Introduction
With the rapid growth of global economic activities, it has become increasingly common for individuals and corporations to face taxation on the same income in more than one jurisdiction. This phenomenon—known as double taxation—creates significant challenges for both foreign investors and multinational enterprises.
Turkey addresses this issue through an extensive network of Double Taxation Avoidance Agreements (DTAAs) and well-established local regulations, offering a robust and predictable framework for cross-border taxation.
What is Double Tax Relief?
Double tax relief refers to the legal mechanisms designed to prevent taxpayers from being taxed twice on the same income in two different countries. Under this system:
- Taxes already paid in the source country can be credited against, or exempted from, tax liabilities in the resident country.
- For both domestic and foreign investors, this mechanism plays a decisive role in shaping international investment strategies.
Double Taxation Agreements in Turkey
As of 2025, Turkey has signed and implemented DTAAs with more than 80 countries. These agreements:
- Apply to both income tax and corporate income taxpayers.
- Cover various categories of income, including dividends, interest, royalties, business profits, and independent personal services.
- Provide certainty for investors, ensuring they are not subject to double taxation in Turkey or in treaty-partner jurisdictions.
For example, income earned abroad by a Turkish-resident company may either be exempt from taxation in Turkey or, alternatively, foreign taxes paid can be credited against Turkish tax liabilities.
Application of Double Tax Relief in Turkey
Turkey employs two primary methods to eliminate or mitigate double taxation:
- Tax Credit Method
- Taxes paid abroad are credited against the Turkish tax due on the same income.
- The credit is limited to the amount of Turkish tax payable for that specific income.
- Exemption Method
- Certain types of income are fully exempt from Turkish taxation.
- Common examples include real estate income and diplomatic earnings.
These approaches help protect investors from excessive tax burdens and strengthen Turkey’s position as an attractive destination for international capital.
Recent Developments in Turkey (2025)
- Mutual Agreement Procedure (MAP): Turkey has enhanced the MAP mechanism in line with OECD guidelines. This enables multinational companies to resolve double taxation disputes through diplomatic negotiations rather than lengthy litigation.
- New Agreements: Negotiations for a DTAA with El Salvador commenced in 2025, alongside renewed talks with several African and Latin American countries.
- Documentation Requirements: To benefit from double tax relief, taxpayers must provide official certificates from the foreign tax authority confirming taxes paid abroad. Turkish tax offices have tightened verification procedures to prevent misuse.
- Digitalization and Compliance: The Turkish Revenue Administration has implemented improved monitoring tools for identifying and taxing cross-border income, particularly from digital platform activities.
Who is Affected by Double Taxation?
The issue of double taxation is particularly relevant for:
- Turkish entrepreneurs conducting business abroad.
- Foreign investors generating income in Turkey.
- Multinational corporations with international subsidiary income.
- Individuals holding shares overseas or receiving foreign dividends.
For these groups, utilizing double tax relief mechanisms is essential to safeguarding net income and maintaining tax efficiency in cross-border operations.
If you require professional assistance on this matter, please reach out to ÖzbekCPA — your trusted partner in accounting, taxation, and business advisory services in Turkey.
