The Turkish government is stabilizing the Turkish economy by using tax revenues. Due to the lack of natural resources such as oil and gas in Turkey, the country strictly enforces tax laws. Turkey, which is one of the most tourist-friendly countries in the world, encourages many people to immigrate and invest in this country with its attractions. People who have lived in Turkey for more than 6 months are considered to be residents of Turkey. The issue of taxation is one of the most important issues for people who work, live and invest
They are migrating to Turkey, so it is necessary to know the tax laws in Turkey. In November 2019, the tax laws in Turkey underwent changes that were implemented in 2020. In the continuation of this article, the updated tax laws in Turkey are discussed.
As mentioned, tax revenue is one of the most important economic sectors in Turkey. In Turkey, like many other countries, different taxes are levied, but these taxes can be divided into three main categories that are directly and indirectly enforced.
Income tax: Every Turkish citizen must pay tax according to their salary and income. Income taxes include individual income taxes and corporate income taxes.
Cost tax: This type of tax is applied indirectly, for example, it is collected from the sale of goods and services, and is usually provided as a percentage of the price on the price of services. VAT, banking and insurance taxes and stamp taxes are in this category.
Property tax: This type of tax is based on assets such as real estate, vehicles, inheritance tax and the like.
Personal income tax in Turkey
Individuals and companies residing in Turkey are required to pay tax on their domestic and foreign income. Non-residents in Turkey are also required to pay taxes on income they earn only from within Turkey, such as employment income, property ownership and other items. People who have lived in Turkey for less than 6 months are considered non-residents. Each person’s personal income can be based on employee salaries, business income, agricultural income, investment income, property income such as rent and other income. According to the new laws enacted in 2020, the income tax rate of each person in Turkey varies from 15% to 40% depending on the amount of income. The following two tables show the personal income tax rate based on employment and other income.
Wage based income
Earnings based on other items
| Taxable income (lira) | Tax rates in Turkey |
|---|---|
| 0 – 22,000 | 15% |
| 22,000 – 49,000 | 20% |
| 49,000 – 180,000 | 27% |
| 180,000 – 600,000 | 35% |
| >600,000 | 40% |
| Taxable income (lira) | Tax rates in Turkey |
|---|---|
| 0 – 22,000 | 15% |
| 22,000 – 49,000 | 20% |
| 49,000 – 120,000 | 27% |
| 120,000 – 600,000 | 35% |
| >600,000 | 40% |
Corporate tax in Turkey
In Turkey, all companies, including corporations, corporations, investment companies and others, are required to pay tax on their income. In Turkey, the corporate tax rate was 30% in the past, but this amount has decreased and the corporate tax rate between 2018 and 2020 is 22%. By law, presidents and ministers can reduce this rate by up to 20%. Profits of subsidiaries that are transferred to the parent company are also subject to a 15% tax. In addition, capital gains from the sale of foreign partnerships held for at least two years by an international holding company based in Turkey are exempt from corporate income tax. Also, according to the agreements made between Iran and Turkey, bilateral companies are only obliged to pay taxes in one of the countries.
Also, according to the agreements made between Iran and Turkey, bilateral companies are only obliged to pay taxes in one of the countries.
Property tax in Turkey usually consists of three types of real estate tax, motor vehicle tax, gift tax and inheritance tax. Property acquisition in Turkey has become very popular in recent years, as property taxes in this country are very important for immigration applicants. Real estate tax is between 0.1% to 1% depending on the type of property and its area; Of course, properties located in important and cultural areas are subject to multiple taxes. In general, the vacant land tax for construction purposes is 0.3%, the residence tax is 0.1%, and the land and ordinary buildings tax is between 0.1% and 0.2%. Also, the agricultural land tax is intended to support 0% production. In case of buying and selling the property, the tax will be paid by the buyer and the seller. According to the tax laws, the luxury house tax is determined based on the price of different tax rates. Homes over 5 million lira are considered luxury homes in Turkey.
Luxury home tax in Turkey
| The value of the house | tax rate |
|---|---|
| 5 – 7.5 million lira | 0.3% |
| 7.5 – 10 million lira | 0.6% |
| More than 10 million lira | 1% |
Digital Services Tax in Turkey
Under the new legislation, the tax is introduced as the Digital Services Tax (DST) at a rate of 7.5%. Of course, the president has the power to reduce the rate to 1% or twice 7.5%, depending on the type of service, individually or on the basis of integration. Taxpayers with a global income of more than 750 million euros and 20 million Turkish lira in local revenues are subject to DST. By law, revenue from the following services is subject to DST:
Types of digital advertising services (including services such as ad control and service performance, data transfer and user management services, and advertising technical services)
Selling any digital, video or digital content on digital media and services on digital media for listening, viewing, broadcasting or recording or using them in digital media (including computer applications, applications, music, Movies and games) are provided.
Digital media development services where users may interact with each other (including operating systems that allow users to sell goods or services)
Intermediary services provided in the digital environment for the above services are also subject to DST.
The tax base for DST is the income from the provision of relevant services during the relevant tax period. The tax period for DST is the one-month period of the calendar year.
VAT and special consumption tax
According to the tax laws in Turkey, professional goods, services, trade, industry, agriculture and related goods, as well as all services and goods imported into the country and the delivery of goods and services as a result of other activities are all subject to VAT. VAT rates are 1%, 8% and 18% depending on the type of goods and services. There are also 4 main product groups in Turkey that are subject to the consumption of special goods at different tax rates. Unlike VAT, which is applied for each delivery, the consumption tax on certain goods is charged only once. These 4 groups are:
Petroleum products, natural gases, oils, solvents and their derivatives
Cars and other vehicles, motorcycles, airplanes, helicopters and motor boats
Tobacco and tobacco products, alcoholic beverages
Luxury goods
Other taxes in Turkey
Transactions of banking and insurance companies are still exempt from VAT but are subject to tax on banking and insurance transactions. This tax on the income that banks earn is like the interest on a loan. Although the overall rate is 5%, some transactions, such as interest on deposit transactions between banks, are taxed at 1%. According to the new tax laws in Turkey, the transaction rates of banking and insurance companies increased from 0.1% to 0.2% in foreign currency transactions. The president has the power to increase the applicable rate by up to 10 times. The rate of hospitality tax and hospitality services in hotels, dormitories, guesthouses, campgrounds and other services provided during the stay (food and entertainment, swimming pool, sports facilities, etc.) is applied at the rate of 2% in accommodation services. ; However, this rate is temporarily 1% until December 31, 2020.
Stamp duty applies to a wide range of documents, including contracts, notes payable, grants, letters of credit, letters of guarantee, financial statements, and payroll. Stamp tax is collected as a percentage of the value of the document at rates ranging from 0.189% to 0.948% or for some documents as a fixed price and a predetermined price. Motor vehicle tax is levied on a fixed amount, which varies from year to year depending on the year and engine capacity of the vehicle; Inheritance and gift taxes also apply at rates of 1% to 30%. Inheritance tax can be paid in installments over 3 years, the tax year or fiscal year begins on January 1 and ends on December 31 of the same year. A special tax period can also be used with the permission of the Ministry of Finance.
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