Business Taxation – Turkey

Standard corporate income tax rate for all Turkish companies and foreign permanent establishments. Applies to worldwide income of Turkish tax residents. Net profit basis after allowable deductions.

Turkey has 18 Free Economic Zones with 0% corporate income tax. Also exempt from VAT, stamp duty, and customs duties. Major advantage for manufacturing and export businesses.

Technology Development Zones offer 0% corporate tax for qualifying R&D and software activities. Must meet specific criteria. Income earned outside zone taxed normally.

Profits from software/services exported abroad may be 50-80% exempt from corporate tax. Applies to technology companies exporting to foreign clients. Significant benefit for Turkish tech sector.

Standard VAT rate applies to most goods and services in Turkey. Known as KDV (Katma Değer Vergisi) locally. Collected monthly, submitted by 26th of following month.

Applied to certain goods including some food items, medical supplies, education services. Mid-tier VAT rate introduced to reduce burden on essential items.

Applied to basic necessities: basic foodstuffs, agricultural products, textbooks, newspapers. Lowest VAT rate to support access to essential goods.

All businesses must register for VAT with Turkish tax office. Monthly VAT returns required. Input VAT on purchases can be offset against output VAT on sales.

Special consumption tax (ÖTV) applies once at production/import. Covers vehicles, petroleum products, tobacco, alcohol, luxury goods. Rates vary significantly by category. Collected before VAT calculation.