2025 withholding tax rate in Turkey needs to be kept in mind by all entrepreneurs. Particularly corporate governance can be properly managed based on all updated tax rates including withholding tax rate in Turkey. Monitoring withholding tax is vital for entrepreneurs and corporate entities in Turkey. Staying updated on tax rates, including withholding tax, is crucial for maintaining compliance and fostering effective corporate governance. Below is an analysis of the recent changes and their implications.
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Introduction
An increase from %10 to %15 has been made in the withholding tax rate in Turkey. Tax rate change was declared by Presidential Decree, circuited in the Official Gazette on 22 December 2024.
The Official Gazette page is available here:
The withholding tax rate in Turkey has been increased from 10% to 15%, as outlined by a Presidential Decree published in the Official Gazette on December 22, 2024. This amendment, effective immediately upon publication, has significant implications for financial transactions such as dividend distributions.
What are the 4 legislation applicable to Tax Law in Turkey?
There are the 4 core norms aiming at the formulation of fundamental tax rules in Turkey:
Corporate Tax Code (Numbered 5520),
Value Added Tax Code (Numbered 3065)
Code of Tax Procedures (Numbered 213)
Income Tax Code (Numbered 193),
It is also significant to underline that the enhancement of the investment opportunities in Turkey is also supported by the Investment Incentive Regime in Turkey by presenting tax advantages in Turkey.
For more information take a look at our article on Tax Guide
What is Meant by Withholding Tax?
In accordance with Article 94 of the Income Tax Law Numbered 193, withholding tax rate is taken from individuals. But tax liability belongs to the entities set forth in the same Article including companies. They have to calculate and pay to tax authorities from their payments like salaries on behalf of tax payers. In terms of dividends, again the relevant company is responsible for paying withholding tax to Tax Authorities.
Under Article 94 of the Income Tax Code (Numbered 193), withholding tax refers to taxes deducted from individuals’ income. Entities specified in the law, such as companies, are responsible for calculating and paying these taxes to the authorities. Common payments subject to withholding tax include salaries and dividends. For dividends, the distributing company bears the responsibility of remitting the withholding tax.
2025 Withholding Tax Rate in Turkey
Article 94 of the Income Tax Law, stipulates withholding tax and relevant criteria for its rates. Under the Presidential Decree in question , the amended withholding tax rate was raised for Article 94 of the Income Tax Law and for Articles 15 and 30 of the Corporate Income Tax Law from 10% to 15%.
It means that 15% as 2025 withholding tax rate in Turkey on the dividend shares distributed to by resident entities to non-resident individuals and|or non-resident entities and dividends distributed to the entities that are exempt from taxes enters into effect as of December 22, 2024.
The Presidential Decree introducing the revised withholding tax rate affects:
- Article 94 of the Income Tax Code
- Articles 15 and 30 of the Corporate Tax Code
The updated rate of 15% applies to:
- Dividend distributions by resident entities to non-resident individuals or entities
- Dividend distributions to entities exempt from tax
This change took effect on December 22, 2024, the date of the decree’s publication in the Official Gazette.
The change will be in effect as of the date of publication of the Official Gazette.
Conclusion
Considering the above, it is worth reiterating that core tax rates should be traced closely by entrepreneurs. 2025 Withholding Tax Rate in Turkey will be applied for legal entities including resident entities distributing dividends and non-resident entities transferring profits.
The increase in the withholding tax rate emphasizes the importance of staying informed about core tax changes. Businesses distributing dividends or managing profits must align their practices with the updated 15% withholding tax rate to ensure compliance with Turkey’s tax regulations.
For expert guidance on navigating tax regulations, contact our team for professional assistance.
