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Income Taxes
Income taxes included in the Turkish Tax Regulation are individual income tax and corporation income tax. Even if the individual income tax and corporation income tax are defined in different laws, especially the income factors and majority of the rules and provisions valid for the individuals for the detection of the net income are applied for various corporations as well.

Individual Income Tax
Incomes of the natural persons are subject to individual income tax. Income is the net amount of the profits and revenues an individual has been gained within a calender year. According to the Law on Income Tax, the factors which are considered as income are as follows:

Commercial Earnings
Agricultural Earnings
Salaries and Fees
Self-Employed Earnings
Real Estate Capital Revenues (Rental Income)
Returns on stocks and bonds (incomes obtained from capital investments)
Other earnings and revenues
Turkish tax regulation regulates the principle of full obligation or limited liability to tax based on the residence in taxation. While fully responsible taxpayers (whose residential address is in Turkey or who reside in Turkey longer than six months constantly within a one calender year) are taxed over all earnings and revenues which they have obtained in Turkey and abroad, limited taxpayers (whose residential address is not in Turkey and who do not reside in Turkey longer than six month constantly within one calender year) are taxed only over the earnings and revenues which they have obtained in Turkey.

The rate of individual income tax varies between 15% and 35%.

The rates of individual income tax applied for 2018 are as follows:

Income Scales (TL)

(For employment)

Rate (%)

Income Scales (TL)

(For incomes apart from employment)

Rate (%)

If the income factors defined in Law on Income Tax are not earned by corporations, the taxation is realized over the nature of being legal entity of these corporations. Corporation income taxpayers defined in the Law are as follows:

Capital companies
Public economic organizations
Economic organizations of associations and foundations
Business partnerships
Institutions of which statutory seats or headquarters are located in Turkey are considered as full responsible taxpayers and taxed on the earnings which they have earned both within Turkey and abroad. Institutions of which both statutory seat and headquarters are not located in Turkey are considered as limited taxpayers and taxed only over the earnings which they have earned in Turkey. Statutory seat is the center specified in the articles of associations of the institutions which are subject to tax or in law of organization; and the headquarter is the center where the business activities are organized and carried out actively.

Corporation income tax levied over the commercial profit in Turkey is 20%. Corporate income tax rate has been increased to 22% for 2018, 2019 and 2020; however, the Council of Ministers has the authority to decrease this rate of 22% to 20%.

If full responsible taxpayer institutions make divided payment to the stakeholders, they are subject to stoppage for 15% generally; however the divided payments which full responsible institutions make to full responsible institutions are not subject to any stoppage. Adding the profit to the capital is not considered as the distribution of the profit, so such cases are not subject to stoppage. Similarly, after corporate income tax amount of taxpayers are deducted, a tax deduction for 15% over the amounts they have transmitted to the headquarters are realized. Stoppage is applied to the amount left after the deduction of the profit of the branches of which corporate income tax are subject to tax.

Value Added Tax (VAT)
Generally applied VAT rates are: 1%, 8% and 18%. Deliveries of commercial, industrial, agricultural and independent business goods and services, goods and services entered to the country by import and goods and services formed by other activities are subject to VAT.

Some VAT exceptions and exemptions are as follows:

Good and service export
Roaming services within Turkey for the customers abroad on the conditions of compliance with the international roaming agreements and reciprocity
Contract services carried out for the customers in free zones
Petroleum exploration works
Services provided for ships and planes in ports and airports
Machinery and equipment deliveries within the scope of investment incentive document
Transit transportation
Deliveries and services provided for diplomatic representations and consulates and international organizations and their affiliates which are within the tax exemption status on the condition of application of reciprocity
Banking and insurance operations which are subject to Bank and Insurance Treatment Tax

Special Consumption Tax (ÖTV)
There are four main product groups which are subject to ÖTV in various tax rates:

Petroleum products, natural gas, machine oils, solvents and solvent types
Automobiles and other vehicles, motorcycles, planes, helicopters, yachts,
Tobacco and tobacco products, alcoholic beverages
Luxury consumer substances
Contrary to VAT applied for each delivery, ÖTV is applied only for once.

Bank and Insurance Treatment Tax
Even if the transactions carried out by Banking and insurance companies are exempt from VAT, such transactions are subject to Bank and Insurance Treatment Tax. This tax is applied for incomes such as credit interest earned by banks. Tax rate is generally for 5%; however, it is for 1% for the interest applied for some transactions such as deposit business between the banks. No tax liability has been realized on the sales amounts resulted from foreign exchange transactions since 2008.

Stamp Duty
Stamp duty is applied for various documents including contracts, notes payables, capital affiliates, credit letters, guarantee letters, financial notifications and pay rolls. Stamp duty is levied in document cost rates varying between 0,189% and 0,948% and it is collected as fixed cost (a cost determined in advance) for some documents.

Capital Taxes
There are three types of capital taxes:

Property Tax
Motor Vehicle Tax
Inheritance and Transfer Tax
Buildings, flats and lands owned in Turkey are subject to property tax varying between the rates of 0,1% and 0,6% and Contribution to the Conservation of Immovable Cultural of such tax accrued at the rate of 10% is paid. Motor vehicle taxes are realized in the amount of fixed costs determined in accordance with the age and engine capacity of the vehicles in each year. Inheritance and transfer taxes are paid at the rate of 1-30%.