Tax is often the point at which a foreign company's plans for Turkey (Türkiye) change shape. The choice between a subsidiary and a branch, the way intra-group services are charged, where staff are employed and how profits are brought home all have tax consequences. Turkish tax law is detailed and changes frequently, and several important changes took effect in 2025 and 2026.
This guide gives foreign businesses an overview of the main taxes a Turkish operation will meet, how a foreign company can become taxable in Turkey without registering anything, and the compliance routine that follows registration. It is a map of the subject, not a substitute for advice from a licensed Turkish tax adviser on your own figures.
Key points
- A company with its registered office or place of effective management in Turkey is taxed in Turkey on its worldwide income. A foreign company without an entity is taxed only on certain Turkish-source income.
- At the time of writing (November 2026), the standard corporate income tax rate is 25%, with a 10% domestic minimum corporate tax applying from 2025 and a 12.5% rate for qualifying production income from 2027. Large multinational groups may also be subject to the 15% global minimum tax (Pillar Two).
- VAT (KDV) is generally charged at 20%, with reduced rates of 10% and 1%. Exports are generally zero-rated with a right to a refund of input VAT.
- Dividends paid to non-resident shareholders are generally subject to 15% withholding tax, which a tax treaty may reduce.
- Staff, agents or a fixed place of business in Turkey can create a permanent establishment for a foreign company even if no Turkish entity exists.
- Compliance is largely electronic: e-invoicing, e-ledgers and online filings are handled in practice by a licensed financial adviser (mali müşavir).
How are companies taxed in Turkey?
Turkish corporate income tax (kurumlar vergisi) is governed by the Corporate Tax Law (No. 5520). The starting point is residence:
- Full taxpayers. A company whose legal seat (registered office) or place of business management is in Turkey is a full taxpayer. It is taxed on its worldwide income, with relief for foreign taxes under domestic rules and tax treaties. A Turkish subsidiary of a foreign group is a full taxpayer.
- Limited taxpayers. A company with neither its seat nor its place of management in Turkey is a limited taxpayer. It is taxed only on income earned in Turkey, for example through a permanent establishment or a permanent representative, or on certain payments that are taxed by withholding at source. A branch of a foreign company is taxed as a limited taxpayer on the profits attributable to the branch.
The Turkish Revenue Administration (Gelir İdaresi Başkanlığı, GİB) and local tax offices (vergi dairesi) administer the system. Registration with the tax office takes place automatically when a company is registered with the trade registry, although the tax office normally carries out a workplace inspection shortly afterwards. See setting up a company for the registration steps.
For a broader overview of the system for both businesses and individuals, see our article on the essentials of the Turkish tax system.
Corporate income tax rates
The standard rate and exceptions
At the time of writing, the standard corporate income tax rate is 25%. Banks and certain other financial institutions, such as financial leasing, factoring and insurance companies, are taxed at 30%.
Reductions apply to some types of income, subject to conditions. In particular, exporters have been able to apply a reduction of 5 percentage points on income derived from exports, and manufacturers a reduction of 1 percentage point on income from production activities. Under Law No. 7582, the 12.5% production rate described below takes the place of the 1-point production reduction from 2027, and income taxed at 12.5% cannot also benefit from the export reduction. The detail should be checked against the current legislation for the relevant year.
The domestic minimum corporate tax
Law No. 7524 introduced a domestic minimum corporate tax for income from 2025 onwards. In outline, the corporate tax payable cannot be lower than 10% of the company's corporate income calculated before certain deductions and exemptions. Some items are excluded from the minimum tax base, and the Revenue Administration has published guidance on how the calculation works. Newly established companies are generally outside the minimum tax for their first three accounting periods, subject to conditions (companies formed by merger, division or similar transactions do not generally qualify). Companies that make heavy use of exemptions and deductions should model their position under both calculations.
The global minimum tax (Pillar Two)
Separately from the domestic minimum tax, Law No. 7524 also introduced the OECD global minimum tax rules. Groups with consolidated annual revenue of EUR 750 million or more may be subject to a 15% minimum effective tax rate in Turkey through a domestic top-up tax and the related income inclusion and undertaxed profits rules. For a Turkish subsidiary of such a group, a top-up tax can reduce the benefit of reduced rates, deductions and incentives, so large groups should model the position before relying on them.
The 2026 reforms under Law No. 7582
Law No. 7582, published in the Official Gazette on 4 June 2026, introduced several measures relevant to foreign investors. At the time of writing, the main corporate measures include:
- A 12.5% rate for production income from 2027. The rate applies to income derived exclusively from production activities carried out by companies that hold an industrial registry certificate and actually engage in production, and to agricultural production income. Income taxed at 12.5% cannot also benefit from the export-income reduction. See setting up manufacturing for the industrial registry certificate.
- Qualified service centres. A deduction of 95% (100% in certain cases, including participants in the Istanbul Finance Centre and certain eligible industrial zones) for qualifying income of capital companies providing specified services to related companies operating in at least three countries, where at least 80% of revenue comes from overseas group companies.
- Transit trade. A 95% deduction (100% in certain cases) for qualifying transit trade income, subject to the income being transferred to Turkey within the deadline for the annual corporate tax return.
- Istanbul Finance Centre incentives extended to 2047.
Much of the practical detail depends on secondary legislation and communiqués. Our article on Türkiye's 2026 tax incentives explains the law in more depth, and the Istanbul Finance Centre article covers that regime.
Provisional tax and the annual return
Corporate income tax is paid in advance through provisional tax (geçici vergi), calculated on quarterly profits and set against the final annual liability. Law No. 7566, published on 19 December 2025, removed the rule that limited provisional tax to the first nine months of the year, so provisional tax now applies to the full year. This affects cash-flow planning. See our article on the key changes to Turkish tax and social security laws.
For companies using the calendar year, the annual corporate tax return is generally filed and the tax paid in the fourth month following the year end (April). Companies with a special accounting period approved by the Revenue Administration follow their own calendar.
Value added tax (KDV)
Turkish VAT (katma değer vergisi, KDV) applies to supplies of goods and services in Turkey and to imports. At the time of writing:
| Rate | Typical application |
|---|---|
| 20% | The standard rate, applying to most goods and services |
| 10% | Certain foodstuffs, some textiles and other listed goods and services |
| 1% | Certain basic goods and listed supplies |
| Exempt with refund | Exports of goods and many exported services, subject to conditions |
The allocation of goods and services between the rates is set by lists annexed to presidential decisions and changes from time to time, so always check the current list for a specific product.
Points that often matter to foreign companies:
- Monthly returns. VAT returns are generally filed monthly, and input VAT on purchases is offset against output VAT.
- Reverse charge. When a Turkish business buys services from a foreign supplier that has no Turkish VAT registration, the Turkish buyer generally accounts for the VAT itself under the reverse-charge mechanism and may then deduct it, subject to the usual rules.
- Exports and refunds. Exporters generally charge no VAT on exports and may claim a refund of input VAT. Refund procedures are documentary and can take time, and may require a certified review report from a sworn financial adviser above certain amounts. See customs, import and export.
- Import VAT. VAT is charged by customs on imports, alongside customs duties.
- Withholding VAT. For certain supplies, the buyer must withhold part of the VAT and pay it to the tax office.
- Digital services from abroad. Foreign providers of electronic services to Turkish consumers may need a simplified VAT registration.
Withholding taxes
Withholding tax (stopaj) is deducted at source by the payer from certain payments. For a foreign group, the most relevant are:
- Dividends. Dividends distributed by a Turkish company to non-resident shareholders (and to individuals) are generally subject to withholding tax at 15%, the rate applying since 22 December 2024. Dividends paid to resident companies are generally not subject to withholding.
- Branch profits. Profits of a branch transferred to its foreign head office are generally subject to withholding in a similar way to dividends.
- Payments to non-residents. Payments to non-residents for professional services, royalties, licence fees and interest are generally subject to withholding tax, at rates that vary by type of payment. Whether other service fees are caught depends on how the service is characterised, so each payment stream should be reviewed.
- Rent paid to individuals. A company renting premises from an individual landlord generally withholds income tax from the rent. See leasing offices and warehouses.
- Salaries. Employers withhold income tax and stamp duty on wages through payroll.
Turkey has a large network of double tax treaties, which can reduce or remove withholding on dividends, interest, royalties and service fees. Relief generally depends on the foreign recipient providing a valid certificate of tax residence, sometimes with an apostille and translation. Treaty definitions of "royalties" and "business profits" differ, so the classification of each payment matters.
Stamp duty
Stamp duty (damga vergisi) is a feature of Turkish tax that often surprises foreign companies. It applies to many signed documents that state a monetary value, including commercial contracts, leases, loan agreements and payroll documents.
- The rate for many contracts is 0.948% of the contract value, with lower rates for some documents, such as 0.189% for leases, and fixed amounts for others.
- There is an upper limit per document, updated each year.
- Each signed original copy can be taxable, so the number of originals matters.
- Exemptions exist for certain documents, including some related to exports, investment incentive certificates and loans from banks.
Careful drafting can affect the stamp duty cost. For example, whether a framework agreement states a total value, and how amendments and guarantees are documented.
Payroll taxes and social security
Once a company employs people in Turkey, it becomes responsible for withholding and paying:
- Income tax on wages, under progressive brackets that are updated each year.
- Stamp duty on wage payments.
- Social security contributions to the Social Security Institution (SGK), with an employee share and an employer share, calculated on earnings up to a ceiling that is linked to the minimum wage.
- Unemployment insurance contributions, shared between employee and employer.
Employers file a combined monthly return (muhtasar ve prim hizmet beyannamesi) covering withholding taxes and SGK contributions. Rates, ceilings and exemptions change regularly, and incentive schemes may reduce the employer share for certain hires or regions. See hiring employees in Turkey for the employment side.
Can a foreign company become taxable in Turkey without a Turkish entity?
Yes. This is one of the most important risks for businesses that "test" the market before setting up. Under Turkish domestic law and tax treaties, a foreign company can have a permanent establishment in Turkey, and its profits attributable to that establishment become taxable in Turkey. Typical triggers include:
- an office, warehouse, workshop or other fixed place of business used for the foreign company's activities
- employees or dependent agents in Turkey who habitually negotiate or conclude contracts on the foreign company's behalf
- construction or installation projects lasting beyond the period set in the domestic rules or the applicable treaty
- in some cases, the provision of services through people present in Turkey for extended periods
Hiring a remote employee in Turkey, appointing a sales agent or using a local warehouse can each raise the issue. Tax treaties narrow the definition in many cases, but each arrangement has to be checked. This is a common reason for moving from an informal presence to a subsidiary or branch.
Subsidiary or branch: how do the tax results differ?
| Point | Subsidiary (Ltd or AŞ) | Branch of a foreign company |
|---|---|---|
| Taxpayer status | Full taxpayer on worldwide income | Limited taxpayer on income attributable to the branch |
| Corporate tax rate | Standard rules and rates | Same rates on branch profits |
| Profit repatriation | Dividends, generally subject to 15% withholding unless reduced by treaty | Branch profit transfers, generally subject to withholding in a similar way |
| Losses | Remain in the Turkish company, carried forward under Turkish rules | May be relevant in the head office's home jurisdiction, depending on its rules |
| Liability | Limited to the company's assets | The foreign head office is liable for branch obligations |
| Treaty access | Turkish company can access Turkey's treaties | Depends on the head office's residence |
The non-tax differences are covered in choosing a business structure and branches and liaison offices.
Transfer pricing and thin capitalisation
Turkish companies dealing with related parties must apply arm's length prices. This covers intra-group sales, services, management fees, royalties, guarantees and loans. Profits shifted through non-arm's-length pricing may be treated as disguised profit distributions, with corporate tax and withholding consequences. Taxpayers must file an annual transfer pricing form with the corporate tax return, and certain taxpayers must also prepare an annual transfer pricing report. Large multinational groups may face additional master file and country-by-country reporting obligations.
Thin capitalisation rules apply to borrowings from shareholders or related parties. In outline, related-party debt exceeding three times the borrower's equity at any time in the year is treated as disguised capital (the ratio is higher where the related lender is a bank or financial institution). Interest and foreign exchange losses on the excess are not deductible and may be treated as a disguised dividend. A Turkish company also generally needs to keep evidence that management fees and service charges reflect services actually received.
Electronic compliance and the role of the mali müşavir
Turkish tax administration is largely electronic. Depending on turnover, sector and other criteria, companies may be required to use:
- e-Invoice (e-Fatura) for invoices between registered users, and e-Archive (e-Arşiv) invoices for other customers
- e-Ledger (e-Defter) for statutory books
- e-Waybill (e-İrsaliye) for the movement of goods
- electronic payroll, VAT and withholding returns
The thresholds for these obligations are lowered periodically, and some sectors are brought in regardless of turnover. Many new companies choose to join the electronic systems voluntarily from the start. Statutory books must be kept in Turkish and in Turkish lira, under Turkish accounting rules. Group reporting under IFRS or another framework is kept separately.
In practice, almost every foreign-owned company appoints a licensed financial adviser (serbest muhasebeci mali müşavir) to keep the books, prepare returns and deal with the tax office. Large companies may also be subject to independent audit under the Turkish Commercial Code, depending on thresholds that are updated periodically. Larger companies often obtain a full tax certification from a sworn financial adviser (yeminli mali müşavir).
Indicative compliance calendar
The table below shows the usual rhythm of filings for a company using the calendar year. Exact deadlines are set by legislation and are sometimes extended. Treat this as a planning aid only.
| Obligation | Frequency | Usual timing |
|---|---|---|
| Withholding tax and SGK return (muhtasar ve prim hizmet) | Monthly | Following month |
| VAT return (KDV) | Monthly | Following month |
| Provisional corporate tax | Quarterly | Second month after the quarter |
| Annual corporate tax return | Annually | April of the following year |
| Transfer pricing form | Annually | With the corporate tax return |
| Stamp duty on documents | As documents are signed | Usually through the monthly return |
| Statutory books and e-ledger | Ongoing | Monthly or as required by the e-ledger rules |
Tax numbers for foreign shareholders and directors
Before a company is registered, foreign individual and corporate shareholders, and foreign directors, generally need a Turkish tax identification number (vergi kimlik numarası). Foreign individuals with a residence permit use their foreigner identification number. The number is usually obtained from a tax office on presentation of a passport or, for a company, certified and apostilled corporate documents. See our article on tax numbers for foreigners in Turkey and the corporate bank account guide, because banks also ask for these numbers.
Incentives at a glance
Beyond the 2026 measures above, foreign investors may be able to use:
- Investment incentive certificates. Depending on the scheme, these can provide VAT and customs duty exemptions on qualifying machinery, reduced corporate tax on income from the investment and social security premium support. See setting up manufacturing.
- Technology development zones (technoparks). These offer exemptions for qualifying software and R&D income and for personnel. See our article on technoparks in Turkey.
- Free zones. Free zones have their own customs and tax rules, which have been narrowed over time for some activities.
- R&D and design centre incentives, and incentives connected to the classification of a business as a small or medium-sized enterprise. On the SME definition, see this update.
Incentives generally require an application before the investment or expenditure is made, and they carry ongoing conditions. Breaching those conditions can lead to clawback with interest and penalties.
Frequently asked questions
What is the corporate tax rate in Turkey in 2026?
At the time of writing (November 2026), the standard corporate income tax rate is 25%, and banks and certain financial institutions are taxed at 30%. A domestic minimum corporate tax of 10% applies to income from 2025. Reduced rates and deductions apply to certain export, production, transit trade and service centre income, subject to conditions.
What is the 12.5% corporate tax rate introduced in 2026?
Law No. 7582 introduced a 12.5% rate for income derived exclusively from production activities by companies holding an industrial registry certificate and actually engaged in production, and for agricultural production income. It applies to income from 2027 onwards. Income taxed at this rate cannot also benefit from the export-income reduction. See our manufacturing guide for the industrial registry certificate.
What is the domestic minimum corporate tax?
It is a rule introduced by Law No. 7524 under which a company's corporate tax for income from 2025 onwards generally cannot fall below 10% of its corporate income calculated before certain deductions and exemptions. Some items are excluded from the minimum tax base, and newly established companies are generally outside it for their first three accounting periods, subject to conditions. Companies that rely on exemptions or deductions should check whether the minimum tax applies to them.
What is the VAT rate in Turkey?
At the time of writing, the standard VAT (KDV) rate is 20%, with reduced rates of 10% and 1% for goods and services listed in presidential decisions. Exports of goods and many exported services are generally exempt with a right to a refund of input VAT. The lists of goods at each rate change from time to time and should be checked for each product.
How much withholding tax applies to dividends paid to a foreign parent?
Dividends paid by a Turkish company to non-resident shareholders are generally subject to 15% withholding tax, the rate applying since 22 December 2024. A double tax treaty between Turkey and the shareholder's country may reduce the rate, usually on presentation of a certificate of tax residence. Branch profit transfers to a foreign head office are generally subject to withholding in a similar way.
Does a foreign company pay tax in Turkey if it has no Turkish entity?
It can. A foreign company is taxable in Turkey on profits attributable to a permanent establishment, such as an office, warehouse or dependent agent in Turkey, and on certain Turkish-source payments taxed by withholding. Employing staff in Turkey or appointing agents who conclude contracts can create this risk. Tax treaties may narrow it.
Is a branch or a subsidiary better for tax purposes in Turkey?
Both pay corporate tax at the same rates on their Turkish profits. The differences lie in the scope of taxation, liability, how profits are repatriated and how losses are treated in the home country. The right answer depends on the group's home-country tax rules and the intended activity, so both should be modelled. See choosing a business structure.
What is the reverse-charge mechanism for services from abroad?
When a Turkish business receives services from a foreign supplier that is not registered for Turkish VAT, the Turkish business generally calculates and pays the VAT itself and may then deduct it, subject to the usual rules. The foreign supplier does not usually need to register for this. Withholding tax may also apply to the payment for the service.
What is stamp duty in Turkey and who pays it?
Stamp duty is a tax on signed documents that state a monetary value, such as contracts, leases and loan agreements. The rate for many contracts is 0.948% of the stated value, with lower rates for some documents and an annual cap per document. The parties usually agree who bears it, although each signatory may be liable to the tax office.
Does Turkey have transfer pricing rules?
Yes. Transactions between related parties must be priced at arm's length, and non-arm's-length pricing can be treated as a disguised profit distribution. Companies file an annual transfer pricing form, and certain taxpayers must prepare transfer pricing reports and, for large groups, additional documentation. Thin capitalisation rules also restrict deductions on excessive related-party debt.
Does a Turkish company need an accountant?
In practice, yes. Statutory books must be kept in Turkish, in Turkish lira and under Turkish rules, and most filings are electronic. Almost all foreign-owned companies appoint a licensed financial adviser (mali müşavir) to keep the books and prepare tax and payroll returns. The adviser typically handles e-invoicing and e-ledger set-up after company formation.
When are corporate tax returns filed in Turkey?
For companies using the calendar year, the annual corporate tax return is generally filed and the tax paid in April of the following year. Provisional tax is paid quarterly during the year. Following Law No. 7566, provisional tax now covers all four quarters. Monthly VAT and withholding returns are also required.
Are there tax incentives for foreign investors in Turkey?
Yes, subject to conditions. They include investment incentive certificates, technology development zone and R&D incentives, free zone rules, and the 2026 measures for qualified service centres, transit trade, the Istanbul Finance Centre and production income. Incentives usually require an application before the investment is made. See our article on Türkiye's 2026 tax incentives.
This guide is general information about Turkish law and practice at the date shown above. It is not legal, tax or customs advice and should not be relied on as such. Rules, thresholds and procedures in Türkiye change frequently and their application depends on the facts, so take advice on your own circumstances before acting. Advice on Turkish law is provided through lawyers qualified in Türkiye.