8 Chapter Tax Laws

    • Important points about tax law to advance into Turkey

      Turkey in 2015 was in place 88th of the Doing Business ranking for starting a business in that country, this year Turkey is at place 94th over 189 economies. According to data collected by Doing Business, starting a business there requires 8.00 procedures, takes 7.50 days, costs 16.60% of income per capita and requires paid-in minimum capital of 11.00% of income per capita.

      ■In case of starting business without establishing bases in Turkey
      Permanent establishments are fixed business or permanent representative where profits are derived in the source country by non-residents of that country.
      Permanent establishments for residents or non-residents are obliged to file annual corporate income tax and quarterly advance corporate income tax returns. Withholding taxes are applicable on the portion of the profit transferred to the main office outside from Turkey.  The rate is 15% but can be reduced depending of the tax treaty the main office resides.

      ■In case of starting business with establishing bases in Turkey
      [In case of establishing a representative office]
      To open a representative office is required to receive a permission from the country for three years after this period the company must present a report about their previous activities and their future plans in the country to receive an extension. As well representative offices must submit a report every year on their activities. A representative office cannot perform commercial activities that may lead to profits and is not considered a legal entity. The representative offices are opened especially for research and marketing purposes. No minimum share capital is needed to open the representative office. There required documents are the following:
      •Certificate of registration by the Turkish consulate.
      •The Balance sheet of the parent company for the previous year.
      •Power of attorney given to the manager of the representative office.
      •declaration about the future planed actions for the representative office.
      •Copy of the lease contract if its available.
      After receiving the registration approval, the company must apply for the identity number and a withholding tax from the competent tax department.
      [In case of establishing a branch office]
      It is required to be registered at the Trade Registry Office to open a Branch office, the procedures for setting it are like a corporation or a limited company and is subject to the same operating rules as a subsidiary.
      The branch office is not a legal entity, no shareholder is needed, its duration is limited to the duration of the parent company, no capital is required but is best to allocate a budget for operations. 
      Repatriation of the profits generated by the branch is allowed which are subject to a corporate tax of 20%, the transference of those profits is subject to a withholding tax at a rate of 15 %, which may be reduced by Double Taxation Prevention Treaties. 
      This are the following requirement to open a Branch office:

      •A Petition signed by an authorized person from company or by proxy, the original or the notarized copy of the power of attorney must be attached to the petition.
      •The resolution from the parent company to open a branch.
      •A certified original copy of the parent company’s articles of association.
      •Certificate of Activity of the parent company or any documentation that about the registration and current status of the parent company
      •A power of attorney granted by the parent company in favor of its resident representatives, assigning full representation and accountability.
      •Five copies of the Establishment Declaration Form 
      •Two copies of the power of attorney stating the representative in Turkey
      •If the branch representative is a Turkish national, a notarized copy of his/her ID card. 
      •Two copies of the signature declarations of the branch representative under the branch title
      •A letter of commitment that has to be signed by an authorized person from the parent company.
      •A Chamber Registry Declaration Form Statement to be obtained from the Trade Registry Office this has to include photographs from the branch representatives.
      [In case of establishing a local subsidiary]
      The subsidiary is separated from the parent company and can be established as a new company incorporated in Turkey. Since the subsidiary is considered a separate legal entity it can have 100% of foreign capital, meaning that the management and decisions come from the parent company and as well it must also observe the provisions for annual accounting and reporting, the tax on profits is to be paid in the country of origin for the parent-company.
      The corporate tax rate 20%, is the same for residents and non-residents in Turkey and as taxpayer’s companies are considered limited or unlimited, a subsidiary is an unlimited company for which corporate tax must be calculated on their total income obtained all over the world.
      The subsidiary is a total different company that could be formed as a limited liability company or a joint stock company. For opening a subsidiary in Turkey:
      A minimum capital share is needed, must be different in accordance to the type of company chosen. For a limited liability company, the minimum capital share is 50,000 TRY if it is public and 10,000 TRY if it is private. One founder or a board of directors is needed as well the decisions will be taken by the shareholders in a general meeting.
      At the incorporation with the local Trade Register its required to present the articles of association, and copies of the passports of the managers.
    • Tax treaties in Turkey

      Turkey has a vast network of treaties, that help to eliminate double taxation. According with the tax authorities to be able to obtain the benefits under a tax treaty, tax must be withheld then a refund will be issued after the documentation is provided.
      Tax Treaties with Turkey
      South Africa
      Bosnia- Herzegovina
      New Zealand
      Northern Cyprus
      Korea (ROK)
      Czech Republic
      United Arab Emirates
      United Kingdom
      United States
      Saudi Arabia

    • Foreign tax credit

      Turkish tax legislation provides a foreign tax credit for residents where Turkey taxes foreign-sourced income up to the Turkish tax due on the same source of income if certain requirements are satisfied. As well, companies are taxed on their worldwide income, with a foreign tax credit granted for foreign tax paid up to the amount of Turkish tax attributable to the foreign income. It must be documented through the foreign tax office and should be approved by the Turkish consulate in the country in which the foreign tax was paid.
    • Transfer pricing tax system

      ■Turkish transfer pricing tax system
      Methods for transfer pricing:
      1. Comparable Uncontrolled Price Method (CUP)
      2. Cost Plus Method (C+)
      3. Resale Price Method (RPM)
      4. Other methods (Profit Split Method, Transactional Net Margin Method, and Method Determined by Taxpayer)
      There are 3 types of documentation requirements:
      1. Annual Transfer Pricing Report which must be prepared by all corporate income taxpayers until the deadline for filing the annual CIT return and, upon request, submitted to Turkish Revenue Administration or other tax authorities entitled to make tax examination.
      2. Transfer Pricing, Controlled Foreign Corporations and Thin Capitalization Form which must be filled by all corporate income taxpayers and submitted to the relevant tax office as an attachment to the annual CIT return.
      3. Taxpayers having an APA should prepare an Annual APA Report every year during the term of the APA and submit it to Turkish Revenue Administration until the deadline for filing the annual CIT return.
      ■Submitting documents
      [Annual report about transfer pricing]
      Case of a person who is tax registration for leading company
      By Law taxpayers have keep documented evidence within the company in case of
      any request by the tax authorities.
      The annual transfer pricing report deadline is due 15 days upon request, the preparation deadline is on the 25th day of the fourth month following the end of the fiscal year which is the 25th of April. The report should include different levels of information depending if the taxpayer is registered to the Major Taxpayers Tax Office and if it is operating in a free trade zones of Turkey.
      Annual transfer pricing report documentation requirements:
      • Information about the taxpayer such as tax ID number, corporate name, taxation period, etc.
      • Information about the related parties within the scope of the form such as company´s name, country of residence, etc.
      • Total amount of transactions that occurred between related parties.
      • The methods used for the related party transaction.
      • Information about the controlled foreign company of the company such as company´s name, country of residence, etc.
      • Information about thin capitalization
    • Measures tax system of tax haven

      The Turkish Legislation to prevent money laundering and tax evasion, some measures have been taken regarding EU Acquis and OECD rules.  In 2007, new corporate tax law no.5520, entered into force. According to article 30/7 of the Law no. 5520;
      “All sorts of payments made to corporations (including branches of resident corporations) that are established or operational in countries which are regarded by the Council of Ministers to undermine fair tax competition due to tax and other practices will be subject to taxation in Turkey irrespective of the fact that: the payments in question are subject to tax or not; or the corporation receiving the payment is a tax payer or not. In this case, stoppage at the rate of 30% is foreseen to be levied over these payments. But under the following cases the stoppage shall not be applied:
      -          Principal interest and dividend payments over the loans obtained from foreign financial institutions.
      -          Insurance and reinsurance payments.”
      Controlled Foreign Company (CFC) tax system.
      CFC rules apply when a resident company has at last 50% interest in a non-resident company with the following conditions:
      1- Minimum 25% or more of the gross income of the control foreign company is comprised of passive income such of the interest, royalty, dividend, profit, rent and sale of security. 
      2- CFC shall bear income and corporate tax lower than 10%. Taxes other than income or corporate income tax do not count towards the tax burden.
      3- The annual total gross revenue of the CFC exceeds the TRY 100,000. 
    • Thin capitalization taxation

      If the amount of debt provided to a Turkish entity by its shareholders exceeds three times of the equity, the excess of debt above 3:1 ratio is known as a disguised equity. Because of this:
      1- expenses incurred during this disguise of equity cannot be deducted for corporate taxes
      2-the interests paid on the disguised equity is known as disguised dividends and are subject to dividend WHT at a 15 %.
      An addition of equity to the company within a period does not help to overcome the thin-capitalization status for the current period, because the shareholder’s equity is measured as of the opening balance sheet, but it may help for subsequent periods.
      The Thin capitalization rules about related party transactions mentions that if the ratio of the borrowings from shareholders or from persons related to the shareholders exceed three times the shareholder´s equity of the borrower company within the year, the exceeding portion will be considered as thin capital. Since January of 2006 the transfer pricing rules apply to resident companies with transactions with related parties, whether resident or not in Turkey, but this is not applied to domestic transactions between related companies unless a loss to the Treasury has occurred. 
    • Taxation system

      ■Tax law in Turkey
      The main taxes imposed on companies are the corporate income tax, withholding tax, value added tax (VAT), special consumption tax, banking and insurance transaction tax and stamp duty.
      The main tax law for companies is the Corporate Tax Law, the office in charge of the enforcement and collection of taxes is the Revenue Administration.
      ■Kind of tax
         [Direct tax and Indirect tax]
      Direct Taxes
      Indirect Taxes
      Real Property
      Rates vary depending on the use of the land.
      Value Added Tax
      Income tax
      15% to 40%
      Capital Tax
      No rate, but has a contribution equal to 0.04% of the contributed capital.
      Real state tax
      0.1% for housing
      0.2% for other than housing
      0.3% vacant land
      0.1% land outside municipal areas
      Transfer tax
      4% of the acquisition or transfer value.
      Stamp duty tax
      0.189%- 0.948%
      Customs and excise duties
      Custom duties are levied at the time of importation on the customs valuation and according to the Customs Tariff Position Numbers.
      Special Consumption Tax
      From 0.5% to 130%.
    • Personal income tax

         [Definition of a resident]
      The residents are those who reside in Turkey, and spend more than six months in Turkey within a calendar year, they are taxed on their earnings and incomes derived in and outside Turkey.
      [Definition of a non-resident]
      The non-residents are those who do not reside in Turkey and do not spend more than a continuous period of six months in Turkey within a calendar year, they are taxed only on their earnings and incomes derived in Turkey.
      ■Taxable persons
       Taxable persons are employees and self-employed persons

      ■Taxable year
      The tax year ends in December 31st.
      ■ Calculation of personal income tax
      [Taxable income]
      Residents are responsible for personal income tax on all their income obtained in or outside Turkey and non- residents who receive part of their income from Turkey must pay tax only under the income generated in the country.
      Taxable income is levied on the following types of income:
      -commercial activities
      -agricultural activities
      -professional activities
      -salaries and wages
      -income from immovable property
      -dividend, interest and royalty income and other income such as capital gains.
      Income Scales (TRY) Employment Income.
      Rate (%)
      Income Scales (TRY) Non-Employment Income)
      Rate (%)
      Up to 12,600
      Up to 12,600
      110,001 and over
      110,001 and over
      [Tax-exempt income]
      Tax exemptions for individuals are premiums for medical, dental, sickness, and disability plans, incentive compensation plans, contributions to the social security scheme in the home country within the upper limit applied in Turkey, and salaries paid by a non-resident employer from sources outside of Turkey
      [Deductible expenditure]
       [Deduction impossible expenditure]
      ·Funds withdrawn from the company by the owner or by his spouse or children, or other assets in kind acquired by them.
      · Monthly salaries, wages, bonuses, commissions and compensation paid to the owner of the enterprise, to his spouse, or his minor children.
      · Interest on the capital invested by the owner of the company
      [Deduction from income]
      The following items of expenditure may be deducted from taxable income:
      ·pension contributions ( 20.5% of the salary)
      ·charitable contributions up to certain limits.
      ■Calculation of tax
      The following are the normal methods of recognizing tax reimbursements paid by the employer:
      ·current year gross-up
      ·current year reimbursement
      To calculate:
      ·Income Tax Base (Taxable Income) = Gross Salary - Social Security Premium (Employee's Share)
      ·Income Tax = Taxable income * Income Tax Rate (%)
      ■Procedures of Tax return and payment
       [Deadline for tax return]
      Corporate income tax must be paid by 30 April of the year of filing. Tax return should be filed by March 25 in the following year, and taxes are payable in two equal installments in March and July.
      [Provisional return]
      Individuals earning an income for professional or commercial services must make income tax payments based on the 15% of the quarterly profits shown in their quarterly income statements, must be declared by the 14th day of the second month following the end of the quarter and paid on the 17th day.
      [Case of resident]
      Residents are not generally required to file income tax returns if they have only been income taxed through a withholding mechanism at source. Employees and self-employed individuals are responsible for paying taxes. Salaries paid to resident employees are taxed at source through a withholding mechanism and there is no filing requirement for this income.
      [Case of non-resident]
      Non-residents are not generally required to file income tax returns if they have only been income taxed through a withholding mechanism. Salaries paid to non-resident employees are taxed through a withholding mechanism and there is no filing requirement for this income. But if an employee is paid by two employers in a calendar year and the payment made by the second employer exceeds TRY 30,000 for year, the employment income should be subject to a declaration regardless of the fact of whether it is already subjected to withholding or not. Taxes withheld will be credited against the taxes payable according with the tax return.
      Non-resident taxpayers must fill special tax return. The special tax return is used for the reporting of certain profits and earnings by tax payers subject to limited tax liability.


    • Corporate income tax

      [Domestic corporation]
      Residents known as full taxpayers are companies whose main business offices are in Turkey. And those companies are taxed on their worldwide income, with a foreign tax credit granted for foreign tax paid up to the amount of the Turkish tax for foreign income.
      [Foreign corporation]
      Non-residents known as limited taxpayers are branch offices whose legal head office and business center are located outside of Turkey and are subject to be taxed on income derived from Turkey. The income is subject to the standard rate of corporate income tax other income may be subject to withholding taxes.
      [Non- profit organizations]
      Non-profit organizations are foundations and associations, created to achieve an objective with no permission to achieve profits.
      Seven founders are needed for establishing an association.
      The associations created in Turkey may be organized in federations with a minimum of three associations or in confederations with at least three federations. Associations have a statute with the name offices, objectives and activities planned to be performed to achieve them, responsibilities and powers of the board of management and audit board, the number of permanent and reserve members, etc.
      The recognition of the statute of association is earned after the submission of foundation deed and other documents.
      Foundations are non-profit organizations without membership established to achieve a certain objective prescribed in its Statute.
      Annual reports must be delivered to this body and if the foundation setup in Turkey is also performing activities for the public benefit, then the reports must be delivered to the Ministry of Finance.
      Taxable income
      The taxable income are all the profits derived from earned income in Turkey.
      Non-taxable income
      Dividends qualifying under the participation exemption. In Turkey under a participation exemption dividends paid by a resident company to another Turkish company are exempt from corporate income tax.
      ■Capital Gains
      [Capital income which is arose from transaction with domestic firm in Turkey]
      The rate of standard tax is the same as the rate of normal income tax of an individual´s income from 15% - 35%.
      A capital gain from the sale of Turkish securities, traded on the Turkish stock exchange, that were held by the vendor for at least 1 year before the date of sale, or sale of shares of resident companies held for at least 2 years is exempt from tax.
      [Capital income which is arose from transaction with foreign firm]
      The standard rate of tax for a corporation is 20%.
      On the sale of foreign participations by a resident international holding company if held for more than 2 years the capital gain is exempt from tax.
      Under certain terms sale of local participation shares is taxed at 25% of the general 20% rate.
      Participate Exemption
      All generated profits from earned income are included in taxable income excepting dividends. Dividends paid by a resident company to another Turkish company are exempt from corporate income tax. For non-resident companies to be exempt the following criteria must be met:
      1- the non-resident payer is a corporation or limited liability company.
      2-The Turkish recipient owned at least 10% of the paid in capital of the payer for at least one year
      3-the profits from which the dividends are paid from were subject to foreign income tax of at least a 15%.
      4-the dividends are remitted to Turkey by the date the corporate tax return is due.
      ■ Deductible expenditure
      The main deductible expenses for corporate tax are:
      -General Operating expenses such as wages, pensions, interest and royalty payments.
      -Travel expenses.
      -Taxes on real property. stamp duties and local taxes.
      -Costs of issuing share certificates and expenses related to the formation and registration of a company.
      -Losses that happened in the last 5-year period.
      -100% on Research and Development expenses.
      ■Nondeductible expenditure
      · Interests that are calculated and paid on equity capital
      · Earnings distributed as slush fund through transfer pricing.
      · Reserves.
      · The corporate tax (all kinds of fines, tax fines, late fees and overdue interests).
      · The losses that are incurred for issuing securities at prices below their nominal value as well as the commissions paid and all similar expenses with respect to such securities. · The expenses and the depreciation costs of the sea vessels like yachts, cutters, boats, speed boats, and the air vessels like airplanes and helicopters that are rented by or registered to the enterprise's name, and which are not associated with the main field of activities of such enterprise.
      · Except for the penalties stipulated in the contracts, material damages and compensations for pain and suffering incurred as the result of offences of the corporation itself, its shareholders, directors and employees.
      · Material damages and compensations for pain and sufferings paid upon offences committed by use of press or upon radio and television programs.
      · 50% of the advertisement costs for all kinds of alcoholic beverages as well as tobacco products.
      ■Calculation of depreciation
      Taxpayers may determine the depreciation rate for all their fixed assets, by using the straight-line method or the declining-balance method which is limited to 50%, the declining- balance method might be twice the rate of the straight- line method. The applicable rates are announced in general communiques issued by the Ministry of Finance.
      For the fixed assets depreciation for the year of acquisition is calculated on a partial basis, by taking the month in which the purchase was made as a complete month. During the last year of depreciation, the depreciation set aside partially in the year of acquisition is completed to make up a full year.
      Intangible assets are depreciated over 15 years and goodwill in 5 years. The leasehold is depreciated based on the lease period.
      ■Special tax measures
      [Research and Development]
      Turkey gives special incentives for research and development centers in which minimum of 30 full-time personnel are employed and projects granted by the Government Institutions. The incentives are:
      1.100% deduction of research and development expenditure from corporate tax base.
      2.Income withholding tax exemption for employees (80% or 90% of the employee income tax).
      3.50% of social security premium exemption for employers during a 5-year period.
      4.Stamp duty exemption for applicable documents.
      5.For new scientists, there is a Techno-initiative capital up to TRY 100K
      [Special tax measures are related to company which operate in Free-Trade Zone]
      All companies established in Free Trade Zones are exempt from Value Added Tax and the transactions and arranged documents related to the activities carried out are exempt from stamp duties and charges. Another benefit of the Free Trade Zone is that trade is free from the Customs Duty Procedure. The Free Zone has an easy access to EU countries because Article 23 of the EC Treaty stipulates free circulation for Community goods throughout the European Community (EC).
      Manufacturing industry
      In Turkey is duty-free on importation of materials for manufacturing and is tax free on exports of finished products. Goods of Turkish origin with a value less than US$5000 or its equivalent in Turkish Lira can be exempted from export procedures.
      ■Procedures of Tax return and payment
      [Deadline for tax return]
      The corporate tax return shall be submitted to the tax office starting from the first day until the evening of the 25th day of the 4th month following the closing month of the fiscal period.
       [Deadline for tax payment]
      The corporate income tax must be paid by the end of the month that the tax return is submitted.
      [Provisional return]
      Companies are required to pay in advance a corporate tax based on their quarterly profits at a rate of 20%. Advance corporate tax returns must be submitted by the 14th day of the second month following the end of the quarterly period and the tax is payable by the 17th day of the same month.
      ■Rules of penalty
      There are 4 types of penalties envisaged by the TP Law:
      · Tax loss fine: equals the amount of the tax lost charged to the taxpayer or the responsible person. In case the tax loss is caused by altering or concealing the books, records, making calculation and accounting frauds in the books and records, etc.
      · Irregularity: an infraction of the provisions of tax laws concerning the form and the procedure.
      · Special irregularity:  penalties are imposed when documents such as invoices, notes of expenses, etc. have not been issued, used, kept and those who are obliged to give information, to submit books have not fulfilled these obligations, and in case of failing to comply with the requirements which are made compulsory by the Ministry of Finance based upon the authorizing provisions of the Law.
      · Imprisonment: penalty imposed to those who commit acts such as accounting frauds in books and records, opening accounts in the name of non-existing persons, altering or concealing the books, etc. The imprisonment periods may vary from 18 months to 3 years, 2 to 5 years or 3 to 5 years.
      The delay charge interest is charged for the period between the date tax was due and the assessment’s date. The current rate per month is 1.4% per month.
    • Withholding Tax

      ■Tax rate
      The rate for dividends is 15%.
      The rate for interests is 10%.
      The rate for royalties is 20%.
      [Remittance of profit from branch]
      The rate for Branch remittance tax is 15%
      [Payroll tax]
      The tax rate for payroll up to 15% to 35%
    • Tax return and payment of Withholding tax

        [Period of tax return and payment]
      Monthly Case;
      Must be declared by the 25th day of the fourth month after the end of the company's accounting period. Corporate income tax is payable by the end of the month in which the tax return is due,
      Quarterly Case:
      Must be declared by the 14th day of the second month following the end of the quarter and paid on the 17th day.
    • Value Added Tax(VAT)

         [Taxable object of VAT]

      The taxable base of a transaction is generally the total value of the consideration received, not including the VAT itself. The VAT Law deals with the taxable base under four headings:

      -the taxable base on deliveries and services.

      -on importation,

      -on international transportation.

      -special types of taxable base.

      The reverse charge mechanism is known as services purchased from non-resident entities by resident taxpayers and are supplied in Turkey.

      The reverse charge only applies on services and rental payments for intangible rights and royalties.


             [Calculate of VAT]

             Non tax deductible VAT

      a) VAT on purchases of cars.  

      b) Missing and stolen stocks.

      c) VAT on expenses accepted as non-deductible.

      d) Input VAT on exempt deliveries listed in Article 17 of the VAT Law.


         ・Non-taxable trade of VAT

      Importation exemptions from VAT:

      a) Importation of goods and services which are exempted from VAT specified in VAT law and from the rules of the Customs Laws.

      b) Materials sent to Turkey to help victims of disaster.

      c) Raw materials.

      e) Under the temporary exportation regime; machinery and equipment can be sent to abroad for repair purposes temporarily under a warranty contract.

      f) Temporary importation regime allows the tax payers to import machinery and equipment into Turkey for a certain period without paying import taxes in the condition that temporary imported materials must be export cleared within the period.


      Exportation exemptions from VAT:

      a) Exportation of goods and roaming services

      b) Finished product deliveries of manufacturing companies destined for exportation


      1.1.1        Standard of tax assessment of VAT

      Must pay VAT in trade for:

      -Delivery of goods and services

      - From the liability to pay customs duties.

      -Entering into or departing from the Customs zones of Turkey in case of ordinary and transit transportation business between Turkey and foreign countries carried out by non-residents.


      Certain transactions are subject to cancelation when transactions entered by an individual or corporation that later become bankrupt may be cancelled by the creditors.

      The transactions subject to cancelation are gratuitous transactions, transactions performed during insolvency and other transactions.

      Gratuitous transactions or donations made during the following two years from the declaration of bankruptcy may be subject to cancelation.


      For transactions to be subject to VAT in Turkey;

      1.      Goods must be present in Turkey at the time of delivery.

      2.      . Services must be rendered or benefited in Turkey.


      1.1.1        Rate of VAT

      Regularly VAT is 18%, there are different rates of tax of 8% and 1% for goods and services as defined in law.


      [Refund of VAT]

      VAT shown on invoices and similar documents related to the transactions exempt from the tax are:

      · Exportation of goods and services,

      · Exemption in vehicles, precious metals and oil prospecting activities and national security expenditure and investments made under an investment incentive certificate.

      · Transit transportation.

      · Diplomatic exemption.


      [Tax return and payment of VAT]

      Obligations of VAT payment starts at the time the place of business is declared to the tax office.  VAT returns are normally submitted monthly; returns are due by the 24th of the month following the end period and any related responsibility are due by the 26th.

      The payment of VAT is made as follows:

      1. Taxpayers who must file and submit VAT returns make the full payment within 6 days from deadline of submission of the returns to tax office.


      2. VAT on imported goods is fully paid at the Customs together with the customs duties.

    • Customs duty

      ■Customs duty
      [Import regulation]
      The Turkish Standards Institute is responsible for setting standards in Turkey, its approval is required to import any products in some products there are restrictions and special requirements such as narcotics, weapons, live animals, medicines, pharmaceuticals, food, plant products, organic chemicals, telecommunications equipment, ozone-depleting substances, explosives, banknotes and commercial paper, radioactive materials.
      Import duties are calculated on cost, insurance and freight prices and are levied as a percentage on the landed value of the good. The importer is responsible for payment of the Turkish value-added tax (VAT), which is set at 18% for most imports or 26% for luxury goods.
       [Import permitted items]
      Turkey uses the Harmonized Commodity Description and Coding System, the system comprises nearly 5,000 commodity groups, each identified by a six digit code, and is utilized by more than 200 countries and the Combined Nomenclature (CN) of the European Union within the framework of the Customs Union. Goods on which duty was paid on entry to an EU country can be admitted duty-free to Turkey.


    • Special Consumption Tax

      Special consumption tax (SCT) is levied only for once at one stage of consumption process of the goods that are indicated as tariff codes generating from Turkish Customs Tariff Nomenclature (TCTN). There are mainly four product groups that are subject to SCT at different tax amounts or rates:
      · List (I) is related to petroleum products, natural gas, lubricating oil, solvents and derivatives of solvents.
       · List (II) is related to land, air and sea vehicles.
      · List (III) is related to alcoholic beverages and sodas, cigarettes and other tobacco products.
      · List (IV) is related to other consumption goods such as caviar, furs, mobile phones, white goods and other electrical household appliances, etc.
      Shares of Excise Duty Revenue´s
      List I
      List II
      List III
      List IV


    • Other tax systems

      ■  Fixed property tax
      Buildings and lands in Turkey are subject to property tax. The tax base for the property tax is the tax value of the building/land according to the Property Tax Law No. 1319. Property taxes are calculated annually by related municipality based on the tax values of land and buildings at rates varying from 0,1% to 0,3%.
      These rates are increased by 100% within the frontiers of metropolitan municipality. Property tax liability begins following budget year in the case of acquiring property, changing in situation of property or end of exemption.
      Property tax is paid annually to local municipalities in two equal installments:
      -the first is paid at any time during the period from March through May.
      -the second in November.
      Payments can be made at banks, by check, online or in cash.
      ■ Stamp duty
      Stamp duty tax rate is between 0.189% and 0.948% it applies to a wide range of documents such as contracts, agreements, notes payable, letters of credit and letters of guarantee, financial statements and payrolls. This tax is levied according to the type of documents at different tax rates or lumpsum amount listed in Annex I of the Stamp Tax Law, exemptions are listed in Annex II of the same Law.
      The Law states that each relevant party shall be responsible for payment of the total amount of stamp tax on the agreements. Each original document is separately subject to stamp tax.
      ■ Automobile tax
      Land motor vehicles registered to traffic bureaus or offices, also helicopters and airplanes registered to the Directorate General of Civil Aviation are subject to the Tax. Tax is assessed and accrued annually in the beginning of January. The motor vehicle taxes are paid in two equal installments, in January and July, every year. Motor vehicles are classified into three categories in terms of motor vehicle tax:
      · List 1: cars, motorcycles and terrain vehicles etc.
      · List 2: minibuses, panel vans, motorized caravans, busses, trucks etc.
      · List 3: planes and helicopters.
      The amount of motor vehicle tax for land transportation vehicles is determined per age, type, number of seats, cylinder capacity, maximum gross weight and for planes and helicopters is determined per their maximum takeoff weight.
      The tax rate is calculated based on the vehicle's year and size. Disabled drivers are exempt from this tax. The tax can be paid at banks, either annually or in two instalments in January and July. There is a penalty fine for late payments.

      ■Tax on transaction of Bank and Insurance
      The subject of the tax are the transactions and services performed by banks, bankers and insurance companies.
      There will be the tax upon the money, which they collect under the name of interest, commission and expenditure because of the services they performed on behalf of them, as well as other transactions of banker’s subject to VAT.
      The transactions of banks and insurance companies are exempt from VAT, but are subject to BITT with a general rate of 5%.
      ■Tax of communication
      Telecommunication services are subject to special communication tax that is not included in the VAT base.
      Tax rates are as follows:
      · On mobile electronic communication services (including the sales for pre-paid lines) %25.
      · The services regarding the transmission of radio and television broadcasts on satellite platforms and cable medium 15%.
      · The internet providing services by wired, wireless and mobile 5%.
      · Electronic communication services not listed above 15%.
      ■ Resource Utilization Support Fund
      The Resource Utilization Support Fund is special fund applied to imports into Turkey which are made on a credit basis and has been collected since 1988 through banks using domestic and foreign credit facilities, based on the payment of imported goods, and is transferred to the Central Bank of Republic of Turkey.  According to the Resource Utilization Support Fund legislation, any import which is made on credit is subject to a special charge amounting to 6% of the value of the goods to be imported.
      The following imports are accepted as import with credit according to the Resource Utilization Support Fund legislation:
      · Import with cash on delivery.
      ·import with acceptance credit.
      ·import with the deferred payment letter of credit.