Often. In the last three years alone, five statutes have made substantive changes: Law No. 7456 (2023), Law No. 7491 (2023), Law No. 7524 (2024), Law No. 7571 (2025) and Law No. 7582 (2026). To these must be added the communiqués published each December, which uplift fixed amounts and thresholds by the annual revaluation rate.

Taxes may only be imposed, amended or abolished by statute (Article 73/3 of the Constitution). Article 73/4, however, allows Parliament to delegate to the President the power to vary exemptions, exclusions, reliefs and rates within statutory upper and lower limits. That power is used extensively: VAT, special consumption tax, withholding tax and digital services tax rates can be changed without any parliamentary process, often with effect from the following day. The fact that a rate applies today is therefore not a safe assumption for a medium-term plan.

Amendments begin with a bill tabled by members of Parliament, are examined by the Planning and Budget Committee, are passed by the General Assembly and are published in the Official Gazette. Tax provisions are generally carried in omnibus statutes amending a large number of unrelated laws, and there is no stage at which a draft is released for public consultation. Implementing rules are set out in general communiqués, while the administration’s interpretation is expressed through circulars and private rulings. Tax statutes are subject to review by the Constitutional Court and secondary legislation to review by the Council of State.

The obligations are set out in the Tax Procedure Law No. 213 (TPL).

A commencement-of-business notification must be filed and a tax identification number obtained before activities begin; changes of address, of activity and cessation are equally notifiable.

Companies keep books on the balance sheet basis. Invoices, dispatch notes, self-employment receipts and payroll records must be issued in the statutory form; a defect in form may lead to the expense being disallowed and to a special irregularity penalty. Taxpayers above the relevant thresholds must use electronic invoices, electronic archive invoices, electronic dispatch notes and electronic books, and filing, payment and service of documents are carried out electronically.

The corporate tax return is filed by the 25th day of the fourth month following the end of the accounting period, and the tax is paid within the same period. Advance corporate tax is declared quarterly; Law No. 7566 reinstated the obligation to file for the fourth quarterly period. VAT returns are filed by the 28th and withholding tax returns by the 26th day of the following month. The transfer pricing form is submitted as an annex to the corporate tax return.

Books and records must be retained for five years from the beginning of the calendar year following the year to which they relate, and produced on request. Failure to produce them may result in the disallowance of input VAT, among other consequences.

Assessment, accrual and collection are handled by the Revenue Administration and the local tax offices; taxpayers above a certain size are registered with the Large Taxpayers Tax Office. The power to conduct tax audits is vested in a separate body, the Tax Inspection Board. Customs duties fall to the Ministry of Trade and follow their own objection procedure. Most contact between the administration and the taxpayer takes place through the Digital Tax Office and the electronic service system.

The routes for resolving a dispute without litigation are: the invitation to explain (Article 370 TPL), voluntary disclosure (Article 371), reduction of penalties (Article 376), waiver of legal remedies (Article 379), correction and complaint (Articles 116 et seq.) and the settlement procedure. The scope of settlement was narrowed in 2024: the tax itself was taken out of the procedure, which is now available only for tax loss penalties and for irregularity and special irregularity penalties above a statutory amount. Where the dispute concerns the tax rather than the penalty, there is no room for negotiation at the administrative stage.

The administration’s view on an uncertain point may be obtained by way of a private ruling. A private ruling is not a binding advance decision: its effect is that no penalty is imposed and no late payment interest accrues where the taxpayer has acted in accordance with it. The only genuinely binding mechanism is the advance pricing agreement (question 11).

Yes. Disputes are decided by courts which sit within the administrative judiciary and are entirely independent of the tax authority. Proceedings are governed by the Administrative Procedure Law No. 2577.

The court of first instance is the tax court, sitting with a single judge where the amount in dispute is below the statutory threshold and as a three-judge bench above it. First instance decisions may be appealed to the tax chambers of the regional administrative courts, whose review extends to the facts. Where the amount exceeds a further statutory threshold, a final appeal lies to the Council of State; below that threshold the appellate decision is final. Both thresholds are uplifted annually by the revaluation rate.

The time limit for bringing proceedings is, as a rule, thirty days from service, and the same period applies to appeals. Hearings are exceptional and proceedings are conducted largely in writing; the appointment of a court expert lengthens matters appreciably. Once domestic remedies are exhausted, an individual application may be made to the Constitutional Court alleging breach of the right to property or to a fair trial.

For self-assessed taxes, payment falls due within the filing period (question 2). Where tax is assessed by the administration, the period is thirty days from service of the notice of assessment.

The rule on disputed amounts favours the taxpayer. Although bringing proceedings does not generally suspend an administrative act, tax cases are an exception: where proceedings are brought in time against an assessment and the related penalty, collection is suspended automatically until the court has ruled. No stay order, security or payment is required.

That protection is confined to the first instance. If the claim is dismissed, the tax accrues and becomes collectable; an appeal does not of itself suspend collection.

Late payment interest runs from the ordinary due date to the date of accrual (Article 112 TPL), and late payment surcharge runs on public receivables not paid when due (Article 51 of Law No. 6183). Both are set at 3.7% per month with effect from 13 November 2025. Suspension of collection does not stop interest from running.

Deferral and payment by instalments are available where there is hardship, with deferral interest at 39% per annum; Law No. 7582 extended the maximum deferral period to seventy-two months. In addition, restructuring statutes are enacted every few years and offer substantial reductions in penalties and interest in exchange for the withdrawal of pending litigation.

Yes. Tax confidentiality is governed by Article 5 TPL. Officials engaged in tax matters, judges and staff of the tax courts, members of statutory tax commissions and court experts may not disclose, or use for their own benefit or that of third parties, any secret concerning the person, accounts, business, undertaking, wealth or profession of a taxpayer or of those connected with the taxpayer which they learn in the course of their duties. The obligation survives the end of their office and its breach is a criminal offence.

There are statutory exceptions. Taxpayers must prepare and display a tax plaque; final assessments and penalties may be disclosed by the administration in accordance with the procedure laid down in the Law, which is the basis on which lists of tax debtors are published from time to time. Information may be shared with public bodies authorised by statute and with the judicial authorities. Exchange of information with other jurisdictions is a further exception (question 7). Tax confidentiality applies alongside the general data protection legislation.

Yes. Türkiye signed the Convention on Mutual Administrative Assistance in Tax Matters in 2011 and signed the Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information on 21 April 2017, ratifying it on 31 December 2019. The competent authority is the Revenue Administration.

The first automatic exchange took place in 2018 with Norway and Latvia, and exchange under the multilateral agreement was extended to reciprocating jurisdictions with data for 2019. Information is exchanged by the end of September of the year following the reporting year. The list of jurisdictions from which information is received does not coincide with the list to which information is sent, and both change annually. Türkiye also participates in country-by-country reporting and in the exchange of information under the global minimum top-up tax rules.

Beneficial ownership must be reported to the administration, but there is no public register of beneficial ownership and none has been announced. Transparency is achieved through reporting to the authorities rather than through public disclosure. Reporting is made electronically under a general communiqué issued pursuant to the Tax Procedure Law, and financial institutions are subject to customer due diligence obligations under Law No. 5549. The trade registry is public: the shareholders of a limited liability company appear on it, whereas the shareholders of a joint stock company do not.

Article 3 of the Corporate Tax Law (CTL) applies two tests: the legal seat and the place of management. A company with either of them in Türkiye is fully liable to tax and is taxed on its worldwide income. A company with both outside Türkiye has limited liability.

The legal seat is the seat designated in the articles of association or founding instrument, so every company incorporated and registered with the Turkish trade registry is fully liable to tax. The place of management is a factual test: the centre where the business is in fact concentrated and directed. A company incorporated abroad may therefore be treated as fully liable to tax in Türkiye if management decisions are in fact taken here. The administration does not apply this test systematically, but structures established abroad without sufficient economic substance carry an audit risk.

Dual residence is resolved under the applicable double tax treaty, the method varying from treaty to treaty. A certificate of residence must be produced in order to rely on treaty provisions.

Corporate tax liability is confined to the closed list in Article 1 CTL, and entities outside that list are transparent (question 18). Turkish law does not recognise the trust, and vehicles treated as transparent in other jurisdictions are characterised by reference to their similarity to the entities listed in Article 1. There is no elective classification mechanism and no specific anti-hybrid rule.

Yes; intra-group cross-border transactions are among the most heavily audited areas. The Tax Inspection Board is organised along sectoral lines and multinational group companies are audited by dedicated teams. Case selection is data-driven: return data, electronic invoice and ledger records, customs declarations and information received through exchange channels are cross-checked.

The recurring themes in audits are the following:

• Intra-group service charges. Management and technical support fees and cost recharges attract criticism more often than any other item. The administration requires evidence that the service was actually received and of the benefit derived from it; where the evidence is considered insufficient, the whole charge may be disallowed.
• Apart from the arm’s length nature of the rate, the characterisation of the payment as a royalty or as business profit is itself in issue, with consequences both for withholding tax and for the application of treaties.
• Intra-group financing. Borrowings from shareholders are examined under the thin capitalisation rules and interest rates under the arm’s length principle.
• Permanent establishment and dependent agent claims. Where a Turkish group company acts for an affiliate abroad, the affiliate may be found to have a taxable presence in Türkiye.
• The interaction between customs value and transfer pricing. A difference between the value declared on importation and the arm’s length price defended for corporate tax purposes may attract criticism from each authority in the opposite direction.

The audit report is followed by a notice of assessment. Recourse to the mutual agreement procedure provided for in double tax treaties is available, although it is used sparingly in practice.

Yes, under Article 7 CTL. Where resident individuals and companies control a foreign subsidiary, directly or indirectly, separately or together, by holding at least 50% of its capital, dividend rights or voting rights, the profits of that subsidiary are taxed in Türkiye whether or not they are distributed. The highest participation held at any time during the period is taken into account.

Three conditions must be satisfied together: at least 25% of the subsidiary’s total gross revenue must consist of passive income such as interest, dividends, rent, licence fees and gains on securities; the subsidiary must bear an overall income or corporate tax burden of less than 10% on its commercial balance sheet profit; and its total gross revenue for the year must exceed the foreign currency equivalent of TRY 100,000.

The income is declared as at the month in which the subsidiary’s accounting period closes, in proportion to the participation held. Foreign taxes are credited, and where the profits are subsequently distributed only the part not previously taxed is brought into charge.

That the regime applies to individuals as well as to companies is unusual by comparison. The gross revenue threshold of TRY 100,000, however, has not been updated since 2006 and no longer performs the filtering function intended for it.

Article 13 CTL treats the purchase or sale of goods or services with related parties at prices which do not comply with the arm’s length principle as a disguised distribution of profit. The profit so distributed is treated as a dividend as at the last day of the period, with consequences not only for corporate tax but also for dividend withholding tax. The definition of related party is broad and a relationship of dependence may exist without any shareholding. The methods follow the OECD Guidelines.

Documentation falls under three headings. The annual transfer pricing report is prepared within the corporate tax filing period and produced on request. The master file is prepared by taxpayers belonging to a multinational group whose balance sheet total and net sales in the preceding period each amounted to TRY 500 million or more. The country-by-country report is filed electronically by the Turkish resident ultimate parent of a group with consolidated revenue of EUR 750 million or more, by the end of the twelfth month following the reporting period. Where the documentation obligations are met in full and on time, the tax loss penalty on any resulting assessment is reduced by 50%.

Under Article 12 CTL, borrowings from shareholders or related parties used in the business are treated as disguised capital to the extent that they exceed three times equity at any date during the accounting period; borrowings from related banks and similar credit institutions are taken into account at half their amount. Interest and foreign exchange losses on disguised capital are not deductible and are treated as a dividend as at the end of the period. A separate restriction applies under Article 11 CTL: where borrowings exceed equity, 10% of the financing expenses attributable to the excess is not deductible.

There is no general safe harbour. Taxpayers may, however, apply to the Revenue Administration for an advance pricing agreement determining the method to be applied. The maximum term is five years and the agreement may be applied to earlier periods where the circumstances are the same and the limitation period has not expired. Unilateral, bilateral and multilateral agreements are available.

Yes; that function is performed by Article 3 TPL. Under the substance over form principle in paragraph (B), what governs is the true nature of the taxable event and of the transactions relating to it, and that true nature may be proved by any evidence other than an oath. Where a state of affairs is asserted which is inconsistent with economic, commercial and technical realities, or which is not normal or customary given the nature of the case, the burden of proof lies on the party asserting it. The provision allows the administration to characterise a transaction by its economic result rather than its legal form. It is complemented by Article 8 TPL, under which private agreements as to liability do not bind the tax office. The limit of the rule is the principle that taxes may only be imposed by statute: the substance over form principle permits recharacterisation but does not permit a charge for which the law does not provide.

In practice the administration relies on the concepts of simulation and of the abusive use of private law forms, and most of the analysis is carried out at the audit stage. Alongside the general rule there are specific provisions which are applied more frequently: transfer pricing and thin capitalisation (Articles 12 and 13 CTL), the controlled foreign corporation regime (Article 7) and the conditions governing the carry-forward of losses. Article 30/7 CTL, which provides for withholding on payments to persons resident in jurisdictions to be designated, has never been applied because the list has never been published.

There is no mechanism in Türkiye through which the tax treatment of a transaction can be negotiated in advance. As settlement is confined to penalties, questions of characterisation are resolved before the tax courts.

Yes. The digital services tax was introduced by Law No. 7194 and has applied since 1 March 2020. It covers digital advertising services, the sale of digital content and services relating to that content, and the provision and operation of digital platforms on which users may interact, including intermediation services. The taxpayer is the digital service provider, and it is immaterial whether it has a permanent establishment or a permanent representative in Türkiye.

The tax is levied on gross revenue rather than on profit, with no deduction for costs or expenses. The taxable period is one month and returns are filed by the end of the following month. Providers whose revenue from the services concerned in the preceding accounting period was less than TRY 20 million in Türkiye or less than EUR 750 million worldwide are exempt; where the provider belongs to a consolidated group, the group’s total revenue is taken into account.

The statutory rate of 7.5% was reduced by Presidential Decree No. 10767 to 5% with effect from 1 January 2026 and to 2.5% with effect from 1 January 2027.

The future of the tax depends on the multilateral solution. Türkiye joined the international understanding on the removal of unilateral digital services taxes and undertook to repeal the tax once the Pillar One solution takes effect. As that process has not been completed, the tax remains in force; because the power to reset the rate lies with the President, its weight can be changed without recourse to Parliament.

Pillar Two

Part Five, added to the Corporate Tax Law by Law No. 7524, published in the Official Gazette of 2 August 2024, transposed the GloBE rules and introduced two separate taxes: the local minimum top-up corporate tax and the global minimum top-up corporate tax. The minimum rate is 15%. The rules apply to multinational groups whose consolidated revenue exceeded EUR 750 million in at least two of the four accounting periods preceding the reporting period, and they apply to accounting periods beginning on or after 1 January 2024, so that Türkiye moved on the same timetable as EU Member States for the first year of application.

The local top-up tax ensures that, where the jurisdictional effective tax rate of the Turkish group entities falls below 15%, the difference is collected in Türkiye rather than under the income inclusion rule in the jurisdiction of the ultimate parent. The global top-up tax applies through the income inclusion rule and the undertaxed payments rule.

The regime became operational during 2026. For the 2024 accounting period, the filing date for the local top-up tax was 15 January 2026 and for the global top-up tax 30 June 2026, and the return and the notification form were made available through the Digital Tax Office. Türkiye also acceded to the multilateral competent authority agreement on the exchange of information in this field, signed on 20 April 2026 and ratified by Presidential Decree No. 11396.

One distinction should be drawn. The domestic minimum corporate tax introduced by the same statute (Article 32/C CTL) is a purely domestic measure and is independent of Pillar Two. It applies to all corporate taxpayers regardless of group size and provides that the corporate tax computed may not be less than 10% of corporate income before exemptions and deductions. A company may be subject to both regimes in the same period.

The relationship between these taxes and the incentive regimes is direct: where an exemption available in a technology development zone or a free zone, or under an investment incentive certificate, brings the effective rate below 15%, the benefit is recovered through the top-up tax. Apart from the substance-based income exclusion, there is no means of preventing that outcome.

Pillar One

The application of Amount A depends on the entry into force of the relevant multilateral convention, which has not been completed. Türkiye has enacted no domestic legislation in this field and has continued to exercise its taxing rights through a unilateral measure, the digital services tax (question 13).

The effect has been to adjust the existing framework to international standards rather than to rewrite it. Türkiye already had much of the anti-avoidance apparatus before BEPS: the transfer pricing, thin capitalisation and controlled foreign corporation regimes all entered into force in 2006. The change has been felt mainly in transparency and reporting.

The three-tier transfer pricing documentation and country-by-country reporting were transposed in 2020, and Türkiye became party to the mutual assistance convention and to the automatic exchange mechanisms. As a result, the administration’s knowledge of the global structure of multinational groups is not comparable with the position ten years ago.

On the digital economy, Türkiye chose unilateral measures rather than waiting for a multilateral solution: a special VAT registration was introduced for non-resident providers of electronic services, followed by the digital services tax. The early adoption of the Pillar Two rules shows, conversely, that agreed solutions are also transposed quickly.

On the limitation of interest deductions, Türkiye did not adopt the fixed ratio rule recommended by the OECD. It retained the thin capitalisation rule and added a proportionate restriction on financing expenses alongside it.

The position on treaty-based measures is different. Türkiye signed the Multilateral Convention on 7 June 2017, but the bill approving ratification has not completed its passage and the ratification process remains incomplete. Minimum standards such as the principal purpose test are therefore not automatically reflected in the existing treaty network; recently signed or revised bilateral treaties, by contrast, contain provisions of that kind directly. Any question of treaty application involving Türkiye must accordingly be tested against the text of the particular treaty.

Yes. Income is taxed under the Income Tax Law (ITL) for individuals and under the Corporate Tax Law (CTL) for companies. The principal taxes on expenditure are VAT and the special consumption tax. Taxing powers are held centrally; municipalities are confined to a narrow field such as property tax and the environmental cleaning tax. A large proportion of rates may be varied by Presidential decree within statutory limits.

a) Business profits

The general rate of corporate tax is 25%. Banks, financial leasing, factoring and financing companies, capital markets institutions, insurance, reinsurance and pension companies are taxed at 30%, as are profits from build-operate-transfer and public-private partnership projects. Export profits benefit from a 5 point reduction (20%) and the production profits of companies holding an industrial registry certificate from a 1 point reduction (24%); Law No. 7582 introduced a rate of 12.5% for production and agricultural production profits for 2027 and subsequent periods. The domestic minimum corporate tax and the minimum top-up corporate tax apply above these rates (question 14). Business, agricultural and professional income of individuals is subject to progressive rates: for 2026, on non-employment income, 15% up to TRY 190,000, 20% up to TRY 400,000, 27% up to TRY 1,000,000, 35% up to TRY 5,300,000 and 40% above that.

b) Employment income and pensions

Employment income is subject to the same tariff, save that the 27% rate applies up to TRY 1,500,000 and the 35% rate up to TRY 5,300,000. Tax is collected by withholding and no return is filed for employment income from a single employer below the statutory threshold. The minimum wage is exempt from income tax. Salary payments also bear stamp tax at 0.759% and social security contributions. Pensions paid by the Social Security Institution are not taxable; payments from private pension arrangements are treated as investment income and are subject to withholding at rates which vary with the period for which the arrangement has been held.

c) VAT and other indirect taxes

The standard rate of VAT is 20% and the reduced rates are 10% and 1%. The system operates by deduction of input tax; returns are filed and tax is paid by the 28th day of the following month. On services received from non-residents and used in Türkiye, the tax is accounted for by the recipient under the reverse charge. The special consumption tax is levied under four schedules covering fuel, motor vehicles, alcoholic beverages, tobacco products and durable goods. Financial transactions exempt from VAT are subject to the banking and insurance transactions tax, the general rate of which is 5%, with much lower rates for certain transactions such as foreign exchange dealings.

d) Savings income and royalties

Interest on deposits, repo income and gains on securities are taxed by withholding under provisional Article 67 ITL, the application of which has been extended to 31 December 2030. Under Presidential Decree No. 10041, withholding on Turkish lira deposit and participation accounts is 17.5% for demand accounts and accounts with a maturity of up to six months, 15% for accounts with a maturity of up to one year and 10% for longer maturities; on foreign currency deposit accounts the rate is 25% irrespective of maturity. The rate on investment fund units is 17.5%, the 0% rate being retained for equity-intensive funds and for units in venture capital and real estate investment funds held for more than two years. The 0% rate on government bonds, treasury bills and lease certificates has been extended to 31 December 2026. Dividends are subject to 15% withholding and royalties and professional service payments to 20%, in each case subject to the applicable treaty.

e) Income from land

Rental income is taxed as immovable property income. Business rents paid by withholding agents bear 20% withholding, whereas residential rents are declared by the landlord. The exemption for residential rental income is TRY 58,000 for 2026. Property tax rates range from 0.1% to 0.6% and are doubled within metropolitan municipalities. On registered transfers, title deed fees of 2% are payable by each of the buyer and the seller.

f) Capital gains

There is no separate capital gains tax. For individuals, gains on the disposal of immovable property within five years of acquisition are taxable, the exemption for 2026 being TRY 150,000. The treatment of shares differs: shares in a joint stock company benefit from a two-year holding period, while no holding period applies to interests in a limited liability company. For companies, 75% of gains on the disposal of participations is exempt under Article 5/1-(e) CTL subject to conditions, immovable property acquired after the amendment made by Law No. 7456 being outside the exemption.

g) Stamp and capital duties

Stamp tax is levied on documents rather than on transactions and, as a rule, each counterpart is separately taxable. For 2026 the rate is 0.948% on agreements, 0.189% on leases and 0.569% on tender decisions, and the maximum amount payable on a single document is TRY 29,115,961.10. The incorporation of companies and increases of capital are exempt from stamp tax and fees. There is no capital duty and no corporate net wealth tax.

The starting point is the accounting profit, but the taxable base is determined under the tax legislation. Corporate income is computed under the business income provisions by virtue of Article 6 CTL, which means that the valuation rules of the Tax Procedure Law apply directly. Taxpayers start from the commercial balance sheet profit, add back non-deductible expenses, deduct exemptions and reliefs and arrive at the taxable profit. Financial statements prepared under the Turkish Financial Reporting Standards are not used in determining the base, and useful lives for depreciation are fixed by the schedules published by the Ministry.

The principal items which separate the taxable base from the accounting profit are interest and foreign exchange losses on disguised capital, profit disguised through transfer pricing, the restriction on expenses relating to passenger cars, the restriction on financing expenses and undocumented expenditure. Losses may be carried forward for no more than five years and may not be carried back.

High inflation gives rise to a further problem which must be taken into account. Under provisional Article 37 TPL, added by Law No. 7571, no inflation adjustment will be made for the 2025, 2026 and 2027 accounting periods, including the quarterly periods, regardless of whether the statutory conditions are met; the President may extend that period by up to three further accounting periods. During the period of deferral, depreciable assets may be revalued. The result is taxation of nominal profit, which pushes the effective burden above the statutory rate for businesses with significant inventories and fixed assets.

Corporate tax liability is confined to a closed list in Article 1 CTL: capital companies, cooperatives, economic public enterprises, economic enterprises belonging to associations or foundations, and joint ventures. Funds regulated and supervised by the Capital Markets Board, and comparable foreign funds, are also treated as capital companies. Vehicles outside the list are transparent:

• An ordinary partnership is not a separate taxpayer; the income is taxed in the hands of the partners in proportion to their shares, although the partnership is separately registered for VAT and withholding tax purposes.
• General partnerships and ordinary limited partnerships have legal personality but are not corporate taxpayers; the partners of a general partnership and the general partner of a limited partnership declare business income, while the limited partner declares investment income.
• In a partnership limited by shares, corporate tax is charged only on the part of the profit attributable to the limited partners.
• For joint ventures, corporate tax registration is optional; in international construction projects that election has direct tax consequences.

Turkish law does not recognise the trust and contains no rules on the characterisation of trusts governed by foreign law. Branches of non-resident companies have no separate legal personality, and amounts remitted to head office are subject to withholding tax.

One practical distinction affects the choice of vehicle: joint stock companies and limited liability companies are subject to the same corporate tax regime, but the taxation of transfers of their shares differs (question 16).

On residence. As the legal seat is the seat designated in the articles of association, every company incorporated in Türkiye is necessarily fully liable to tax; registration is not, however, determinative in itself, since a company incorporated abroad may also be fully liable on the ground that its place of management is in Türkiye (question 8).

Companies fully liable to tax are taxed on their worldwide income, foreign taxes being credited under Article 33 CTL up to the Turkish tax attributable to that income. Companies with limited liability are taxed only on the categories of income derived in Türkiye, the source rules being those in Article 7 ITL. For business profits, what matters is the existence of a permanent establishment or permanent representative in Türkiye and the derivation of the profit through it; where a treaty applies, the treaty definition of permanent establishment prevails. Other categories of income are taxed principally by withholding.

Changing residence afterwards is not straightforward under Turkish law: company law provides no mechanism for transferring the legal seat abroad, so residence can in practice only be brought to an end through liquidation.

Yes; the system is incentive-heavy and has changed considerably over the last two years.

Investment incentives. Presidential Decree No. 9903, published in the Official Gazette of 30 May 2025, replaced the framework which had been in force since 2012. The new system consists of the programmes grouped under the Türkiye Century Development Initiative together with sectoral and regional incentive schemes; the available support comprises reduced corporate tax, VAT and customs duty exemptions, employer’s social security contribution support, interest or profit share support, land allocation and, newly, machinery support. Applications for incentive certificates will be considered until 31 December 2030.

Technology development zones. Under Law No. 4691, income from software, design and research and development activities is exempt until 31 December 2028, and exemptions from income tax on the salaries of qualifying personnel and social security support are available. Taxpayers whose exempt income exceeds the statutory threshold must invest a proportion of it in venture capital funds or in entrepreneurs operating in incubation centres; if that obligation is not met, part of the exempt income loses the benefit of the exemption for that year.

Research and development and design centres. Under Law No. 5746 the whole of the qualifying expenditure may be deducted a second time, and withholding tax incentives on salaries, social security support and stamp tax exemption apply.

Free zones. The exemption for manufacturing profits was narrowed by Law No. 7524 and is now confined to profits derived from the export of the goods produced.

Financial services. The sector is taxed at 30% and bears the banking and insurance transactions tax; at the same time, the deduction available to institutions operating in the Istanbul Financial Centre with a participant certificate in respect of profits from the export of financial services has been preserved and its term extended by Law No. 7582.

Qualified service centres and transit trade. Law No. 7582 allows 95% of the income derived from abroad by companies qualifying as a qualified service centre, and 100% in the Istanbul Financial Centre, to be deducted from the corporate tax base. The deduction applies for twenty accounting periods and the income must be transferred to Türkiye by the filing date. The deduction for income from the sale abroad of goods purchased abroad without their being brought into Türkiye was likewise increased to 95%. The deduction for certain exported services was increased to 80% by Law No. 7491.

None of these regimes can now be assessed in isolation: the domestic minimum corporate tax sets a floor, and for groups above the EUR 750 million threshold the top-up tax recovers the benefit obtained (question 14).

Yes, under Article 5/B CTL, headed exemption for industrial property rights. Fifty per cent of the income derived from the licensing, transfer or sale of inventions resulting from research, development, innovation and software activities carried out in Türkiye, of the income derived from their mass production and marketing in Türkiye, and of the part attributable to the patented invention of the income from the sale of products manufactured using it in Türkiye, is exempt from corporate tax.

The limits of the exemption are narrow. It applies only to inventions protected by a patent or a utility model certificate; trademarks, designs and copyright fall outside it. The patent must have been granted following examination and the utility model certificate following a positive search report. The research, development and software activity must have been carried out in Türkiye, which aligns the regime with the nexus approach. Where the invention is used in production, the part of the income attributable to it is determined under transfer pricing principles. The exemption begins on the date the certificate is granted and lasts no longer than the period of protection; the valuation report originally required was abolished by Law No. 6728.

The technology development zone exemption and the research and development allowance support the earlier stage of the same activity, although the same income cannot benefit twice. Royalties paid abroad are subject to 20% withholding, subject to the applicable treaty.

No. There is no group taxation or consolidated filing; each company is taxed separately on its own profits and the profits and losses of group companies cannot be aggregated. Nor is there any group contribution mechanism. The only consolidation is within a single company: branches, factories and other establishments are reported in a single return even if they maintain independent accounting systems.

Losses may be carried forward for no more than five years and may not be carried back. Losses may pass between companies only on a merger or division, and then only within limits: losses of the transferred company may be used up to the amount of the equity taken over, provided that returns for the last five years were filed on time and that the activity is continued for five years.

Tax-neutral reorganisations are available. Transfers and divisions under Articles 19 and 20 CTL are carried out at book values on the basis of universal succession; where the conditions are met, no tax arises on the transfer and the transaction is exempt from VAT and stamp tax. The conditions for carrying forward input VAT on a merger or transfer were tightened by Law No. 7524, which also introduced a restriction on input VAT carried forward and not recovered over five calendar years.

Because there is no consolidation, intra-group transactions are fully taxable: supplies of goods and services bear VAT, agreements bear stamp tax and pricing must comply with the arm’s length principle. The jurisdictional computation required under the global minimum top-up tax, by contrast, introduces a form of consolidation which domestic law does not otherwise recognise.

Yes; withholding is used extensively and operates as the final charge on many categories of income. The relevant provision depends on the recipient: Article 94 ITL for payments to individuals, Article 15 CTL for payments to resident companies and Article 30 CTL for payments to non-resident companies. Provisional Article 67 ITL contains a separate regime for income from securities.

For non-residents the domestic rates are: dividends 15%; royalties 20%; professional service payments 20%; rents outside a commercial or agricultural activity 20%; interest on loans from foreign banks and financial institutions 0%; and interest on other lending 10%.

No withholding applies to dividends paid by a resident company to another resident company, or to a non-resident company which derives the dividend through a permanent establishment in Türkiye. Amounts remitted to head office out of the profits of a Turkish permanent establishment are subject to withholding at the same rate as dividends.

The rates apply subject to the primacy of double tax treaties under Article 90 of the Constitution. A certificate of residence for the relevant year must be produced to the withholding agent; failing that, the domestic rate is applied and the treaty rate may be claimed afterwards by way of refund.

Payments for services received from abroad give rise to more disputes than any other category; the distinction between business profits and professional services, together with the permanent establishment and duration tests, forms the basis of the taxpayer’s case. As withholding is computed on the gross amount, a contractual undertaking to pay a net amount transfers the burden directly to the Turkish party. Returns are filed by the 26th day of the month following payment.

There is no single environmental tax regime; obligations with an environmental purpose are spread across different statutes. The environmental cleaning tax collected by municipalities is charged on business premises at fixed amounts. The recovery contribution share under the Environment Law No. 2872 is payable by those placing on the market plastic bags, tyres, batteries, accumulators, mineral oils, electrical and electronic goods and packaging. The special consumption tax on fuel and motor vehicles and the motor vehicles tax are, whatever their label, the heaviest charges which influence environmental behaviour.

The principal development came in 2025. The Climate Law No. 7552, published in the Official Gazette of 9 July 2025, established the legal framework for carbon pricing, providing for the creation of an emissions trading system, national allocation planning, the distribution of allowances and voluntary carbon markets. Although the Law defines carbon pricing instruments as covering both an emissions trading system and carbon-based taxes, the instrument chosen has been the emissions trading system; no separate carbon tax has been introduced. Installations within the system must surrender allowances annually corresponding to their verified greenhouse gas emissions. Behind the legislation lies the question, for producers exporting to the European Union, of the jurisdiction in which the carbon cost is to be borne.

There is no tax credit specific to environmental investment. Support is provided through the general instruments: green and digital transformation projects are within the scope of the new investment incentive system, and research and development in energy efficiency and clean technology qualifies for the allowances under Law No. 5746.

Under Article 5/1-(a) CTL, dividends received from a participation in another company fully liable to Turkish tax are exempt from corporate tax. No minimum participation or holding period is required and no withholding applies to such distributions. Profits are therefore not taxed repeatedly as they move up a chain of companies; taxation is deferred until the profit is paid to an individual shareholder or abroad.

For dividends from foreign participations, Article 5/1-(b) CTL requires that the recipient holds at least 10% of the paid-in capital of the foreign company; that the participation has been held without interruption for at least one year; that the income has borne an overall income or corporate tax burden of at least 15%; and that the income is transferred to Türkiye by the date on which the corporate tax return for the relevant period falls due. Article 58 of Law No. 7491 added an alternative: where the recipient holds at least 50% of the paid-in capital of the foreign company and transfers the income to Türkiye by that date, 50% of the income is exempt without the other conditions having to be met. Dividends outside both routes are included in taxable income, foreign taxes being credited under Article 33 CTL. Where profits previously taxed under the controlled foreign corporation rules are later distributed, only the part not previously taxed is brought into charge.

For individuals, half of the dividends received from resident companies is exempt from income tax and the balance is included in the annual return where the filing threshold is exceeded, the whole of the withholding tax being credited against the tax computed. A comparable exemption applies to dividends from foreign joint stock and limited liability companies where at least 50% of the paid-in capital is held and the dividend is brought to Türkiye within the filing period.

The 15% withholding applied on distribution is the final charge for non-resident individuals and companies (question 23).

The advantages Türkiye offers and the risks it carries arise from the same body of rules, and the two have to be read together.

Advantages

Although the corporate tax rate is 25%, the effective burden falls appreciably depending on the activity: export profits benefit from a 5 point reduction and, under Law No. 7582, production profits will be taxed at 12.5% from 2027. The range of incentives is wide; alongside the new investment incentive system, research and development and design centres, technology development zones and free zones, the qualified service centre, transit trade and Istanbul Financial Centre regimes have been added in 2026. A qualified and comparatively affordable workforce, a location giving access to European, Middle Eastern and North African markets, the customs union relationship and an extensive treaty network are further strengths. The tax administration is highly digitalised, which lowers the cost of compliance once systems are in place. Finally, the automatic suspension of collection where proceedings are brought in time against an assessment affords a cash flow protection which many jurisdictions do not.

Disadvantages

The first is predictability: the legislation changes frequently and often through omnibus statutes, and a large proportion of rates may be set by Presidential decree with immediate effect. The second is the effect of inflation on the taxable base; as no inflation adjustment will be made for 2025 to 2027, nominal profits continue to be taxed. The third is the minimum taxes, through which the benefit of an incentive may be partly recovered under the domestic minimum corporate tax or the top-up tax. The fourth is the intensity of disputes: audits are frequent, assessments common, and since the tax itself was removed from the settlement procedure in 2024 litigation has become the only real option, with late payment interest running throughout. The fifth is structural: there is no group taxation or consolidation, losses may be carried forward for five years only, and stamp tax arises on each document and each counterpart.

Türkiye is chosen not because its headline rate is low but because it produces an efficient result when the activity is placed in the right regime. For structures built around production, exports, research and development and the export of services the framework is competitive; structures resting on tax arbitrage alone are not sustainable, whether against the minimum taxes or against audit practice.