Taxation of Company Income and Capital Gains
The Turkish direct taxation system consists of two main taxes on income and earnings: income tax (for individuals) and corporate tax (for companies).
Corporate tax is levied on the income and earnings of capital companies and similar foreign companies, cooperatives, public enterprises, and enterprises owned by foundations, societies and associations and joint ventures.
If the company’s legal head office, or the place of effective management, is situated in Turkey, then the company is taxed on its worldwide income (unlimited tax liability). If the company’s legal head office and place of effective management are abroad, then it is taxed only the income derived in Turkey (limited tax liability).
Corporate tax is assessed on the basis of annual tax returns. In principle, each taxpayer is required to file only one tax return – even if income was derived through various business places or branches, which may have their own accounting and allocated capital.
The corporate tax return is filed until the 25th evening of the fourth month of the year following the month in which the fiscal year ends, and the assessed taxes are paid until the end of that month. However, if a limited-liable taxpayer leaves the country for good, the corporate tax return must be submitted to the authorised tax office in the 15 days preceding their departure from Turkey. In such a case, declaration is made and taxes are paid at the same period.
Corporate income tax is applied at a 22% rate on the corporate earnings. Taxpayers pay provisional tax at the rate of corporate tax; these payments are deducted from corporate tax of current period. Any excess payment of advance corporate tax is refunded or used to offset from other tax liabilities.