Corporate Tax in Turkey

Corporate tax is the tax on corporate earnings. Corporate tax in Turkey  is calculated over the net corporate income earned by the taxpayers within an accounting period.

As of January 2024, Turkey’s corporate tax rate is 25%. Corporate taxation plays a crucial role in Turkey’s economic landscape, influencing business operations and investment decisions. The country’s corporate tax system is designed to support economic growth and competitiveness. The rate of 25% is relatively moderate compared to some other countries, providing a favorable environment for businesses. Turkey has implemented various tax reforms in recent years to enhance its attractiveness to investors and stimulate economic activity. Understanding the corporate tax landscape is essential for businesses operating in Turkey, influencing financial planning and strategic decision-making. However, for the most current and specific information on corporate tax rates in Turkey, it is recommended to consult with tax professionals or refer to the latest official sources and updates.

What are the Corporate Tax rates in Turkey in 2024?

Corporate tax in Turkey will be collected at the rate of 20% over the corporate income in general. However, time to time such rate can be changing. As of October 2023 the corporate tax rate in Turkey is 25%. For electronic payment and money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies the corporate tax rate in Turkey as of October 2023 is 30%

Corporate tax rates in Turkey for export Activities (2024)

Previously, a 1% discount was applied to the corporate tax rates in Turkey for exporting companies . With the change made in the second half of 2023, this rate was increased to 5%. In other words, companies exporting in Turkey received an incentive with this reduction in the corporate tax rates.

What is the subject of Corporate Tax?

According to the first article of the Corporate Tax Law of Turkey, the source of the tax are as follows:

• Capital companies (joint stock, limited, limited partnership companies whose capital is divided into shares)
• Cooperatives
• Economic public institutions
• Economic enterprises belonging to associations or foundations (unions are considered as associations; communities are considered as foundations)
• Business partnerships

As a result of the above elements corporate tax in Turkey is very important for the entrepreneurs who are interested in “company establishment in Turkey”

What is Full Obligation and Limited Liability?

Full corporate tax liability is the tax liability of the companies which has their legal and operational center in Turkey  over their local and global earnings.

The limited tax liability is the tax liability of the companies which has not their legal and operational center in Turkey  over their earnings only from Turkey

The legal center is the center indicated in article of association

The business center is the center where activities are managed.

Corporate Tax Return in Turkey

The corporate tax return is submitted to the tax office to which the taxpayer is affiliated, that is the tax office of the place where the legal or business center of the institution is located. It is given between the first day  and 25^th day of the 4th month following the month in which the accounting period is closed

 

Each taxpayer submits a declaration for all of the taxable income. In other words, a separate declaration is not submitted for taxpayers’ branches, agencies, buying-selling offices and shops, manufacturing plants or other workplaces affiliated to them, even if they have independent accounting and allocated capital.

Loss Offset

Losses arising from the commercial activities of the institutions can be deducted from the earnings arising in the following periods. In the corporate tax return, the losses in the declarations of previous years can be deducted from the corporate income, provided that the amounts for each year are shown separately and not transferred for more than 5 years.

Payment of Tax

Corporate tax is paid by the end of the month in which the declaration is submitted. It is paid until the evening of the twenty-sixth day of the month in which the declaration is submitted. In addition, payment can be made with contracted banks.

Since the taxation is one of the most important elements of the profitability of the company, entrepreneurs are very sensitive for the tax regime of the country.

Corporate Tax in Turkey is the most fundamental element of the tax system of Turkey for companies. In this article we provided brief information with this regard. For comprehensive information on the tax system of Turkey please review the resource of Ministry of Finance.

Does the Corporate Tax Rate in Turkey Vary According to Company Types?

First of all, companies in Turkey should be divided into two: capital companies and sole proprietorship companies. Since private companies have a legal personality, they are considered taxpayers according to the Turkish Commercial Code. The point to remember here is that sole proprietorships, unlike limited companies, pay income tax, not corporate tax.

Among the capital companies, the most preferred by foreign investors are Joint Stock Companies and Limited Companies. Both of these types of companies are corporate tax payers. The corporate tax rate in Turkey paid by both types of companies is the same. This rate is 25% of corporate earnings as of November 2023.