The legal regime concerning all taxes (in a broad sense, all public revenues) applied in a specific country during a specific period is qualified as the Tax System. The Turkish Tax System, on the other hand, examines the taxes applied in Turkey during a specific period. Currently, a multi-tax system is in effect in Turkey, with multiple taxes collected from more than one source.
In tax law literature, the “Turkish Tax System” is also referred to as Special Tax Law. In this naming, while the general principles of tax law are explained under the title of General Tax Law, the structure of tax types in practice and the legal rules related to these taxes are examined in the Turkish Tax System or Special Tax Law.
The tax system can be analyzed by dividing it into sections according to many criteria. These criteria are:
- According to the taxpayer’s status: Subjective and Objective Taxes,
- According to the distinction between the payer of the tax and the person bearing the tax burden: Direct and Indirect Taxes,
- According to the scope of the tax: General and Specific Taxes,
- According to the economic source taxed: Taxes on Income, Taxes on Wealth, and Taxes on Expenditure.
Taxes in Turkey are divided into three categories:
Income Tax Personal Income Tax Corporate Income Tax (Organizations) Withholding Tax Consumption Tax Value Added Tax (VAT) Special Consumption Tax (SCT) Stamp Tax Banking and Insurance Transactions Tax (BITT) Wealth Tax (Asset) Property Tax Motor Vehicle Tax Inheritance and Gift Tax Income Tax Income Taxes in Turkey include Income Tax, Corporate Tax, and Withholding Taxes.
In Income Tax, the income of real persons is taxed within the framework of certain rules; in Corporate Tax, the income earned by capital companies, cooperatives, business partnerships, economic enterprises affiliated with associations and foundations, and public economic enterprises is taxed. Taxes on expenditures in Turkey are very diverse, with the most well-known being Value Added Tax (VAT), Special Consumption Tax (SCT), Stamp Tax, Betting Tax, Banking and Insurance Transactions Tax, Special Communication Tax, Entertainment Tax, Environmental Cleaning Tax, Customs 1 Duties, Fees, etc.
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Personal Income Tax The income of real persons is subject to tax on real person income. Income includes the earnings and interest amount that a person earns during a calendar year. According to the Turkish Tax Law, taxes are divided into the following categories: • Business Income • Agricultural Income • Salary • Income from Freelance Professions • Profit from Housing – Real Estate Value Increase Tax • Profit from Movable Capital • Other Income and Profits Regarding the domicile of individuals, the Turkish Tax System is applied in the form of Full Liability and Limited Liability. Accordingly, in Full Liability, all income and benefits earned within and outside Turkey during a year (for individuals residing in Turkey continuously for more than 6 months in a calendar year) are taxable. However, in Limited Liability, which includes individuals without a residence permit in Turkey, only the income and benefits that individuals earn within the borders of Turkey are taxable.
Income tax has rates that vary according to the amount of earnings. The taxation rates for incomes for 2025 are listed above. According to these rates, the calculation is as follows:
If the non-wage income subject to tax is TRY 100,000, the accrued tax amount is (100,000 x 15%) TRY 15,000. If the non-wage income subject to tax is TRY 200,000, it is TRY 23,700 for TRY 158,000 and (32,000 x 20%) TRY 6,400 for the remaining TRY 32,000. The total accrued tax amount will be TRY 32,100. If the non-wage income subject to tax is TRY 300,000, it is TRY 23,700 for TRY 158,000 and (142,000 x 20%) TRY 28,400 for the remaining TRY 142,000. The total accrued tax amount will be TRY 52,100.
Corporate Income Tax (Organizations) Corporate Income Tax includes legal entities and companies. These are: • Capital Companies • Cooperatives • Public Economic Enterprises • Businesses Belonging to Associations and Foundations • Business Partnerships
Withholding Tax Withholding tax in the tax system refers to a way of calculating individuals’ income tax. Thus, companies, organizations, and employers directly deduct the personal income tax amount from the net wages of these individuals and pay the total of these deductions to the state on behalf of their employees. Withholding tax is generally used for paying employees, paying freelance contracts, paying rent, and paying dividends to companies. For this reason, withholding tax includes four types:
3-1- Tax Deducted from Employees’ Salaries In the Turkish Tax System, certain taxes are collected by deducting them from the salaries of taxpayers to ensure tax collection, and even the monthly salaries of employees of institutions and companies are paid after deducting the tax amount. However, companies and employer organizations are required to apply for withholding tax quarterly or annually by applying to the tax office and submitting a declaration.
If your annual income is up to TRY 158,000, your tax rate is 15%. If it is up to TRY 330,000, it is TRY 23,700 for the TRY 158,000 portion and 20% for the amounts above. If it is up to TRY 800,000, it is TRY 58,100 for the TRY 330,000 portion and 27% for the amounts above.
3-2- Workplace Rental Tax (Commercial) Another form of taxation is the rental tax on commercial establishments. In Turkey, the rental tax collected by the Tax Office is applied to the lessor, not the owner of the commercial property. In fact, these types of taxes are the responsibility of the tenant and the business owner, not the property owner. The rental tax rate for commercial buildings in Turkey is 20%. It should be noted that this tax does not include residential properties, only workplaces and commercial buildings.
3-3- Freelance Professions Tax Payments made for freelance professional work within the scope of Article 18 of the Income Tax Law are subject to a withholding tax of 17%, and others are subject to 20%. This deduction is a preliminary taxation and will be deducted from the tax calculated in the annual declaration.
3-4- Stock Dividend Tax DIVIDENDS obtained from the participation certificates of equity-intensive funds are subject to a 0% withholding tax. – Those obtained from the participation shares of venture capital investment funds and real estate investment funds held for more than two years are subject to a 0% withholding tax. Those obtained otherwise are subject to a 7.5% withholding tax.
Consumption Tax Consumption Tax is divided into Four Types:
1- Value Added Tax (VAT) The VAT applied in Turkey is generally 1%, 10%, or 20%. For example, the VAT on bread is 1 percent, most food taxes are 10 percent, and the electronic tax rate is 20 percent. Goods and services in trade, industry, agriculture, and freelance professions, as well as goods and services imported into the country, are subject to VAT. In fact, the Turkish Tax System collects VAT on the supply and importation of goods and services. A value-added obligation arises when a person or organization engages in commercial, industrial, agricultural, or freelance professional activities in Turkey or imports goods and services.
Some VAT Exemptions and Exceptions Include: Export of Goods and Services Roaming services provided in Turkey in accordance with international roaming agreements for customers outside Turkey (i.e., non-resident customers) and on the basis of reciprocity Petroleum exploration activities Tax exemptions and privileges granted to diplomatic missions, consulates, and international organizations and their personnel (generally subject to reciprocity) Services provided for ships and aircraft in ports and airports Tax exemptions related to international transportation and transit Facilitating the entry of equipment and machinery into Turkey in the context of promoting direct foreign investment Tax exemption for customers and companies operating in Free Trade Zones Banking and Insurance Transactions are exempt from VAT as they may be taxed separately for Banking and Insurance Transactions.
VAT Payment Time VAT is a monthly tax and must be declared by the 24th day of the following month. The payment of this tax is the responsibility of the company accountant. VAT is usually paid in advance when receiving services or incurring expenses.
2- Special Consumption Tax (SCT) In Turkey, Special Consumption Tax is applied to the following four groups of goods:
Petroleum products, natural gas, machine oils, solvents, and their derivatives. Cars and other transportation vehicles, motorcycles, airplanes, helicopters, and yachts. Tobacco and related products and alcoholic beverages. Luxury consumer goods. Unlike VAT, which is levied on every supply of goods and services, Special Consumption Tax is applied only once.
3- Banking and Insurance Transactions Tax In Turkey, the Banking and Insurance Transactions Tax rate is 5% according to the tax laws in force in 2023. The BITT rate is according to the tax laws in force in Turkey. The tax rate is a tax levied on banking transactions, insurance transactions, payment systems, and similar financial transactions. AP 8 Azer 1402
4- Stamp Tax Stamp Tax applies to a wide variety of documents, including contracts, agreements, debts, stocks, identification information, guarantees, financial statements, and payrolls. Stamp Tax is determined as a percentage of the document value, ranging from 0.189% to 0.948%, and is collected as a fixed price (pre-determined price) for some documents.
Wealth Tax (Asset) There are Three Types of Wealth Tax in Turkey
1- Property Tax Buildings, apartments, and land owned in Turkey are subject to Property Tax ranging from 0.1% to 0.6%. Motor Vehicle Taxes are collected annually at a fixed amount that varies according to the age and engine capacity of the vehicle.
2- Motor Vehicle Tax The taxpayers of these types of taxes are real and legal persons who own motor vehicles registered in their names with the Traffic Registration Directorates, Municipalities and Ports, and the Ministry of Transport and Infrastructure Civil Aviation Registry Office. The Motor Vehicle Tax amount for land vehicles is determined according to the weight, age, cylinder capacity, and fuel consumption of the vehicles. Property Tax is determined annually and is paid at the beginning of January each year. Motor Vehicle Tax, on the other hand, is paid in two equal installments in January and July each year.
3- Inheritance and Gift Taxes Products received as gifts or through inheritance are subject to an increasing tax rate depending on the estimated value of the items. Inheritance tax paid in a foreign country is deducted from the taxable value of the capital. Inheritance and Gift Taxes are paid in six-month installments over a three-year period.
