tax consulting turkey

Tax Guide

Overall, the main objective of this article is to provide a comprehensive tax guide in Turkey. Undoubtedly, Turkey takes business-friendly policies and provides a deep talent pool and low marketing costs at the nexus of Europe, Asia and Africa. It is critical to emphasize at the outset that tax matters have a direct impact upon every single investment project. Pi Legal as a tax consulting turkey works.

For our work and all legal services on the matter of investment, please click our Practice Areas, titled Investment Advice.

What are the main legal instruments applicable to Tax Law in Turkey?

There are several legal texts providing norms, principles and standards in terms of taxation. Tax lawyers and legal practitioners face a broad range of challenges for the implementation of taxation norms concerned. What is more, the existing legal framework for tax matters is amended and changed continuously by law makers. Particularly three legislatures are of great importance in shaping tax law in Turkey.

Additionally, communiqués play a critical role in formulating specific rights and tax obligations into line with relevant legislation.

As a matter of fact, the Turkish taxation system covers two main income taxes: personal and corporate income tax.

What is the main criteria of the Turkish Income Tax Code for taxation?

In accordance with the established taxation principles all over the world, there are two main criteria for the taxation: residency or nationality. It is useful to understand that article 3 of Income Tax Law (Numbered 193) stipulates residency as the leading criteria for taxation. Income Tax Law bases taxation of natural persons on territoriality principle.  Indeed, according to Article 3, those residing in Turkey are liable to pay tax for his/her worldwide income.

Are foreigners liable for income tax in Turkey? 

As for taxation of aliens, it must be taken into account that Turkey is party to numerous bilateral agreements intended to the prevention of double taxation. Besides, any person staying in Turkey more than 6 months within a calendar year is assumed as a resident in Turkey under Article 4 of Income Tax Code. It necessarily means that taxation obligations are applicable to him/her.

There are of course exceptions to that rule according to Article 5. In that sense, foreigners staying in Turkey for six months or more for a specific job or business or particular objectives cannot be regarded as residents.

What is more, non-residents are not obligated to pay tax in principle. Having said that, non-residents are obliged to pay tax when they earn income in Turkey under Article 6.

Who may be a taxpayer under the Income Tax Code? 

According to Article 1, the income of a real person is subject to taxation. It necessarily means that individuals are liable to pay income tax. Personal income may consist of any type of earnings among others

  • agricultural profits,
  • business profits
  • salaries and wages
  • income from independent personal services
  • income from immovable property and rights (rental income)
  • income from movable property (capital investment income)

What is the main role of the Corporate Tax Code in Turkey?

Corporate Tax Law (Numbered 5520) regulates tax liability for corporations. It is significant to note that Corporate Tax Law stipulates “tax liability” based on the question of where the legal or business center of the relevant company is. If any of these is not located in Turkey, they only pay tax to the extent that they earn income in Turkey under Article 3.

Turkish Business Lawyer

Who may be a taxpayer under Corporate Tax Law? 

Taxation rates are changeable depending on the type of income and relevant sources. Article 1 illustrates that following legal entities are responsible for paying taxes:

  • Capital companies
  • Cooperatives
  • Public economic enterprises
  • Economic enterprises owned by associations and foundations​
  • Joint ventures.

What is meant by a tax identification number? 

The National Identity Tax Number (NITM) is applicable to all Turkish or foreign taxpayers as of 1 July 2006. Foreigners residing in Turkey more than six months are obliged to have a NITM. It is critical to bear in mind that the submission of NITM is an obligation to carry out and finalize administrative actions and banking transactions.

What are tax authorities in Turkey? 

Turkish Revenue Administration is the central national authority to levy and collect taxes. Revenue Administration operates under the umbrella of the Ministry of Finance. In terms of justice sector, individuals are granted to lodge a case before tax courts for the revision, annulment or withdrawal of the taxation and related administrative action.

Conclusion

In the final analysis, this article has analyzed taxation norms and principles set down in Turkey. This study offers a useful tax guide for entrepreneurs. In conclusion, residents in Turkey are subject to tax on their worldwide income. Nonetheless, non-residents are only taxed on their Turkish-source earnings. Understanding, absorbing and implementing the fundamental principles and rules together with exceptions laid down in Turkish tax regulations is far from simple. A full-fledged legal assistance is necessary to develop a proper solution to each case.

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