The Turkish tax system rests on three pillars: taxes on income, taxes on expenditure and taxes on wealth. For a foreign investor what matters is not only the rates but the base they are applied to and the calendar they are applied on. This page sets out the 2026 position and marks the items that have changed over the last two years.
The corporate tax rate is 25%; 30% applies to banks and financial institutions and to companies party to certain public-private partnership projects. A 5 point reduction applies to export income, 1 point to the manufacturing income of companies holding an industrial registry certificate, and 2 points to qualifying public offerings.
Income tax is progressive between 15% and 40%; the third bracket differs between employment income and other income.
The standard VAT rate is 20%, with reduced rates of 10% and 1%. The 8% rate has not been in force since mid-2023.
Two structural differences in 2026: the domestic minimum corporate tax is now part of the filing process, and inflation adjustment does not apply for the 2025, 2026 and 2027 accounting periods.
Key figures for 2026
Map of the system
Who is taxed, and where?
Full liability
Companies whose legal seat or place of management is in Turkey, and individuals resident in Turkey, are taxed on their worldwide income. For individuals, residence turns on having a domicile in Turkey or staying in Turkey continuously for more than six months in a calendar year.
Limited liability
Companies whose legal seat and place of management are both outside Turkey, and individuals not resident here, are taxed only on income derived in Turkey. Whether income is treated as derived in Turkey is determined by the permanent establishment and permanent representative tests.
Effect of treaties
Turkey’s double taxation agreements in force may narrow the definition of a permanent establishment and reduce withholding rates below the domestic ones. A tax residence certificate is required to rely on a treaty provision.
Filing or withholding?
Where a non-resident company has no permanent establishment or permanent representative in Turkey, taxation is usually final at the withholding stage. Where a permanent establishment arises, a filing obligation follows.
Income tax: the 2026 tariff
The tariff is updated each year by the revaluation rate. The tariff applying to 2026 income has been announced by general communiqué. Employment income and other income diverge at the third bracket.
Income other than employment
| Bracket | Tax |
|---|---|
| Up to TRY 190,000 | 15% |
| For the first TRY 190,000 of TRY 400,000 | TRY 28,500, excess at 20% |
| For the first TRY 400,000 of TRY 1,000,000 | TRY 70,500, excess at 27% |
| For the first TRY 1,000,000 of TRY 5,300,000 | TRY 232,500, excess at 35% |
| Above TRY 5,300,000, on the first TRY 5,300,000 | TRY 1,737,500, excess at 40% |
Employment income
| Bracket | Tax |
|---|---|
| Up to TRY 190,000 | 15% |
| For the first TRY 190,000 of TRY 400,000 | TRY 28,500, excess at 20% |
| For the first TRY 400,000 of TRY 1,500,000 | TRY 70,500, excess at 27% |
| For the first TRY 1,500,000 of TRY 5,300,000 | TRY 367,500, excess at 35% |
| Above TRY 5,300,000, on the first TRY 5,300,000 | TRY 1,697,500, excess at 40% |
The minimum wage exemption applies to all employees. No income tax or stamp duty is calculated on the portion of an employee’s salary corresponding to the gross minimum wage. The exemption is not limited to those earning the minimum wage; for higher earners the tax attributable to the minimum wage is deducted from the tax calculated. Taxpayers with income other than employment income cannot benefit from it.
Categories of taxable income
| Category | Method of taxation | Point to watch |
|---|---|---|
| Commercial income | Annual return on the balance sheet or operating account basis | The simplified regime has been abolished and replaced by an earnings exemption |
| Agricultural income | Return or withholding | The regime changes according to the size criteria of the operation |
| Employment income | Withheld by the employer | A return may arise above certain amounts and where salary is received from more than one employer |
| Professional income | Withholding plus annual return | The paying company withholds; the income is also declared |
| Rental income | Return; withholding on commercial premises | Conditions apply to the residential rent exemption and the lump-sum expense method |
| Investment income | Mostly through withholding | Filing thresholds for dividends, interest and similar income change annually |
| Other income and gains | Declared as capital gains or occasional income | Holding period and exemption amounts are decisive |
Corporate tax and the minimum tax
| Item | Rate | Scope |
|---|---|---|
| Standard rate | 25% | Capital companies, cooperatives, economic public entities, economic enterprises of associations and foundations, joint ventures |
| Financial sector rate | 30% | Banks, financial leasing, factoring and financing companies, payment and electronic money institutions, capital markets institutions, insurance, reinsurance and pension companies, and companies party to certain public-private partnership projects |
| Export income reduction | 5 points | Applied to income derived from exports |
| Manufacturing income reduction | 1 point | Income from manufacturing by companies holding an industrial registry certificate and actually manufacturing |
| Public offering reduction | 2 points | For companies offering at least 20% of their shares to the public for the first time, over five accounting periods |
| Domestic minimum corporate tax | 10% | Corporate tax computed cannot be less than 10% of corporate income before deductions and exemptions. It does not apply for three accounting periods to newly established companies. |
| Global/domestic minimum top-up tax | 15% | Minimum effective tax burden for the Turkish entities of multinational groups whose consolidated revenue exceeds the threshold |
| Dividend withholding | 15% | On distributions to individual shareholders and to non-resident companies; treaty provisions are reserved |
The minimum tax directly affects incentivised structures. Companies whose tax base is reduced by a free zone, a technology development zone, an investment allowance or the participation exemption now face a floor at 10% of corporate income. Incentive calculations should be rebuilt with that floor in mind.
Value added tax
Rates
The standard rate is 20%. Reduced rates of 10% and 1% apply to basic foodstuffs, medicines, books and certain services. The 8% rate has not been in force since 10 July 2023, when 8% became 10% and 18% became 20%.
Deduction and refund
Input tax is deducted from output tax. Refunds may be claimed on exports, reduced-rate supplies, withholding transactions and transactions within the scope of an investment incentive certificate. The refund process runs against a sworn-in certified public accountant’s report or a guarantee.
Withholding
For certain supplies and services, part or all of the tax is declared by the buyer as the responsible party. Construction work, cleaning, consultancy and labour supply are the areas most frequently encountered.
Services received from abroad
Where a service is received from abroad and used in Turkey, the tax must be declared by the recipient as the responsible party. The same amount may be deducted in the same period.
Withholding: the backbone of the system
| Type of payment | Rate | Note |
|---|---|---|
| Salary payments | Progressive tariff | The minimum wage exemption is offset |
| Commercial premises rent | 20% | Calculated and declared by the tenant |
| Professional service payments | 20% | The paying company is responsible |
| Dividend distributions | 15% | No withholding on distributions to resident companies |
| Progress payments on long-term construction works | 5%; 1% for railway, metro and shipbuilding works | Offset against the annual return filed on completion |
| Deposit and participation account returns | Varies by maturity | Rates are set periodically by presidential decision |
| Payments to non-residents | By type of payment | Different rates for royalties, service fees and interest; treaty provisions take priority |
Stamp duty, fees and wealth taxes
| Tax | Rate | Explanation |
|---|---|---|
| Stamp duty | 0.948% | On contracts stating a specific amount; 0.189% on lease agreements. The annual maximum announced each year cannot be exceeded. Signatories are jointly liable. |
| Land registry fee | 2% from the buyer and 2% from the seller | Calculated on the transfer price; the combined burden is 4% of the transaction value. It cannot be declared below the property tax value. |
| Property tax | 0.1% – 0.6% | By category for buildings, plots and land; rates are doubled within metropolitan municipality boundaries. |
| Valuable housing tax | 0.3% – 1% | For residential properties above the stated value, progressive by value band. |
| Motor vehicles tax | Fixed amounts | By age, engine capacity and value of the vehicle; paid in two instalments each year. |
| Inheritance and transfer tax | 1% – 30% | Progressive between 1% and 10% on inheritance, and between 10% and 30% on gratuitous transfers. |
| Banking and insurance transactions tax | 5% | On amounts received in their favour by banks and insurance companies; different rates and exemptions apply to certain transactions. |
| Digital services tax | 5% | For digital service providers whose revenue in Turkey and worldwide revenue both exceed the stated thresholds; liability arises only where both thresholds are exceeded. |
| Accommodation tax | 2% | On overnight accommodation services provided by hotels, motels, holiday villages and similar facilities, together with other services sold with them. |
Incorporation and share transfer documents are exempt from stamp duty. The schedule annexed to the Stamp Duty Law exempts documents relating to the incorporation of capital companies, share transfers, capital increases and extensions of duration. Commercial contracts, letters of guarantee and progress payment certificates remain taxable.
Resource utilisation support fund
On foreign currency loans
- 3% on the principal where the average maturity is up to one year
- 1% between one and two years
- 0.5% between two and three years
- No levy at three years and above
On lira loans obtained from abroad
- 1% on the interest where the average maturity is under one year
- No levy at one year and above
On imports
A levy arises on the import value where payment is deferred — acceptance credit, deferred letter of credit and cash against goods. No levy applies to advance payment or letter of credit transactions; whether the payment method matches the customs declaration is the first thing examined in an audit.
Why it matters
Although not called a tax, the fund has the same cash cost, and where it is overlooked in intra-group financing structures it becomes the subject of a retrospective assessment.
The international layer
Transfer pricing
The arm’s length principle governs purchases and sales of goods and services with related parties. Documentation obligations cover the annual transfer pricing report, the return annexes and group-level reporting.
Disguised capital
Borrowing from shareholders or related parties exceeding three times equity is treated as disguised capital; interest and exchange differences on that portion are not deductible.
Controlled foreign companies
The income of a foreign subsidiary is taxed in Turkey even without distribution where the control, tax burden and revenue conditions are met together.
Information exchange and minimum tax
The automatic exchange of financial account information and the global/domestic minimum tax rules bring the Turkish leg of group structures within the reporting perimeter.
What to do differently in 2026
Inflation adjustment does not apply
Under Law No. 7571, financial statements are not subject to inflation adjustment for the 2025, 2026 and 2027 accounting periods, regardless of whether the statutory conditions are met. Certain groups such as banks, insurance and pension companies and capital markets institutions are outside the scope. Revaluation of depreciable assets becomes relevant instead.
The minimum tax is now part of filing
The domestic minimum corporate tax calculation is taken into account in the provisional tax periods as well. In companies with heavy exemptions and deductions the cash tax burden arises independently of the tax base calculation.
Fixed amounts revalued
The stamp duty ceiling, fees, irregularity penalties and statutory thresholds have been updated by the revaluation rate. The stamp duty cap in contract templates and thresholds such as the invoice issuance limit should be checked at the start of the year.
Payroll parameters changed
The upper limit of earnings subject to social security premiums has been raised to nine times the gross minimum wage. For higher-paid staff the employer cost has increased independently of the income tax tariff.
Compliance calendar
| Return | Period | Filing date |
|---|---|---|
| Value added tax | Monthly | 28th of the following month |
| Withholding and premium service return | Monthly (quarterly where conditions are met) | 26th of the following month |
| Provisional corporate tax | Quarterly, three periods a year | 17th of the second month following the period |
| Corporate tax | Annual | By the end of the fourth month following the accounting period |
| Annual income tax | Annual | By the end of March of the following year; paid in two instalments |
| Stamp duty | Monthly | 26th of the following month |
| Transfer pricing report | Annual | Kept available by the corporate tax return filing deadline |
Frequently asked questions
What is the corporate tax rate in Turkey for 2026?
The standard rate is 25%. A 30% rate applies to banks, financial leasing, factoring and financing companies, payment and electronic money institutions, capital markets institutions, insurance, reinsurance and pension companies, and companies party to certain public-private partnership projects. A 5 point reduction is available on export income, 1 point on the manufacturing income of companies holding an industrial registry certificate, and 2 points on qualifying public offerings.
What is the domestic minimum corporate tax?
Under article 32/C of the Corporate Tax Law, corporate tax computed cannot be less than 10% of corporate income before deductions and exemptions. It applies to income derived in 2025 and subsequent taxation periods, and does not apply for three accounting periods to companies commencing operations for the first time.
What are the 2026 income tax brackets?
For income other than employment: up to TRY 190,000 at 15%; TRY 28,500 plus 20% on the excess up to TRY 400,000; TRY 70,500 plus 27% up to TRY 1,000,000; TRY 232,500 plus 35% up to TRY 5,300,000; and TRY 1,737,500 plus 40% above that. For employment income the third bracket runs to TRY 1,500,000, so the base tax above TRY 5,300,000 is TRY 1,697,500.
Does the 8% VAT rate still exist in Turkey?
No. From 10 July 2023 the 8% rate became 10% and the 18% rate became 20%. The rates in force are the 20% standard rate and the reduced rates of 10% and 1%.
What is the withholding rate on dividend distributions?
15% on distributions to individual shareholders and to non-resident companies. No withholding applies to distributions to resident companies. For non-residents, a lower rate under a double taxation agreement may be applied on presentation of a tax residence certificate.
How much is the land registry fee and who pays it?
On transfers of immovable property the fee is levied on the transfer price at 2% from the buyer and 2% from the seller, so the combined burden is 4% of the transaction value. The fee must be calculated on the actual transfer price and cannot be declared below the property tax value.
What is the withholding rate on long-term construction works?
Progress payments on construction and repair works spanning more than one year are subject to withholding at 5%; a 1% rate applies to railway, metro and shipbuilding works. The tax withheld is offset against the tax computed on the annual return filed when the work is completed.
Does inflation adjustment apply in 2026?
No. Under the temporary article added to the Tax Procedure Law by Law No. 7571, financial statements are not subject to inflation adjustment for the 2025, 2026 and 2027 accounting periods, regardless of whether the statutory conditions are met. Certain groups such as banks, insurance and pension companies and capital markets institutions are outside the scope.
When does a foreign company become a taxpayer in Turkey?
Companies whose legal seat and place of management are both abroad are limited taxpayers and are taxed only on income derived in Turkey. Where a permanent establishment or permanent representative exists, a filing obligation arises for commercial income; otherwise taxation is usually final at the withholding stage.
What is the rate and threshold of the digital services tax?
The rate is 5%. Liability arises where revenue derived in Turkey and worldwide revenue both exceed the thresholds set in the law; exceeding only one of the two is not sufficient.
What is the disguised capital threshold?
Borrowing from shareholders or related parties exceeding three times the equity at the start of the accounting period is treated as disguised capital. Interest and exchange differences attributable to the excess are not deductible in determining corporate income.
Sources
- Income Tax Law No. 193 art. 103 and the 2026 income tax tariff (Income Tax General Communiqué Series No. 332)
- Corporate Tax Law No. 5520 art. 32 and 32/C; Domestic Minimum Corporate Tax Guide and Guide to Corporate Tax Rate Applications
- Value Added Tax Law No. 3065 and the rate decisions
- Tax Procedure Law No. 213, repeating art. 298; Law No. 7571 (Official Gazette 25.12.2025) disapplying inflation adjustment for the 2025–2027 periods
- Stamp Duty Law No. 488; Fees Law No. 492; Property Tax Law No. 1319; Inheritance and Transfer Tax Law No. 7338; Motor Vehicles Tax Law No. 197
- Law No. 7194 (digital services tax, accommodation tax, valuable housing tax)
- Law No. 7566 (Official Gazette 19.12.2025) — 2026 payroll and social security parameters
Tax compliance and planning
Since 2002 we have provided tax and accounting services to foreign-owned companies in Turkey. Scope:
- Setting up corporate tax, provisional tax and minimum tax calculations
- Value added tax refund processes and withholding applications
- Transfer pricing documentation and disguised capital analysis
- Withholding on payments abroad and application of treaty provisions
- Representation in tax audits and settlement procedures
Related pages: tax rates, value added tax, corporate tax incentives, double taxation agreements, tax calendar. Contact us.
