Main Tax Rates in Turkey

MAIN TAX RATES IN TURKEY

1. VALUE ADDED TAX (VAT)
   1. What is VAT ? : VAT is a type of Consumption Tax which is charged on sale of goods or service that people purchase and called Indirect Tax because it is collected by the corporates on behalf of the Goverment.
   2. What are VAT rates ? :The standart rate of VAT is currently 20% in Turkey. However, there are two different rates (1% and 10%) apart from 20%.
      1. VAT Rates of 1% and 10%: Following sales and transactions which are taken part in List No 1 and 2 released by The Minister of Finance are subject to 1% VAT in List No 1; 20% VAT in List No 2
         1. List No 1: Agricultural Products, Second-Hand Cars, Houses sized less than 150 m² , Financial Leasing Transactions.
         2. List No 2: Foods, Education Services, Books, Medicines, Textile Products, Cinema & Theatre Tickets
      2. Exemptions from VAT; Following transactions are exempt from VAT
         • To export goods or services
         • International Transportation
         • Services for watercraft and aircraft at harbour and airports
         • Goods and Services supplied into Free Trade Zone
         • Goods and Services for Corporates owning investment incentive certificate
         • Goods and Services for Oil Exploration
         • Delivery of Scrap and unprocessed metals and items.
2. Reverse Charge Mechanicsm: If a foreign business entity where is not registered in Turkey renders a service to a company registered as a taxpayer in Turkey, Turkish company is responsible for VAT on behalf of the foreign business entity. The company pays directly VAT to tax office by reporting VAT Return No 2 and recover same amount of VAT from its VAT payable. These balance each other out. It means there will be no VAT burden due to this transaction.
2. INCOME TAX

Following seven type of earnings elements are subject to income tax for individuals.

• Commercial Earnings
• Agricultural Earnings
• Earnings from employment, including allowances in salary
• Earnings from self-employment
• Earnings from immovable property and rights
• Earnings movable property
• Others

Individual income tax rates can vary from 15% to 40% depending upon how much the individual earns over a fiscal year of 2023.

3. CORPORATE TAX

In fact, there is a single Corprate Tax rate of 25%. However, effective from 01/10/2023, the tax rate has been turned into 25%. The Tax Return has to be filed on 25^th day of April after end of the fiscal year-end.

4. STAMP TAX

The written documents includes a certain fee such as agreements, payslips, lease contracts etc which are attached of Law of Stamp Tax are subject to stamp tax.

• The rate of agreements is 0,948%
• The rate of lease contracts 0,189%
• The rate of payslips is 0,759%

Despite the abovementioned rates, the stamp tax to be paid can not exceed 10.732.371,80 TL for fiscal year of 2023.

5. SPECIAL CONSUMPTION TAX (SCT) / EXCISE TAX:

Special Consumption Tax (SCT) is charged on consumption on certain goods and products which are classified into 4 lists in attached lists of the 4760 Law of Special Consumption Tax. The tax rates varies depending on type of goods and products.

• List 1^st : Oil based products such as natural gas, fuel, diesel, lubricating oil, solvents.
• List 2^nd : Cars, other motor vehicles, planes, waterecrafts
• List 3^rd :Tobacco products, alcıholic beverage, carbonated beverages, cola
• List 4^th : Luxury products such as durable consumption goods, air conditioners, mobile phones, after shaves, PC, notebook etc

The SCT is derived from one-off whether when the products or the goods are manufactured or imported into Turkey. Tax base of SCT is gross margin of the products, same as calculating VAT.