Taxes in Türkiye: Your guide is comprehensive for individuals and companies

Tax is a monetary amount required from individuals or companies to be paid to the state obligatorily. The government uses this money to finance public services such as education, healthcare, infrastructure, and security.

In Turkey, there are several types of taxes imposed on individuals and companies based on their income, economic activities, or even their property.

Types of Taxes in Turkey

1. Income Tax for Individuals (Gelir Vergisi):

   Concept of Income Tax for Individuals:
   Income tax in Turkey is imposed on individuals who earn income from various sources such as employment, business activities, rental income, or agricultural activities. Income tax is progressive, meaning the rate imposed on income increases as the individual's income increases.

   Income Tax Rates for Individuals in Turkey:
   The income tax is imposed according to certain income brackets. These are the rates applied to annual income:

   • First bracket: From 0 to 32,000 Turkish Lira at 15%
   • Second bracket: From 32,001 to 70,000 Turkish Lira at 20%
   • Third bracket: From 70,001 to 250,000 Turkish Lira at 27%
   • Fourth bracket: From 250,001 to 880,000 Turkish Lira at 35%
   • Fifth bracket: Above 880,000 Turkish Lira at 40%

   Who is Obligated to Pay Income Tax?

   • Residents in Turkey: They are obligated to pay tax on income from all sources, both inside and outside Turkey.
   • Non-residents: They are obligated to pay tax only on income earned within Turkey.
   • Self-employed individuals: Such as lawyers, doctors, and other professionals in independent occupations.

2. Corporate Tax (Kurumlar Vergisi):

   Obligated Parties: Companies.
   Tax Rate: 20% on corporate profits (may vary in certain special cases).

3. Value Added Tax (VAT - KDV - Katma Değer Vergisi):

   Concept: VAT is imposed on goods and services when sold or provided. This tax is collected by the seller or service provider, but is ultimately paid by the final consumer (individuals).

   Tax Rates:

   • 1% on some basic products like fresh food.
   • 8% on certain goods and services such as pharmaceuticals and transportation means.
   • 18% on most other goods and services.

4. Customs Duty on Imported Products:

   Concept: This is a tax imposed on products imported into Turkey. The rate varies depending on the type of product.

   Tax Rate:
   The rate differs based on the type of imported product. Some goods may be exempt from taxes or subject to a low rate, while higher taxes may be imposed on products like luxury cars or entertainment products.

5. Property Tax (Emlak Vergisi):

   Obligated Parties: Real estate (buildings, land).
   Tax Rate: Ranges from 0.1% to 0.6% of the property value, depending on the location and type of property.

6. Capital Gains Tax (Değer Artışı Vergisi):

   Obligated Parties: Profits arising from the sale of properties or capital assets.
   Tax Rate: Ranges from 15% to 35%, depending on the holding period of the assets.

7. Tax on Foreign Companies (Yabancı Sermaye Vergisi):

   Obligated Parties: Foreign companies operating in Turkey.
   Notes: There may be treaties to avoid double taxation with some countries.

8. Self-Employment Tax (Serbest Meslek Vergisi):

   Obligated Parties: Individuals working as independent professionals such as doctors, lawyers, accountants.
   Tax Rate: Ranges from 15% to 40% based on annual income.

9. Inheritance and Transfer Tax (Veraset ve İntikal Vergisi):

   Obligated Parties: Inheritance and bequests.
   Tax Rate: Ranges from 1% to 30% depending on the value of the estate and the relationship of the heir.

10. Agricultural Activity Tax (Tarım Vergisi):

Obligated Parties: Income from agricultural activities.
Notes: Some agricultural activities may be exempt from taxes based on certain conditions.

11. Social Security Tax (Sosyal Sigorta):

Obligated Parties: Employees and employers.
Purpose: Covers health insurance and retirement.

12. Customs Duty on Imported Goods (Gümrük Vergisi):

Obligated Parties: Imported goods.
Tax Rate: Varies based on the type of goods.

Who is Obligated to Pay Taxes?

In Turkey, individuals and companies are required to pay income taxes based on certain criteria, which include:

• Residents in Turkey: An individual is considered a "resident" if they live in Turkey for more than 6 months annually. These individuals pay taxes on income from all sources, both inside and outside Turkey.

• Non-residents: People who do not reside in Turkey for more than 6 months a year are obligated to pay tax on income earned only within Turkey.

• Local and foreign companies: Companies owned by Turkish citizens or foreigners, operating in Turkey, are required to pay taxes on profits earned within Turkey.

• Freelancers: Such as doctors, lawyers, and accountants, who are obligated to pay tax on their professional income.

• Investors and property owners: Those who earn income from financial investments or rentals in Turkey.

Difference Between Income Tax and Other Types of Taxes

Income tax is a tax imposed on the income earned by individuals or companies, whether from employment, investments, or capital gains. Compared to other types of taxes, income tax is considered a direct tax, as it is calculated based on the total declared income.

• Income Tax: Imposed on individuals and companies based on their annual income.
• Other Taxes: Such as VAT (KDV) or property tax are indirect taxes, imposed on commercial activities or property rather than direct income.

Thus, income tax differs from other types of taxes in that it relates to the explicit income earned, while other taxes cover goods, services, or properties.