Other Taxes

Value added tax (VAT)

The Turkish tax system levies VAT on the supply and importation of goods and services. Liability for VAT arises when a person or entity performs commercial, industrial, agricultural or independent professional activities within Turkey, or when goods or services are imported into Turkey.

The Turkish VAT system employs multiple rates, which the Council of Ministers is authorized to change within certain limits; the standard rate is set at 18%. Services mentioned in List No. I of are subject to 1% VAT; those mentioned in List No. II (e.g. basic food stuffs, health, textile, tourism, culture and education) are subject to 8% VAT.

  • Taxable base

The taxable base of a transaction is generally the total value of the consideration received; this does not include the VAT itself or any discounts, provided that they are at a reasonable rate with regard to commercial practice and are explicitly listed in all invoices or similar documents.

  • Reverse charge VAT

In the event that the taxpayer is not resident or has no place of business in Turkey, the Ministry of Finance is authorized to hold any one of the people involved in a taxable transaction responsible for the payment of tax – known as a  ‘reverse charge’ VAT mechanism. This requires the calculation of VAT by resident companies on payments abroad. Under this mechanism, VAT is calculated and paid to the related tax office by the Turkish company or customers on behalf of the non-resident company (foreign company); the local company treats this as input VAT and offsets it in the same month.

  • The credit mechanism of VAT

VAT is collected at every stage of the production and distribution process, from the initial sale by the producer to the final sale to the consumer. At each stage, the amount of tax payable is the difference between the total amount of tax charged on the invoices issued by the taxpayer and the total amount of tax charged on invoices issued to the taxpayer during the same period. Thus the VAT is initially computed by applying the appropriate rate of taxation to the taxable base for goods and services supplied by the taxpayer during a taxable period. This amount is then reduced by a credit for VAT previously paid on importation and on goods and services supplied to the taxpayer.

  • VAT refund

Input VAT shown on invoices and similar documents related to the transactions that are exempt – such as exportation of goods and services; exemption for vehicles, petroleum exploration and investments made under an investment incentive certificate; transit transportation; or diplomatic exemptions – are deducted from output VAT to be calculated on the transactions of the taxpayer that are subject to VAT.


In the absence of transactions subject to VAT, or if the output VAT is less than the input VAT, then the input VAT that cannot be deducted is refunded to those who perform such transactions, on the basis of principles to be determined by the Ministry of Finance.

Stamp tax

Stamp tax applies to a wide range of documents, including (but not limited to) contracts, agreements, notes payable, letters of credit and letters of guarantee, financial statements and payrolls.

Stamp duty is levied as a percentage of the value stated on the document. Stamp tax rates range from 0.189% to 0.948%. The Stamp Tax Law provides that each relevant party shall be responsible for payment of the total amount of stamp tax on the agreements.

Stamp tax upper limit has been set as 2.642.810 TRY per document for 2019.

Banking and insurance transactions tax

The subject of this tax is transactions and services produced by banks, bankers and insurance companies. Taxpayers are banks, insurance companies and bankers. Banks and insurance companies are exempt from VAT; instead, they are subject to banking and insurance transactions tax at a rate of 5%, which is due on the gains of such companies from their transactions for each calendar month of the year. Taxpayers declare their taxable transactions up to the evening of the 15th day of the following month.

Special consumption tax

Goods in the lists attached to the Special Consumption Tax Law are the subject of this tax, which is charged only once. Four main product groups that are subject to special consumption tax at different tax rates:

  1. List I is related to petroleum products, natural gas, lubricating oil, solvents and derivatives of solvents. Taxpayers are manufacturers and importers of petroleum products
  2. List II is related to automobiles and other vehicles, motorcycles, planes, helicopters and yachts. Taxpayers are merchants of motor vehicles, exporters for using or sellers through auction
  3. List III is related to tobacco and tobacco products, alcoholic beverages and cola. Taxpayers are manufacturers, exporters or sellers through auction of tobacco, alcoholic beverages and cola
  4. List IV is related to luxury products. Taxpayers are manufacturers, exporters or sellers through auction of luxury products.

Resource Utilization Support Fund (RUSF)

It does not even have the word “tax” in the name, RUSF is a kind of tax that is taken from specific imports and foreign exchange and gold loans obtained from abroad.

Some goods imported under deferred letter of credit, acceptance credits and cash against goods subject to RUSF at a rate of 6%. However, according to Council of Ministers Resolution no. 2015/7511 which published in the Official Gazette on 10.04.2015, RUSF rate decreased to 0% for some specific goods even they are imported under deferred letter of credit, acceptance credits and cash against goods.

Council of Ministers Resolution no. 2012/4116 which has made amendments to various tax rates was promulgated in the Official Gazette dated 01 January 2013.

As per the Article 11 of the above mentioned resolution, Resource Utilization Support Fund (“RUSF”) rates for foreign exchange and gold loans obtained from abroad by entities other than banks and financing companies have been rearranged.

As such, the scope of the RUSF exemption on the foreign exchange and gold loans obtained from non-resident entities has been narrowed.

Maturity Period Tax rate
< 1 year 3%
Between 1 year to 2 years 1%
Between 2 years to 3 years 0.5%
> 3 years 0%

On the other hand, no amendment has taken place with regard to the TL denominated loans obtained from non-resident entities. Accordingly, RUSF at 3% is due on interest paid on all TL denominated loans borrowed from non-resident parties (i.e. regardless of the maturity period of the loan).

Taxes on wealth

There are three types of taxes on wealth: property tax, inheritance and gift tax, and motor vehicle tax.

  • Property tax

Property tax is paid each year on the tax values of land and buildings. In the case of the sale of a property, a levy is paid on the sales value by both the buyer and the seller. Annual taxes are paid in two equal installments – the first in March, April or May and the second in November.

  • Inheritance and gift tax

Items acquired as gifts or through inheritance are subject to a progressive tax rate, respectively, of the item’s appraised value. Tax paid in a foreign country on inherited property is deducted from the taxable value of the asset. Inheritance and gift tax is payable in biannual installments over a period of 3 years.

  • Motor vehicle tax

Taxpayers are real and legal persons who have motor vehicles that are registered to their own names in the traffic, municipality and docks register and the civilian air-vehicle register maintained by the Ministry of Transportation. The amount of motor vehicle tax for land transportation vehicles is determined according to their weight, age, cylinder capacity and the fuel used. Tax is assessed and accrued annually at the beginning of January. Motor vehicle tax is paid in two equal installments, in January and July, every year.

Withholding tax

Under the Turkish tax system, certain taxes are collected through withholding by the payers in order to secure the collection of taxes:

  1. Income tax on salaries of employees
  2. Lease payments to individual landlords
  3. Independent professional service fee payments to resident individuals
  4. Royalty, licence and service fee payments to non-residents.

Companies are responsible for withholding such taxes on their payments and must declare them through their withholding tax returns.

  • Interest

Withholding tax rates to apply on the interest income of a non-resident company are:

  1. Interest on foreign loans obtained from foreign banks and other financial institutions = 0%
  2. Interest on foreign loans from non-financial institutions = 10%
  3. Interest on Turkish government papers = 0%
  4. Interest on foreign currency bank deposits = 18%
  5. Interest on TRY bank accounts = 15%
  6. Interest on repossession transactions = 15%.
  • Royalties and fees

Non-resident companies receiving license, know-how and technical assistance payments are taxed through withholding taxes, which apply to fee payments at the following rates:

  1. Royalty and service payments to foreign licensers = 20%
  2. Rental fees to non-residents = 20%
  3. Technical service fees = 20%
  4. Other service fees = 20%
  5. Oil exploration services = 5%
  6. Financial leasing fees = 1%.

Social security tax

Salary payments are subject to withholding tax at a source of relevant progressive rates, which range from 15% to 37,5%. Social security premiums are calculated as a percentage of gross salary and are payable at premiums of 14% for the employee and 20,% for the employer. There is also an unemployment contribution, with premiums of 1% for employee and 2% for the employer. Employer share may decreased to 15,5% with 5% discount if accrued taxes paid in time.

Digital Services Tax

Digital Service Tax has been introduced by the Law Numbered. 7194 published in the Official Gazette dated 07.12.2019. Digital Services Tax applies to digital services companies whose revenue are over EUR 750 million and local revenue of TRY 20 million. According to the Law No. 7194, revenue generated from the following services provided in Turkey is subject to the Digital Service Tax:

  • All types of advertisement services provided through digital platforms (including advertisement control and performance measurement services, data transmission and management services concerning users, and technical services such as presenting advertisements).
  • Services regarding the sale of all types of auditory, visual, or digital content on digital platforms (including computer programs, applications, music, videos, games, in-game applications, and counterparts), and listening to, watching, playing, recording, or using such content via electronic appliances)
  • Services related to the provision and management of digital platforms for user interactions (including providing or easing services for the sale of products or services among users)
  • Intermediary services provided in the digital environment for the above services are also subject to Digital Service Tax.

The tax rate is 7.5% of the gross revenue from Turkish sales. However, the President is authorized to reduce this rate downward to 1% and to increase the rate of up to two times the applicable rate of 7.5%. These changes can be made for all services or to only certain service types.

Accommodation Tax

Accommodation Tax has been introduced by the Law Numbered. 7194 published in the Official Gazette dated 07.12.2019. The tax rate is 2% on accommodation services given by hotels. The tax will apply as of 01.04.2020 and the tax rate is temporarily reduced to 1% until the end of 2020.


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