to the Article 12 of Double Taxation Agreement between Turkey and Netherlands.

As the example above, the payments that would be done by the comic paper to Taxpayer (F) who is a caricaturist and living in Netherlands, are subject to 10% withholding tax according to the Article 12 of Double Taxation Agreement between Turkey and Netherlands, in case he gives the usage right of the cartoons he drew to the comic paper in Turkey.

However, in order to be taxed in line with Article 12 of Double Taxation Agreement, residents (full taxpayers) of other country who derive income or profit from Turkey, should submit certificate of residence received from competent authorities of their own resident country along with the translated copy of it into Turkish language which will be approved by a notary public or Turkish Consulates in that country, to the related tax office or the tax withholders in case withholding tax is required. The tax withholders are required to keep the certificates of residence to submit to the competent authorities on demand. In case of failure of submitting the certificate of residence, domestic laws shall be applied instead of the Articles of the Agreement.

The taxes that would be paid by Turkish citizens, who are living in foreign countries related with the incomes they earned in Turkey, would be deducted or exempted at the countries they are living in accordance with the Double Taxation Agreement with that country.

Source: gib.gov.tr
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

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1- If a taxpayer, who takes advantage of an educational institution and a rehabilitation center’s income exception, opens a new school or a center in addition to operated school or centers; the earning, which is received from the new school or the center, will be evaluated as a new unity in terms of exception procedure.

2- If a taxpayer, who takes advantage of an educational institution exception, transfers those institutions to another institution; he/she will not take advantage of the exception for five accounting periods, but he/she will take advantage of it for the untapped period.

Source: Corporation Tax Law

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

Thus, Eurobonds should be declared in the event that they exceed the declaration limit of interest income. In 2016, declaration limit of interest income is 30.000-TL.

Eurobond’s date of issue have no importance in this practice. Eurobonds are floated in foreign currency; as a result of that, discount rate is out of question. Provisional article 59 was terminated in 31.12.2007; that is why, this exception is not applied to earnings received after that date.

Source: Revenue Law

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

2- WHAT IS THE PROCEDURE OF TAXATION OF RETURN ON SALES OF IMMOVABLE PROPERTIES,  IF A COMPANY HASN’T GOT ANY OFFICES IN TURKEY?
If an overseas company (limited taxpayer) hasn’t got any offices or permanent representatives in Turkey in accordance with Tax Procedure Law, the profits made from the sales of immovable properties within 5 years from the date of acquisition should be taxed within the scope of other income and earnings.

3- IF AN OVERSEAS COMPANY MAKES PROFIT THAT IS SUBJECT TO TAX FROM IMMOVABLE PROPERTIES, WHERE AND HOW SHOULD IT MAKE THE EARNING NOTICE?  
If an overseas company (limited taxpayer) makes profit that is subject to tax from immovable properties, the person, who represents the company in Turkey, should make the notice in a tax office stated in article 101 of the Tax Procedure Law within 15 days from the date of acquisition.

*** The exception concerning to the earnings within the scope of article 80 of Income Tax Law shouldn’t be applied to above-mentioned incomes of companies that are limited taxpayers.

Source: Corporate Tax Law

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

In Turkish taxation system; rights, burdens, ways of implementing mandates and carrying out duties along with principals of accrual are regulated by the Tax Procedure (TP) Law.

This Law comprises procedural and formal provisions of all tax laws.
Taxes, duties and charges, and the ones that belong to provincial private administrations and municipalities are within the scope of the Law. However, taxes, duties and charges collected
by customs administrations are not subject to the TP Law.

The TP Law consists of 5 main sections.

1.Taxation (Articles 4-152)
This section comprises provisions about main issues such as; taxpayer, the person responsible for the tax, legal representative, time limits, types of assessment, notifications, payment, errors and the ways of correction, tax inspections.
The taxpayer is the real person or the legal entity liable for the debt in accordance with tax laws. The person responsible for the tax is the person who is responsible towards the taxation office, as regards the payment of the tax.
Legal capacity shall not be required for being a taxpayer or responsible for the payment of the tax.
The prohibition by law of the act having generated the tax does not suppress liability or responsibility with regard to taxation.
Persons who are obliged to withhold tax payments shall be responsible for the deduction and the payment of the totality of the tax and for the performance of other duties incumbent on them.

2.Taxpayer Duties (Articles 153-257)
This section comprises provisions for taxpayer duties, declarations, books and records, also the documents to be issued.

3.Valuation (Articles 258-330)
This section comprises provisions regulating how tax payer should validate his/her economic assets and wealth, also provisions for depreciation.

4.Penalty Provisions (Articles 331-376)
This section comprises provisions for penalties to be imposed on the taxpayers violating tax laws, payment and abolishment of penalties, also the provisions regulating conciliation process.
Usage Note: This document includes unofficial translation and explanatory notes regarding Turkish tax laws. This note shall not
have legal bindingness. It shall not be used as an official document in any official and private corporations and institutions and
national and international courts. It shall not be quoted for official documents. Our administration cannot be held responsible for
any legal results that may occur with the use of this note. The Turkish version of the laws are binding for official and private
operations, quotes and legal processes.

Tax loss means that the tax cannot be assessed in time or is assessed short of its actual amount owing to the taxpayer not fulfilling the duties incumbent upon him in due time in connection with taxation or fulfilling same in an incomplete manner. Tax penalty is imposed if tax loss
occurs.

Source: The Republıc Of Turkey Mınıstry Of Fınance Revenue Administration
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

IN THE TURKISH TRADE LAW, SHARE CERTIFICATE PRESENTMENT AND CERTIFICATE PRESENTMENT ARE DESCRIBED AS FOLLOW.

ARTICLE 486- Shares presented before registration of capital increase are invalid, however, obligations subscription of share capital are valid. If there are bearer securities, board of management will distribute the share to the owners within three months.

Certificate can be published until the share certificate attained. The provisions regarding share certificates are executed to the certificates too. If the ones who have little shares in the company request, written share certificate can be attained and disturbed.  The one, who attained share certificate before registration, will be responsible for the damage resulted from this action.

2-Taxation on share certificate or certificate: 

If stock certificate registered, the stock certificates having had more than 2 years will not be liable to tax, in the case of having those disposed. (Tax Law number 232)Consequently, stock certificate disposal will be considered as other certificates.

Incomes attained by Istanbul stock exchange cannot be included in the annual income tax declaration and income tax stoppage.

3- Taxation when share certificate or certificate does not exist:

To Whoever and whenever Corporation Company co-founder sells his shares, the gain resulted from this operation will be liable to tax. (Income Tax, Article number 80/4)

In the calculation of share gaining, share cost will be liable to indexing; exception will not be included in share gaining.

(Indexing system and calculation exist in taxation parts.)

4-  Temporary Certificate for Stock Companies

Since % 90 of the Stock Companies in Turkey are the family companies, according to the provisions of Turkish Trade Law, they operate without having  share certificates or other certificates, however, according to the income tax law,  the acquirement from selling shares will be liable to tax.

5- Is temporary certificate substitute for stock certificate?

In corporate companies, temporary certificate; whether it is written to bearer or to the actual person, is substituted for stock certificate.

Since Temporary certificates are substituted for stock certificates, they include   right to share owning. However, eve though they are temporary, their validity is not temporary.

5- How are temporary certificates implemented?

Since Temporary certificates will be exchanged and substituted for stock certificates, they have to be implemented just like stock certificates in terms of form and scope. In which method, stock certificates will be implemented is defined in Turkish Trade Law. Because of the fact that certificates are exchanged for stock certificates, the date of gaining those certificates is the date of certificate gaining.

6- Is it mandatory to get permission in order to get temporary certificate.

It is not mandatory to get permission in order to get temporary certificate. It is possible for temporary certificates to be prepared on computers and duplicated.

7- Is income tax paid, in the case of selling temporary certificates?

In the case that temporary certificates are disposed, and in the case that temporary certificates are liable to tax, related provisions are executed.

After these specific days past, if these are disposed after two years, they will not liable to tax no matter how much is it.

According to the Income Tax Declaration serial number 232 of Ministry of Finance, in the taxation of temporary gains; the provisions of stock certificates will be executed, according to income tax law.

8- Which information has to be in temporary certificates?

Temporary Certificate

…Corporate

…ISTANBUL

Trade Register Number

Date of issuance

Serial Number

İtem Number
Total Rated Capital

Total Share Number

Value of Common Stock

Partner’s
Name Surname:
ID Number:
Residence Address
Number of Shares

Source: ISMMMO

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.