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The tax system in Turkey

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This is probably not the most exciting and glamorous side of expatriation, but let’s face it, with your new life in Turkey comes the obligation to comply with the local tax system. Good news is, the Turkish tax system is relatively straightforward, inspired from international standards, and is viewed as one of the most competitive in the region. In other words, taxes in Turkey are all but stifling.

Here is an overview of the main taxes in Turkey.

Tax offices

First, you will need to get a tax identification number, which will be required for a variety of procedures (opening a bank account or applying for a residence permit for example). To obtain a tax number, you will simply have to present your passport and provide the names of your father (in Turkish, 'baba') and of your mother ('anne') at your local tax office. That’s it!

Value added tax (VAT)

VAT (the tax on consumption) is levied on all imported or locally produced goods and services. The standard VAT rate is 18%, but basic goods such as grocery products or books enjoy a lower 8% rate, while raw agricultural products are taxed at 1%.

On the other hand, a higher Special Consumption Tax is attached to gas products and fuels, motor vehicles, tobacco products and alcoholic beverages, and luxury goods. This special tax has been on a rising trend of late — for example the price of beer has all but doubled over the last 4 years.

Individual income tax

This part may not concern you if you do not intend to work in Turkey. Under certain conditions you may keep your fiscal residence in your home country even if you dwell in Turkey.

Otherwise, you will have to pay income tax on any revenue earned in Turkey. The taxation rate is progressive — it increases along with your total yearly earnings — from 15% for an income up to 12,600 Turkish liras to 35% for a revenue exceeding 110,001 liras, as of 2016.

Turkish companies automatically calculate their employees’ income tax, deduct it from the wages, and directly transfer it to the tax office. Entrepreneurs and independent workers, however, have to file a quarterly tax return themselves.

Corporate income tax

If you own a company operating in Turkey, you will normally have to pay a 20% tax on corporate profits. Yet, to encourage investment, the country has developed a battery of tax incentives for companies, generally applying to investment projects in priority development areas, and sectors or for specific operations such as Research and Development.

Wealth tax

There are three types of wealth taxes in Turkey: the property tax, the tax on motor vehicles and the tax on inheritance and gifts. Property taxes are calculated yearly based on the values of land and buildings, at rates ranging from 0,1% to 0,3%. Inherited or gifted items are subject to a progressive rate, from 1% to 30% of the item's value. Finally, the tax on motor vehicles is determined annually according to the age, type and capacity of vehicles.

 Useful links:

Revenue Administration www.gib.gov.tr
Invest in Turkey www.invest.gov.tr
Finding a tax office: www.gib.gov.tr

We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
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Member since 01 June 2008
Small earth, Mauritius
1 Comment
tpw
tpw
2 years ago

Just a note on the side... should any expat in Turkey need to get a turkish tax number, with a valid passport you can get one for free that takes only a few minutes, at the local state tax office.

Reply

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