Turkey, institutions among OECD member countries has one of the most competitive tax rates. Turkish corporate tax legislation is regulated by provisions that are understandable, objective and in accordance with international standards.
Taxes in Turkey
Turkish tax legislation can be grouped under three main headings:
Income taxes, personal income tax and corporate tax included in the Turkish tax legislation. Although personal income tax and corporate tax are defined by different laws, most of the rules and provisions that apply to individuals, especially in terms of income elements and the determination of net income, also apply to corporations.
Personal Income Tax
Revenues of natural persons are subject to personal income tax. Revenue is the net amount of earnings and earnings of a natural person during a calendar year. According to the Income Tax Law, the items considered as income are as follows:
- Business earnings
- Agricultural earnings
- Salaries and fees
- Self-employment earnings
- Real estate capital income (rental income)
- Income from securities (income from capital investments)
- Other earnings and revenues
Turkish tax legislation regulates the full or narrow liability obligation on the basis of residence in taxation. Full taxpayers (residence in Turkey and continuously for more than six months sitting in Turkey within a calendar year) of Turkey are taxed on all of the revenues, except for limited taxpayers (residence not available in Turkey and within a calendar year from those living permanently more than six months) are taxed only on profits and revenues earned in peo (Professional Employer Organization).
Personal income tax rates vary from 15% to 35%.
In case the income elements defined in the Income Tax Law are obtained by the corporations, the taxation is made through the legal personality of these corporations. The corporate tax payers defined in the Law are as follows:
- Capital companies
- Public economic institutions
- Economic enterprises of associations and foundations
- Business partnerships
Legal centers, business centers or institutions in Turkey, are considered fully responsible and should be taxed on the profits they obtain in Turkey and foreign countries. Legal centers or both, of the business centers also exist in Turkey, it is considered taxpayers and are taxed only on income earned in Turkey. While the legal center is the center specified in the articles of association or the laws of the taxable institutions, the business center is the center where the activities are actually collected and managed.
The corporate tax rate levied on business profits is 20% in Turkey. Corporate tax rate has been increased to 22% for 2018, 2019 and 2020; however, the Council of Ministers has the authority to reduce the mentioned rate of 22% up to 20%.
Fully taxpayers are generally subject to withholding tax at the rate of 15% when dividends are paid to shareholders; however, the dividends paid by the taxpayers to the taxpayers are not subject to withholding tax. Since the addition of profit to capital is not considered as profit distribution, such situations are not subject to withholding. Similarly, after deducting the corporate tax amount of the taxpayers, a 15% tax deduction is made on the amounts transferred to the head office. The withholding tax is applied to the remaining amount after deducting the corporate tax from the profit of the taxable branches.
Taxes on Expenses
Generally applied VAT rates are; % 1, 8% and 18%. Commercial, industrial, agricultural and independent professional goods and services; All deliveries of goods and services created by importing goods and services entering the country and other activities are subject to VAT.
Some of the VAT exemptions and exclusions are:
- Export of goods and services
- International roaming (roaming) in accordance with the agreement and provided that the implementation of the reciprocity in Turkey for customers outside Turkey roaming (roaming) services
- Subcontract services for customers in free zones
- Oil exploration activities
- Services provided for ships and aircraft at ports and airports
- Deliveries of machinery and equipment within the scope of investment incentive certificate
- Transit transportation
- Provided that the reciprocity requirement is applied, diplomatic representatives and consulates, international organizations in the status of tax exemption and their delivery and services
- Banking and insurance transactions subject to Banking and Insurance Transactions Tax
Special Consumption Tax (SCT)
There are four main product groups subject to SCT at various tax rates:
Petroleum products, natural gas, machine oils, solvents and solvent derivatives
Cars and other vehicles, motorcycles, planes, helicopters, yachts
Tobacco and tobacco products, alcoholic beverages
Luxury consumer goods
Apply on every delivery
Find your suitable Payroll in Turkey Solution
PEO Turkey (Professional Employer Organization), Umbrella Company in Turkey management or a combination of both. Choose from our range of solutions to support your employees throughout their employee life cycle and improve your bottom line.
Discover our HR solutions to automate and drive your HR processes, including time management, training, and performance reviews.
Whether your workforce is local or international, we can optimize the pay process by freeing you from time-consuming, low value-added tasks.
Time and activities
Facilitate the organization of working time and planning.
Payroll in Turkey Management : externalizing salary payment with Sthatam
For any company, the payment of wages is a delicate and critical task. With Sthatam, you have a complete outsourcing PEO Turkey (Professional Employer Organization) solution that allows you to reduce your fixed costs.
Our mission is to make payroll management easier. The solution we offer allows you to organize, secure and optimize your payroll process through an analysis of indicators related to regulation, quality, performance, HR aspect, information system and the organizational dimension of your payroll.
Why externalize pay management at Sthatam ?
Social legislation is constantly evolving and the calculation of wages is largely impacted by these incessant changes. In order to remain in conformity with the social legislation, a socio-legal watch is essential, but also expensive if it is carried out internally.
By entrusting your payroll and your social statements to Sthatam, you benefit from a triple advantage:
- Regulatory compliance and timeliness: Sthatam is committed to ensuring that wages are paid monthly on time. A hassle less on your list!
- Save time: Thanks to our technical experience and legal expertise, salaries are processed faster each month and your HR department can focus on other priority tasks.
- More cost flexibility: Significant positions, such as IT maintenance, can be saved with significant financial gain for your business.
Informations you need to know if you are looking for a PEO Turkey company (Professional Employer Organization)
- January 1, – New Year
- 23 April – National Sovereignty and Children’s Day
- May 1,- Labor and Solidarity Day
- 19 May – Commemoration of Atatürk, Youth and Sports Day
- Feast of Ramadan
- Eid al-Adha
- August 30, – Victory Day
- October 29,- Republic Day