Turkey’s tax system is governed by various laws and secondary regulations, primarily under the Income Tax Law, Corporate Tax Law, Value Added Tax Law, and related legislation. Understanding the tax rates in Turkey is essential for foreign investors, companies, and expatriates operating within the country.
This article provides a structured overview of Turkey’s corporate tax, personal income tax, VAT, withholding tax, property tax, and other key tax categories in line with the applicable legislation and administrative practice.
Corporate Tax Rates in Turkey
Corporate entities operating in Turkey are subject to corporate income tax under the Corporate Tax Law. The standard corporate tax rate in Turkey is 25%. This rate applies to resident capital companies, including limited liability companies (LLCs) and joint-stock companies (JSCs), on their worldwide income.
Corporate Tax Key Points:
- The general corporate tax rate is 25%.
- Taxable income includes revenues from business operations, capital gains, and other sources.
- Dividends paid by Turkish companies to non-residents are subject to a 15% withholding tax, unless reduced by a double taxation treaty (DTT).
- Special rates apply to certain financial institutions and industries.
Personal Income Tax in Turkey
Personal income tax (PIT) is applied to individuals on their worldwide income if they are tax residents in Turkey. Non-residents are taxed only on their Turkish-source income.
Income tax in Turkey follows a progressive taxation system, meaning that higher levels of income are taxed at increasing marginal rates. The applicable income brackets and tax rates are determined annually under the Income Tax Law and announced by the Turkish Revenue Administration.
Personal Income Tax Rates in Turkey
Income tax is calculated based on the annual taxable income of the individual as follows:
| Income Bracket (TRY) | Tax Rate (%) |
| 0 – 190,000.00 | 15% |
| 190,001.00 – 400,000.00 | 20% |
| 400,001.00 – 1,500,000.00 | 27% |
| 1,500,001.00 – 5,300,000.00 | 35% |
| Over 5,300,001.00 | 40% |
These rates apply to employment income, self-employment income, rental income, capital gains, and other taxable income categories, subject to the provisions of the Turkish Income Tax Law.
Key Considerations
- Income derived from employment, self-employment, rental properties, capital gains, and other sources is generally subject to income tax.
- Certain deductions — such as education expenses, health expenses, and insurance premiums — may reduce the taxable base, provided that statutory conditions are met.
- High-income earners are subject to the top marginal tax rate of 40% on the portion of income exceeding the highest bracket threshold.
- Income tax withheld through payroll is credited against the final annual tax liability where an annual declaration is required.
Declaration thresholds, income brackets, and related parameters are updated periodically through official legislation and secondary regulations. Therefore, income tax calculations should always be assessed in light of the applicable income year and official guidance.
Value-Added Tax (VAT) in Turkey
Value-Added Tax (VAT) is one of the most significant indirect taxes in Turkey, applied to the sale of goods and services.
Current VAT Rates in Turkey:
- Standard VAT rate: 20% (applicable to most goods and services)
- Reduced VAT rate: 10% (for specific sectors like accommodation services)
- Lower VAT rate: 1% (for certain essential goods such as flour, books, and newspapers)
Certain goods and services are exempt from VAT, including exports and international transportation.
Special Consumption Tax Turkey
Special Consumption Tax in Turkey
Special Consumption Tax (ÖTV) applies to specific goods and is assessed before Value-Added Tax (VAT). ÖTV is governed by the Special Consumption Tax Law and related Presidential Decrees and applies differently based on product categories and characteristics.
For example:
- Motor vehicles: ÖTV rates vary based on engine size and other vehicle specifications, leading to effective tax burdens that, when combined with VAT, significantly increase the final cost of vehicles in Turkey.
- Fuel products: ÖTV is applied per litre at fixed statutory amounts that are adjusted periodically.
- Tobacco and alcoholic beverages: ÖTV on these products is determined through a combination of ad valorem and specific components depending on alcohol content and product type.
- Other categories: Certain luxury goods, electronic cigarettes, and other defined products also fall within the scope of Special Consumption Tax.
Due to the product-specific nature of ÖTV rates and complex calculation methods, the applicable tax burden should be determined based on the relevant product classification and legislative provisions issued by the Ministry of Treasury and Finance and the Turkish Revenue Administration.
Withholding Tax Turkey
Withholding tax is deducted at the source for specific types of payments under Turkish tax legislation. The applicable withholding rates depend on the nature of the payment, the status of the recipient (resident or non-resident), and any applicable double taxation agreements.
- Dividends paid to non-residents: Typically subject to 15% withholding tax, which may be reduced under an applicable treaty.
- Interest payments to non-residents: Generally subject to 10% withholding tax, subject to reduction under double taxation treaties.
- Royalties and similar intellectual property payments: Commonly subject to 20% withholding tax, with treaty relief possible.
- Professional and consultancy service fees paid to non-resident service providers: Generally subject to withholding tax depending on the nature of services and treaty provisions.
Withholding tax rates and applications should always be assessed in light of the relevant legislation, the residence status of the recipient, and the terms of any double taxation agreements to which Turkey is a party.
Property Tax in Turkey
Property owners in Turkey are subject to annual property tax under the Real Estate Tax Law (Law No. 1319). Tax rates vary depending on the type of property and whether it is located within a metropolitan municipality.
- Residential properties:
- 0.1% of the tax value (standard municipalities)
- 0.2% within metropolitan municipalities
- Commercial properties:
- 0.2% (standard municipalities)
- 0.4% within metropolitan municipalities
- Land (plots):
- 0.3% (standard municipalities)
- 0.6% within metropolitan municipalities
Property tax is calculated based on the tax value determined by municipalities and is payable in two installments annually.
Stamp Duty Turkey
Stamp duty is levied on certain agreements and official documents under the Stamp Duty Law (Law No. 488). The applicable rate depends on the nature of the document and may be calculated either as a proportional rate or as a fixed amount. For proportional documents, rates may reach up to 0.948%, subject to statutory upper limits. Certain documents are subject to fixed stamp duty amounts as determined by the annual revaluation rates.
Navigating the complexities of Turkish tax regulations requires up-to-date knowledge and strategic compliance. Failing to meet tax obligations can result in penalties, audits, and financial setbacks—especially for foreign investors unfamiliar with the local system.
To learn how our experienced team can help you ensure compliance with Turkish regulations, reduce your tax risks and take full advantage of applicable tax benefits, contact us.
