Introduction to Corporate Tax in Turkey

For international and local companies operating in the regional economy, understanding the corporate tax rate in Turkey is critical. The corporate tax system in Turkey consolidates several levies such as corporate income tax, withholding taxes, VAT and some subsidized free zone innovation and export taxes. Knowing the Turkish corporate tax framework with its significant dates, exemptions, and obligations enables companies to mitigate risks and optimize tax results.

Learning about company tax filing Turkey, deadlines for corporate tax payments, and filing incentive eligibility can save companies from costly mistakes. Commenda’s corporate tax compliance services Turkey equip you with the necessary guidance and knowledge to navigate the complexities of doing business in Turkey.

What Is the Corporate Tax Rate in Turkey?

Every business will attempt to answer: what is the corporate tax rate in Turkey? As of fiscal year 2023, the corporate income tax rate in Turkey is 25% on net taxable profits in Turkey.

However, there are some corporate tax exemptions tailored according to sectors which aim to promote growth:

  • Financial Sector: A higher 30% tax rate applies to banks, financial institutions, insurance companies, and pension funds.
  • Export-Focused Firms: Companies that earn revenue exclusively through exports qualify for a five-point reduction in taxation, which effectively lowers the rate to 20%.
  • Manufacturing Entities: Those holding valid industrial registry certification apply an additional 1-point deduction and may combine the export-linked reduction resulting in rates between 19-24%.
  • Minimum Tax Measures: Starting 2024, Turkey instituted a 10% minimum corporate tax for companies that would otherwise be exempted due to tax incentives. In addition, Turkish and foreign multinationals with more than €750 million in annual revenue are now subject to a 15% global minimum tax.

These classifications, while presenting compliance requirements, open up avenues for tax optimization. There are many ways to optimize, such as adjusting the domestic-to-export sales ratio, obtaining industrial certification, or operating through free-zone entities to achieve preferential rates. This strategic flexibility enables firms to align operational decisions with fiscal benefits.

Breakdown of Corporate Income Tax Components

In Turkey, the corporate income tax system is designed with layers to balance effective base tax collection and apply regulations for certain industries.  

Federal Corporate Tax (25%)

  • To achieve effective base tax collection while considering regulations for specific sectors, Turkey applies a layered approach to corporate income tax.

Financial Surcharge (30%)

  • This is the minimum rate applied to the net profit after accounting and tax adjustments. Deductions allowable are expenses, depreciation, and non-taxable items in accordance with Turkish tax laws.

Branch Profits Tax

  • A domestic company’s overseas branches must pay a 25% tax and a 10% dividend withholding tax, which may be waived under relevant Double Tax Treaties (DTTs).  

Capital Gains Tax

  • The tax rate on capital gains is 25%, but there are exceptions: 
  • A 75% exemption is granted for long-term asset disposals.
  • Real estate that is held for over two years is taxed at 25%.  

Participation Exemption

  • Dividends received domestically are taxed at 0%
  • Foreign-source dividends are exempt if:
  • The shareholder held at least a 10% stake for over one year.
  • The foreign company pays a minimum tax of 15% (20% for financial companies).
  • The profits are repatriated before the tax filings.  

Alternative Minimum Tax / Minimum Tax Floor

  • In cases where firms qualify for full exemptions, a 10% minimum tax will apply. There are no classical AMTs.
  • There is a global minimum tax of 15% for MNEs exceeding €750 million in revenue to counter aggressive base erosion.  

Municipal & Local Taxes

  • There are no municipal-level corporate taxes in Turkey. The central Revenue Administration retains these powers. 

Stamp Duty & Deeds

  • Contracts, documents and deeds are liable to pay a stamp duty of 0.1%-0.6% of the document value.

VAT & Consumption Taxes

  • Though they are separate tax categories, VAT and SCT interact with corporate tax in the areas of deductions and compliance obligations. 

To accurately forecast profits and make informed strategic business decisions, including restructuring, cross-border payments, and operational timing, companies need to analyze every layer—federal rates, sectoral surcharges, repatriation rules, and even stamp duties—to build comprehensive tax liability models. 

Corporate Tax Filing Requirements in Turkey

The company tax filing Turkey is governed by Law No. 5520 and the Turkish Revenue Administration (GİB) supervises compliance. Like many countries, Turkey operates on a self-assessment model, which means evaluation accuracy, filing deadlines, and maintaining reliable records are critical. 

Registration & Log-in

  • Companies must hold a tax ID and be registered in the GİB system gib.gov.tr. Non-residents usually need local representation. 
  • Tubitak-issued electronic or mobile signatures allow for digital submission and filing.  

Filing Process

  • Annual returns require submission of audited financial statements, a profit-loss statement, and schedules detailing costs not permitted as deductions or related party transactions.
  • Returns are submitted in Turkish and the e-Declaration system is used to accept filings post-digital signature.

Payment Methods

  • Tax obligations can be settled electronically via e-Payment, at GİB affiliated banks, or for non-residents via wire transfer.

Extensions & Technical Failures

  • Official support may only grant short extensions during outages but there is no policy like some EU countries have. Businesses are best served managing contingencies proactively.  

Penalties for Non-Compliance

  • For filing deadlines missed, there is a monthly surcharge of one percent, which increases to three and a half percent after a certain period of time.  
  • Fines for inaccurate returns are charged for each case based on specific inaccuracies.  
  • For missing records or unnotarized records, there is a procedural fine that can be as much as a day’s revenue or periodic fines.

Audits & Reviews

  • Companies with cross-border activities, research and development (R&D) tax deductions, or within cooperative zones are prone to automatic audits or industry-related reviews. Results of the audit may result in changes, penalties, or compulsory reporting as prompted by new Turkey disclosure rules. 

Companies may avoid risks of audit and enforcement action by being adept at the GİB portal, having clean books, and managing review triggers. Automated e-filing makes documentation robust and accurate tracking of submissions possible, allowing robust compliance.

Tax Year and Payment Deadlines in Turkey

Tax periods are in alignment with the calendar year beginning January 1 through December 31. Important dates:

Annual Corporate Tax Return & Payment:

  • In Turkey, corporate tax returns are filed annually, thus making the submission due date 30 days after the end of the fourth month hence for calendar-year filers it is April 30. Payments must accompany the return.

Quarterly Advance Payments:

  • Advance installments for the previous year’s financials are set to be paid in three installments due by May 31 (Q1), August 31 (Q2), and November 30 (Q3), with Q4 being reconciled against the annual return of the current year. Prior year Financials can be relied upon to estimate the advance payments. 

Late Payment Penalties:

  • A 1% penalty for each month of unpaid tax shall be charged with 3.5% for legal delays. Interest continues to accumulate until the obligation is settled.
  • Daily penalties apply for filing omissions.  
  • Liabilities and fines resulting from audits can be adjusted and backdated. 

Voluntary Walk-in Conditions:

  • GİB initiates periods for correction where they accept walk-in payments without penalty during new regulation flows, like BEPS or MDR.  

Accurate financial projections and risk registers aligned with filing timelines help avoid unwanted financial risk.

Withholding Taxes and Other Business Taxes

Turkish corporate operations come with a number of withholding taxes that businesses manage on the payers’ behalf. 

Dividends

  • Standard withholding: 15%. DTTs can reduce this to 5–10%.
  • Domestic dividends may be exempt under participation exemption rules.  

Interest

  • Applies at 0–15%, with progressive rates or exemptions for government bonds and DTT beneficiaries.  

Royalties

  • Range from 0–20%, depending on the intellectual property type and treaty-based reductions.

Capital Gains

  • Taxed at 25%, with exemptions for long-held assets sold after two years.  

Value-Added Tax (VAT)

  • Standard VAT is 18%. Reduced rates of 8% and 1% apply to essential goods and services.
  • Export sales are generally zero-rated, enabling recovery of input VAT.  

Stamp Duty

  • Applies at 0.1–0.6% on legal and commercial documents.  

Special Consumption Tax (SCT)

  • Levied on specific goods like petroleum, cigarettes, alcohol, and vehicles—outside corporate tax frameworks.  

Environmental & Municipal Levies

  • While there may be fees for waste and other local services, the scope is quite limited. 

By incorporating the obligations of remitting withholding taxes as part of the tax and pricing evaluations, companies ensure compliance while reaping the benefits of treaty-based rates.

Corporate Tax Incentives, Deductions, and Exemptions

The Turkish tax system promotes investment with generous corporate tax incentives Turkey, particularly for exports, innovation, and strategic sectors.

R&D and Innovation Incentives

Turkey assists research and development (R&D) through Law No. 5746 and its subsequent regulations:

  • Qualifying R&D and design expenses can be super-deducted up to 100% from the corporate tax base.
  • There is an additional 50% salary increment deduction for R&D-related wage bills where headcount meets certain thresholds.
  • Exemption from income tax withholding for personnel engaged in R&D activities.
  • Social security premium relief up to 50% of the employer’s contribution for five years.
  • For R&D activities performed in Technology Development Zones (TDZs), there is a 100% corporate tax exemption as well as VAT and customs duty relief.

Technology Development Zone (Technopark) Incentives

Located across 92 zones in Turkey, tech parks offer stark tax relief:

  • Exemption from corporate tax for software and R&D revenues till a minimum 2028.
  • Exemption from VAT on sales of software.
  • Exemption from stamp duty and customs taxes.
  • Tax and social security contributions for employees engaged in innovation and technology work within TDZs are discounted linkedin.comwww2.deloitte.com.

Free Trade Zones (FTZs)

For Turkey, 19 Free Trade Zones including Mersin, Antalya, and İzmir. These offer robust benefits like: 

  • Complete exemption from corporate and income taxes for companies operating within the zones and focused on manufacturing exports.
  • Exclusion from customs duties and value-added tax (VAT) within the zone borders. 
  • Employees of Free Zone companies are vastly exempt from wage income tax. 
  • Ideal for exporters because of unrestricted currency transfers and operations.

Regional and Sector-based Investment Incentive Schemes

Turkey supports investment based on geographic and economic need:

  • Split into six development regions, incentives are cumulative from Region 1 (most developed) to Region 6 (least developed).
  • The grants comprise a reduction on corporate tax (50-90%), VAT, customs, social security relief for the employer and employee, subsidised interest, and land concession. 
  • The Strategic Investment Program and HIT-30 focus on high technology (semiconductors, renewables) and provide stronger incentives of tax reductions and grants and public infrastructure support.

Example Use Case (Region 3 Investment):
Investing 100 million TRY yields 25 million in corporate tax reduction, 4 million in VAT relief, 1.2 million in customs savings, 12 million employer social security relief, and 1 million in interest support totalling 59.5% support on the investment invest.gov.tr.

International Tax Treaties and Double Taxation Avoidance

Over 90 countries have signed bilateral Double Taxation Treaties (DTTs) with Turkey, allowing international companies to organize cross-border transactions in a tax-efficient manner.  

  • Foreign Tax Credits
    Companies that are residents of Turkey are permitted to claim a foreign income tax credit with respect to any foreign income taxes paid, mitigating double taxation up to the Turkish tax liability on that income.  
  • Withholding Rate Reductions
    Withholding rates on outbound payments of dividends can be reduced to 0-10%. Interest and royalty payments are often reduced to 5%-10% as well.  
  • Permanent Establishment (PE) Rules
    Turkey uses PE rules from the OECD regarding physical presence and activities performed by agents to determine when foreign businesses become taxable residents. Not following these rules might create unanticipated tax liabilities in both countries.  
  • Anti-Avoidance & MDR Compliance
    To align with BEPS Action Plans, Turkey has implemented Mandatory Disclosure Rules (MDR) alongside Country-by-Country Reporting (CbCR) for MNEs. These rules require tax-aggressive structures to be publicly disclosed or face penalties of up to 10 million.  
  • OECD Global Minimum Tax Integration
    Turkey will implement a 15% global minimum tax in 2024, ensuring multinational corporations pay at least that percentage of their profits across the globe, countering base erosion tactics.

These treaty frameworks along with measures regarding transparency foster proactive tax planning. Businesses can respond to Turkey’s favourable tax climate if certain conditions like PE risks or reporting obligations are fulfilled.  

How Commenda Supports Corporate Tax Compliance in Turkey

The corporate tax system in Turkey can be tricky to navigate for international investors and expanding companies. At Commenda, our focus lies on assisting businesses during the entire process of corporate tax compliance in Turkey with utmost accuracy.  

This is how we assist you through corporate tax compliance in Turkey:  

  • Entity Structuring Advice
    As a limited company, joint stock company, or branch office, we advise clients on the most tax-efficient legal structure to incorporate in Turkey.  
  • Registration and Setup
    We facilitate the registration process with the Turkish Tax Administration by acquiring a tax ID, registering for VAT if needed, and setting up mandatory e-invoicing systems.  
  • Accurate Tax Filing and Reporting
    We take care of preparing and submitting quarterly advance corporate tax returns and annual tax filings, complying with the most recent regulations and deadlines.
  • Withholding Tax Management
    We assist firms in determining the correct withholding tax rates on dividends, royalties, service payments, and payments under relevant treaties where applicable.  
  • Transfer Pricing Documentation
    Our specialists help to keep updated transfer pricing documentation files to meet compliance with Turkish regulations to avoid being penalized in related party transactions.  
  • E-Invoicing & E-Ledger Compliance
    We help you comply with Turkish laws on mandatory electronic invoicing and bookkeeping systems, e-ledger generation, e-archiving, and e-ledger archiving.  
  • Audit & Risk Assessment
    Commenda provides pre-audit health check-ups for tax compliance, spotting red flags, answering tax authority queries, and audit preparedness. 
  • Local Expertise with Global Insight
    We have a team of bilingual professionals that work with Turkish regulations and international taxation which allows us to blend local compliance with international business standards. 

Commenda is the go-to partner for firms in Turkey looking to launch a startup or expand their operations while ensuring stay compliant and optimize their tax position. 

Common FAQs About Corporate Tax in Turkey

Q1. What is the current corporate tax rate in Turkey?
The base rate is 25% with a 30% surcharge on financial institutions. There are reductions for certified exporters and manufacturers — exporters (20%), and manufacturers (24%).

Q2. How is the corporate income tax calculated?
Tax is calculated based on net profits after adding back non-deductible expenses and book adjustments. Deductions for R&D and participation exemptions reduce the base amount.

Q3. Are there different rates for small businesses?
There is no statutory SME rate, but small firms may qualify for simplified returns, VAT exemption, or some regional benefits. The general corporate tax still applies.

Q4. When are corporate tax returns due?
The annual return is due April 30 of the following year and the quarterly advances are due May 31, August 31, and November 30.  

Q5. What are the penalties for late corporate tax filing?
Surcharges of 1% per month (capped at 3.5%). Additional fines may be incurred for inaccurate returns, unverified ledgers, and no submission.  

Q6. What incentives or deductions exist?
In addition to the regular incentive packages, there are R&D super deductions, TDZ FTZ exemption, regional investment support, and benefits for strategic projects which may reduce tax liability by up to 100%.

Q7. Is there a minimum corporate tax?
Yes. A minimum tax of 10% now prevents baseline liabilities from being removed by full exemptions. Multinationals with more than €750 million turnover also have a 15% global minimum tax.

Q8. Are foreign companies taxed differently?
Foreign companies tax only Turkish-sourced income, on a withholding and PE determination basis. They must file only where withholding does not meet their liability or a PE is present.

Q9. What services does Commenda provide?
 Registration, filing, audit defense, incentive applications, transfer pricing, VAT & WHT advisory, regulatory updates, and training.