Finlexia is a globally recognized Turkish Accounting Firm with a long record of excellence and professional leadership in Istanbul, Turkey. Our Turkish accountants and our Turkish Tax Lawyers are prepared to handle your company’s VAT in Turkey. Finlexia handles all kinds of accounting services required to run your company in Turkey. We offer the best accounting services, at competitive prices to foreign businessmen who already established or getting ready to establish a company in Turkey.

Finlexia provides a wide range of services designed to provide effective tax compliance and advice, aiming to give your business a competitive advantage both in local and international context. At Finlexia, we provide tax certification, audit and consultancy services on a local and global scale. Using our in-depth experience and knowledge, we are providing competitive analyses and alternative solutions to our clients while offering them services in terms of compliance to financial legislation.

VAT in Turkey

VAT in Turkey

The Turkish VAT is usually 18%, but there are incentives granted to basic foodstuff, pharmaceutical products and other which are subject to an 8% rate and to the newspapers, magazine and some farm products which are subject to a VAT of 1% rate.

How can VAT be Refunded in Turkey?

Turkey tax law imposes a VAT standard rate of 18% which has to be paid by companies. Paying this tax produces effects on the companies’ profits and implies certain procedures. However the Turkish VAT can be recovered by submitting a refund application to the Tax Authorities in Turkey. It is mandatory for the application to contain original invoices, a copy of a recent tax certificate and other documents. Usually the VAT return is completed within 3 to 9 months, but in some cases it can take up to 12 months.

Taxes in Turkey

Corporate Taxes in Turkey

The Turkish standard tax rate is 22% but certain incentives are granted, for example the incomes provided by software development are exempt from paying taxes until January 2024. Also major reductions may be granted for operating in certain regions.

The Turkish tax regime can be classified under three main headings:

Corporate Income Taxes

In Turkey, the basic corporate income tax rate levied on business profits is 22%.

Withholding taxes on selected payments of resident corporations:

  • Dividends are subject to 15%.
  • Interest on treasury-bill and treasury bonds derived by resident corporations is subject to 0%.
  • Interest on other bonds and bills derived by resident corporations is subject to 0%.
  • Bank deposits are subject to 10%-18%.
  • Profit shares paid by participation banks in consideration of participation accounts are subject to 10%-18%.
  • REPO agreements are subject to 15%.

Withholding taxes on selected payments of non-resident corporations:

  • Dividends are subject to 15%.
  • Interest on treasury-bill and treasury bonds derived by resident corporations is subject to 0%.
  • Interest on other bonds and bills derived by resident corporations is subject to 0%.
  • Bank deposits are subject to 10%-18%.
  • Profit shares paid by participation banks in consideration of participation accounts are subject to 10%-18%.
  • REPO agreements are subject to 15%.

Personal Income Taxes

Income taxes in Turkey are levied on all income, including that of domestic and foreign individuals and corporations residing in Turkey. Non-residents earning income in Turkey through employment, ownership of property, business transactions, or any other activity which generates income are also subject to taxation, but only on the income earned in Turkey.

What is the Dividend Taxes in Turkey?

Under Turkish tax system all taxable companies are subject to the dividend withholding tax applied at 15% to profits.

What are the Tax Rates Applied on Other Payments?

There is only a 10% withholding tax on interest paid on loans from nonresidents which are not financial entities. The rest of the interests are not taxable.

A withholding tax on royalties derived from sales or transfer of intangible assets have the value of 20%. The rest of the royalties are not subject to taxation.

The technical service fees are taxed with 20%. A 15% tax is imposed on branch remittances.

Are there any Incentives for Foreign Investors in Turkey?

Turkey ranks as one of the most sought after companies to invest in, due to its geographical location, natural resources abundance, agricultural heartland, heavy industry and favorable relations with other countries. As a plus, foreign investment is highly valued as the government offers a welcoming environment as well as incentives for investors. Privatization programs in fields of energy, telecommunications, infrastructure, education and health are available for foreign entrepreneurs wishing to invest in Turkey.

Why do I Need a Local Accountant for my Turkish Business?

Even though the financial system in Turkey is straight-forward and there is a well established communication system with the public, it is advisable for a new company, especially foreign-owned to work with a local accountant. Tax fillings and all financial procedures are easily taken care of by a local accountant who has a better understanding of all the required procedures, and more experience in dealing with formalities.

Turkish Dividend Tax

Finlexia is a globally recognized Turkish Accounting Firm with a long record of excellence and professional leadership in Istanbul, Turkey. Our Turkish accountants and our Turkish Tax Lawyers are prepared to handle your company’s need in Turkish Dividend Tax Law. Finlexia handles all kinds of accounting services required to run your company in Turkey. We offer the best accounting services, at competitive prices to foreign businessmen who already established or getting ready to establish a company in Turkey.

Our tax department is prepared to handle your company’s Turkish dividend tax law issues in Turkey. Turkey has one of the most competitive corporate tax rates in the OECD region. Turkish Corporate Tax Law No. 5520 that was enacted on June 21, 2006 made some important amendments to the current applications and also included new concepts in the tax legislation. With the new Corporate Tax Law in place, Turkish corporate tax legislation now has noticeably clearer, more objective and better harmonized provisions which are in line with international standards.

Dividend Tax Law in Turkey

The rate for dividend tax in Turkey is 15% for residents and non-residents (natural persons and legal entities) that receive dividends from companies incorporated in Turkey. The legal entities can be limited or full taxpayers according to the part of the income subject to taxation in Turkey. The limited ones will pay taxes, including dividend tax, for their income obtained in Turkey, while the full taxpayers are subject to taxation for their income gained all over the world.

Companies that have their main/registered office in Turkey are considered full taxpayers and this rule applies also for Turkish subsidiaries of foreign companies and the branches are limited taxpayers. The foreign companies that have economic activities in Turkey are limited taxpayers and they have to pay taxes on their income (dividends) obtained in Turkey.

Turkish Dividend Tax Law

Transfer of Dividends

The foreign companies are allowed to repatriate their profits and some limitations exist only for the companies monitored by entities such as Capital Market Board or the Banking Regulatory and Supervisory Board that approve the transfer of the dividends. The dividends can be transferred from Turkey to other countries according to the Foreign Direct Investment Law and the new Turkish Commercial Code.

Foreign companies pay a dividend tax lower than 15% if there are double taxation treaties already signed between their country of residence and Turkey. Until now, Turkey has signed over 70 double tax treaties. The dividend tax must be paid before the profits are repatriated. Therefore if the DTT dividend withholding tax rate is lower than the generic 15% rate, the DTT rate may apply.

There is no limitation for repatriation of profits unless the company is monitored by an upper supervisory body (such as the Capital Market Board or the Banking Regulatory and Supervisory Board), whose approval is required. After paying a 20% corporate tax, there is a 15% dividend withholding tax if the profit is distributed to local natural persons or foreign natural/legal persons.

Under the Turkish tax system, all taxable entities are subject to the same dividend withholding tax rate, which is 15% and is applied to profits after taxation. Favorable dividend withholding tax rates exist due to Turkey’s Double Taxation Treaties.

Foreign investors are free to transfer dividends to abroad in accordance with the Foreign Direct Investment Law. However, the Turkish Commercial Code legal reserve requirements must also be met. There are no restrictions with respect to dividend payments under the Foreign Exchange legislation, but the dividend withholding tax has to be paid before repatriation. This will be checked by the banks used for the transfer.

Tax Services in Turkey

Our accounting firm provides a wide range of services designed to provide effective tax compliance and advice, aiming to give your business a competitive advantage both in local and international context.

At Finlexia, we provide tax certification, audit and consultancy services on a local and global scale. Using our in-depth experience and knowledge, we are providing competitive analyses and alternative solutions to our clients while offering them services in terms of compliance to financial legislation.

Every day – somewhere in the world – tax regulations, rules, and treaties change. Strategies that reduced taxes yesterday may not work today. New opportunities to save money could be missed – especially as you enter new markets. The talented tax staff in your organization might not have time to keep up with each nuance. Your current tax advisor may think your company is too small for personal attention – or your advisor may be too small to serve you.

Successful companies consider tax implications before they make business decisions, so they do not pay more than their legal obligation. This makes international tax compliance, consulting, and structuring a crucial element in your global strategy.

Tax Services in Turkey

Tax Law Services in Turkey

The accountant will prepare financial statements for tax return, make an audit, will be responsible for book-keeping and financial planning and other different accounting services. He can help you with services such as:

  • Corporate tax consultancy
  • Tax audits – Tax certification and other Sworn financial advisory services
  • Tax and customs litigation
  • Global compliance
  • Human resources
  • Legal services
  • VAT advisory and VAT refunds
  • Foreign trade, customs and indirect
  • Tax Consultancy in transfer pricing
  • Tax Due Diligence
  • Expatriates Tax Consultancy

Reach us for VAT in Turkey

Since its foundation, Finlexia Turkish Accounting Firm has been the choice of numerous clients in Turkey. Thanks to its nationally recognized accountants and accounting services, our accounting firm is now one of the leading accounting firms in Istanbul, Turkey. You may reach our accountants and lawyers for VAT in Turkey by sending by sending an email or filling in Contact Form in Contact page.