The Income Tax in Turkey

There is a lot of controversy surrounding the income tax in Turkey. Some people believe that it is not very high, while others claim that it is very high. Whatever your opinion may be, it is important that you know how much taxes you will be paying.

Property taxes

People looking to buy property in Turkey often ask about taxes. While these are important, there are other fees and costs that may be overlooked. These include the cost of purchasing a Turkish title deed, property tax, and earthquake insurance.

The purchase of a Turkish title deed is essential for owning a property in Turkey. It includes information about the owner and the property itself. This is an essential piece of paper and is supplied by the General Directorate of the Land Registry and Cadastre Office.

Property taxation is a fee that is levied by the Turkish government to fund the basic necessities of a city. The amount is calculated based on a property’s category and location. Some taxpayers are exempt from paying this tax.

Withholding tax

When an individual is working in Turkey, he or she is liable for income tax. The type and source of his or her income to determine the amount of tax that he or she will pay.

In addition to the basic tax, the government also charges withholding taxes. The rates vary from 15 to 35%. These taxes are levied on the earnings of residents and non-residents.

An individual is considered a resident if he or she spends more than six months in Turkey for business purposes. However, a regular tourist visa does not allow an individual to stay in Turkey for more than six months in a calendar year.

In Turkey, income tax is paid on salaries, professional services, interest, dividends, and capital gains. Interest payments are taxed at 0% for loans from banks. It is taxed at 10% for other loans.

Capital gains

If you have a property in Turkey and you sell it before five years from the date of purchase, you will be required to pay a capital gains tax. The amount is determined by the difference between the value you declare when you first purchased your property and the price at which you sell it.

There are a number of rules that you must follow in order to avoid paying any tax. This is particularly true if you are buying or selling a property in Turkey for the first time.

The main method for determining an arm’s length price is the cost plus method. Other methods include the resale price method and comparable uncontrolled method.

For the purposes of transfer pricing, Turkey has adopted the three-tier transfer pricing model. It includes a master file, a local file, and a country-by-country reporting system. In addition, it requires documentation of related party transactions.

Double taxation prevention treaty

A Double Taxation Prevention Treaty is a legal agreement between two states to reduce or eliminate the taxation of a certain receipt or income. The benefits of a treaty include reduced tax rates on certain receipts and offsets of taxes owed by the foreign state. In the case of Turkey, the Agreement for Avoidance of Double Taxation was signed today with India.

Several countries have signed double taxation agreements with Turkey. However, there are also special provisions that apply in certain situations.

The most important aspect of a double taxation agreement is the residence of the taxpayer. This can depend on the length of time that the individual has lived in the country, the level of authority that the employee has, and the type of services that the employee provides.

Exemptions from tax

In Turkey, there are certain areas where exemptions from income tax are available. However, you must first ensure that you are a resident. Generally, individuals who live in Turkey for more than six months are considered residents for tax purposes.

The Turkish taxation system consists of three main taxes. These are income tax, corporate tax, and withholding tax. Income tax is applied on wages and salaries, professional services, capital gains and rentals. Corporate income tax is applied on profits and dividends. Withholding tax is applicable on interest payments.

Companies operating in Turkey are subject to a corporate tax. Profits generated in Turkey are subject to a corporate tax rate of 23% for 2022. This rate is set to drop to 20% in 2023.

Non-resident companies are taxed in Turkey on their income derived in the country. They must also register for all taxes in Turkey. If they are not registered, they must pay an advance income tax and file a tax return.