17/10/2022

How are taxes calculated in Turkey?

taxes in turkey

Taxes in Turkey

Taxes in Turkey are probably not the most exhilarating aspect of your departure to Turkey, but, it must be admitted, your new life in Turkey comes with the obligation to respect the local tax system.

Good news ! Turkish taxation is relatively simple, in line with international standards and is considered one of the most competitive in the region. In other words, Turkish taxes probably won’t bleed you dry. Here is an overview of the main types of taxes in the country.

Tax Centers in Turkey

It all starts at the nearest tax center to you. There you can get a tax ID that you will need for various administrative procedures, such as opening a bank account or applying for a residence permit. To obtain a tax ID, simply present your passport and fill in your father’s name (in Turkish, baba) and your mother’s name (anne). That is all !

Once you acquire your Turkish tax number you can complete all your official applications with ease from opening utility accounts to signing up rental agreements.

Useful link:

Find a tax office www.gib.gov.tr

Value Added Tax (VAT) in Turkey

VAT applies to all products and services consumed, whether imported or produced locally. The basic rate is 18%, but a large number of essential products such as small groceries or books benefit from a reduced rate of 8%, while raw agricultural products are only taxed at 1%.

On the other hand, higher special consumption taxes affect gasoline and petroleum products, motor vehicles, tobacco and alcoholic beverages, as well as luxury goods. These special taxes have recently risen rapidly: for example, the price of beer has almost doubled in the last 4 years. Fuel prices usually rival Norway, and they are almost always on the list of the 5 most expensive gas prices in the world.

Income tax in Turkey

This type of taxes may not concern you if you do not intend to work in Turkey. Under certain conditions, you can keep your tax residence in your country of origin while actually living in Turkey.

In any case, you will have to pay income tax on any income generated in Turkey. The personal income tax rate follows a progressive scale, varying from 15% for annual income below 18,000 Turkish liras to 35% for income above 98,000 liras in 2020.

Turkish employers automatically deduct tax from wages and transfer it directly to the tax office each month. On the other hand, the self-employed are required to complete quarterly declarations themselves.

Corporate tax in Turkey

If you own a business operating in Turkey, you will have to pay a 22% profit tax. However, the country has put in place a panoply of tax incentives to stimulate investment. These tax boosts generally apply to investment projects in priority development areas or sectors, or to specific operations such as research and development.

Useful link:

Invest in Turkey www.invest.gov.tr

Wealth tax in Turkey

There are three categories of wealth tax: inheritance and gift tax, property tax and motor vehicle tax.

The property tax is calculated annually on the basis of the value of land and buildings at rates varying between 0.1% and 0.3%. Residential units and land are taxed at 0.1% of their sale value.

Motor vehicle tax is determined annually based on the year, type and capacity of vehicles. It typically ranges from 45% to 60% of the car’s original price for engines 1.6 liters or smaller, and around 110% for engines 2.0 liters and larger.

Finally, inheritance and gift taxes are levied at a rate varying between 1 and 30%.