By Justin Mays:
Turkey’s taxes occupy an important place in the economy. For
those who wish to move and start a life in Turkey, understanding the tax system
can benefit them greatly. In today’s blog, Prime Property Turkey brings you all
the information about the types of taxes in Turkey. Stay tuned!
Types of Taxes in Turkey
The tax system in Turkey has three types of taxes:
1. Income Taxes
Turkish income taxes include two main categories: personal
income tax and corporate income tax.
Personal Income Taxes
The income of every individual, whether foreign or domestic,
is subject to personal income tax, which includes the total earnings and
profits of a person in a year. Every individual who lives in Turkey has to pay
taxes on their income. Non-residents, however, have to pay income tax only on
the income they earn within the country.
The following types of income are subject to personal income
tax:
- Agricultural profits
- Business profits
- Salaries
- Income from property, etc.
The personal income tax rates are 15% to 40%.
Corporate Taxes
Corporate companies in Turkey are subject to corporate
income tax, and Turkish law defines them as:
- Capital companies
- Cooperatives
- Public economic enterprises
- Joint ventures
- Economic enterprises owned by associations and foundations
The corporate income tax rate on business revenue is
23%.
Further Reading: Getting
Title Deed in Turkey | FAQ Guide
2. Taxes on Expenditure
This tax category includes Value Added Tax (VAT tax),
Special Consumption Tax (SCT), Banking and Insurance Transaction Tax and Stamp
Duty.
Value Added Tax (VAT)
The VAT rates typically include 1%,8%, and 18%. The VAT tax
applies to sales of goods such as commercial, agricultural, etc., and services
as well as goods imported to Turkey.
Special Consumption Tax (SCT)
The Special Consumption Tax (SCT) is different from VAT
since it is only levied once and includes the following four product
categories:
- Petroleum products, natural gas, lubricating oil, solvents,
and derivatives of solvents.
- Vehicles, aircraft, yachts, etc.
- Luxury goods, including cell phones.
- Alcoholic beverages, tobacco, cigarettes.
Banking and Insurance Transaction Tax
The VAT tax is not levied on banking transactions and
insurance companies; however, they are subject to the Banking and Insurance
Transaction Tax. This type of tax is related to the transactions made by banks
and their income, as well as that of insurance companies. The rate for the
Banking and Insurance Transaction Tax is 5%. Also, foreign exchange
transactions bear no tax.
Stamp Duty
Stamp duty is levied on documents. These documents include
contracts, payroll, receipts, papers on any commercial transactions, etc. The
tax rate for the stamp duty ranges from 0.189% to 0.948%, depending on the
document’s value. Certain documents, however, have a fixed stamp duty
tax.
3. Taxes on Wealth
This category encompasses three types of wealth taxes:
property, motor vehicle, and inheritance and gift taxes.
The real estate tax is levied on all ownership of buildings
and land in Turkey. The rate for this tax is between 0.1% and 0.6%.
Motor vehicle taxes, on the other hand, are paid in two
installments and are at a fixed rate, depending on the age of the vehicle and
the engine’s capacity.
Inheritance and gifts are subject to a tax rate of 1% to 3%.
This tax is paid in two installments.
Further Reading: invest.gov.tr (Tax Guide)
Property Taxes in Turkey
Purchasing real estate in Turkey includes the following
taxes:
- Property transfer tax
- Stamp duty
- Government fees
- VAT
The tax rate of a property transfer is 4% and is meant to be
paid by the buyers and seller.
To Wrap it Up
Anyone who has lived in Turkey for more than six months is
considered a resident and has to pay taxes on their income. We hope you find
our article on the types of taxes in Turkey helpful. If you have any more
questions, our legal team can answer them for you. So contact us and get the
best real estate consulting services in the market.
More to read from us:
All About Buying A Property In Turkey
