Turkey’s tax system is governed by various laws and regulations, and understanding the tax rates in Turkey is essential for businesses and individuals alike.. Understanding the tax rates in Turkey is essential for foreign investors, companies, and expatriates looking to operate within the country. This article provides a comprehensive overview of Turkey’s corporate tax, personal income tax, VAT, and other key tax types applicable in 2025.
Corporate Tax in Turkey
Corporate entities operating in Turkey are subject to corporate income tax. The standard corporate tax rate in Turkey is 25% for the fiscal year 2025. This applies to all companies registered in Turkey, including limited liability companies (LLCs) and joint-stock companies (JSCs).
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.
Personal Income Tax Rates for 2025
Income tax in Turkey is progressive and applied at different rates depending on the individual’s annual income:
| Income Bracket (TRY) | Tax Rate (%) |
| 0 – 120,000 | 15% |
| 120,000 – 250,000 | 20% |
| 250,000 – 600,000 | 27% |
| 600,000 – 3,200,000 | 35% |
| Over 3,200,000 | 40% |
Key Considerations for Personal Income Tax:
- Income from employment, self-employment, rental properties, and capital gains are all taxable.
- Certain deductions, such as education expenses and health insurance premiums, may reduce taxable income.
- High-income earners (over 3.2 million TRY) are subject to the highest 40% tax rate.
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
The Special Consumption Tax is applied to specific luxury and environmentally harmful goods. It includes automobiles, fuel, tobacco, and alcoholic beverages.
- Automobiles: Tax rates range from 45% to 220%, depending on engine size and value.
- Alcohol and tobacco: Heavily taxed, with high rates to discourage consumption.
- Fuel products: Subject to significant Special Consumption Tax rates, affecting the cost of gasoline and diesel.
Withholding Tax Turkey
Withholding tax is deducted at the source for certain payments, such as:
- Dividends paid to non-residents: 15%
- Interest payments to non-residents: 10%
- Royalties: 20%
- Professional services: 20%
Double taxation agreements may reduce withholding tax rates depending on the country.
Property Tax in Turkey
Property owners in Turkey must pay an annual property tax based on the value of their real estate.
- Residential properties: 0.1% – 0.2% of the property’s value.
- Commercial properties: 0.4%.
- Luxury properties above 6.500 million TRY: 0.3% – 1% progressive tax.
Stamp Duty Turkey
Stamp duty is levied on official documents, including contracts and financial transactions. The rate varies between 0.189% and 0.948%, depending on the document type.
Conclusion
Turkey’s tax system encompasses various direct and indirect taxes affecting individuals and businesses. Understanding the applicable tax rates and compliance requirements is essential for efficient financial planning and avoiding potential penalties.
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