The Turkish tax regime is an important part of the economy and can be divided into three main categories: income taxes, taxes on expenditure and taxes on wealth. In Turkish taxation system; rights, burdens, ways of implementing mandates and carrying out duties along with principals of accrual are regulated by the Tax Procedure (TP) Law. This Law comprises procedural and formal provisions of all tax laws.
Turkish direct taxation system consists of two main taxes; personal income tax and corporate income tax. Turkish taxation system comprises several indirect taxes, but the most important ones are value added tax and special consumption tax (also called excise duty).
Multi-tax system is applied in Turkey. The Turkish tax regime can be classified under four main headings:
Personal Income Tax
The net amount of profits and earnings obtained by natural persons in one calendar year are the subjects of the personal income tax.
An individual’s income may consist of one or more income elements:
- Business profits
- Agricultural profits
- Salaries and wages
- Income from independent personal services
- Income from immovable property and rights (rental income)
- Income from movable property (income from capital investment)
- Other income and earnings without considering the source of income
Corporate Tax Income
- The income and earning derived by corporations and corporate bodies are the subject of corporate tax
- The income elements for corporate tax are the same as those covered in the Personal Income Tax.
- CIT is applied at 20 % rate on the corporate earnings
The following entities are the taxpayers of the CIT
- Capital companies
- Cooperative companies
- State Economic Enterprises (public corporations)
- Economic entities owned by foundations and associations
- Joint Ventures
Value Added Tax
- The Turkish tax system levies value added tax on the supply and the importation of goods and services
- Applied to all stages from producer to consumer
The following transactions carried out in Turkey are subject to VAT:
- Supply of goods and services within the scope of commercial, industrial, agricultural or independent professional activities
- Importation of all kinds of goods and services
- Other activities
Excise Duty (Special Consumption Tax)
- First acquisition
- Selling through auction
Delivery,first acquisition, importation and selling through auction of some goods are laid down list numbered:
- Petroleum products, natural gas, lubricating oil, solvents and derivatives of solvents
- Automobiles and other vehicles, motorcycles, planes, helicopters, yachts
- Tobacco and tobacco products, alcoholic beverages, cola
- Luxury products
Banking And Insurance Transaction Tax
- All transactions of banks and insurance companies and bankers are the subject of the tax.
Special Communicaton Tax
- Services of cell phone, cable radio and television broadcasts and telecommunication are generally the subject of the tax.
- Preparation of the documents related to acts, conclusions, official reports, papers related to commercial transactions and receipts is the subject to the stamp tax.
- Goods imported from abroad are the subject of the tax.
Inheritance And Gift Tax
- Items acquired as gifts or through inheritance are subject to taxes between 1% and 30% of the item’s appraised value
Real Estate Tax
- Building Tax: The ownership of the building and setting up usufruct or acting as owner of the building is the subject of the real estate tax
- Land Tax: The ownership of the land and setting up usufruct or acting as owner of the land is the subject of the land tax
Motor Vehicle Tax
- Registration of the motor vehicles in the traffic, municipality and docks is the subject of the motor vehicle tax