Turkey tax legislation

Income Taxes

Income taxes in Turkey are levied upon the income, both domestic and foreign, of individuals and corporations resident in Turkey. Non-residents earning income in Turkey through employment, ownership of property, carrying on a business or other activities providing an income are also subject to taxation, but only on their income in Turkey.

Individual Income Tax

The limited tax liability covers trade or business income from a permanent establishment, salaries for work done in Turkey (regardless of where paid or whether or not permitted to Turkey),rental income from real property in Turkey, Turkish derived interest, and income from the sale of patents, copyrights and similar intangible assets. The personal income Tax rate varies from 15% to 40%.

Stamp Tax

Stamp duty applies to a wide range of documents, including contracts, agreements, notes payable, capital contributions, letters of credit, letters of guarantee, financial statements and payrolls. Stamp duty is levied as a percentage of the value of the document at rates ranging from 0.15% to 0.75%. In the event of absence of a monetary value on the agreement, Stamp Tax would be calculated on a lump sum basis and paid in New Liras. Stamp Tax is payable by the parties who sign a document. Each and every signed copy of the agreement is separately subject to Stamp Tax.

Property Tax

Property taxes are paid each year on the Tax values of land and buildings at rates varying from 0.1% to 0.6%.

In the case of the sale of property, a 1.5% levy is paid on the sales value by both the buyer and the seller. The rate is also applied as 1.5% if the property is contributed as capital-in-kind. The rates are applied twice for the property located in the Metropolitan Municipality areas.

Buildings and lands owned in Turkey are subject to real estate Tax at the following rates:

• Residences 0.1%
• Other Buildings 0.2%
• Land 0.1%
• Vacant land (but allocated for construction purposes) 0.3%
• Farming lands 0%

Inheritance and Gift Tax

Items acquired as gifts through inheritance are subject to taxes between 1% and 30% for the items appraised value. Tax paid in a foreign country on inherited property id deducted from the taxable value of the asset. Inheritance Tax is payable over the period of three years and in two instalments per year.

Children are reserved heirs in Turkey and have automatic inheritance rights. If you have no children your parents become you reserved heirs. If your parents are no longer alive your sisters or brothers are the next in line to inherit. A spouse has limited entitlements and the amount to which they are entitled depends on whether there are children or not.

The reserved portion for children in 75%, for parents 50%, for each brother or sister 25%. The spouse is entitled to their remainder. If there are no reserved heirs the spouse is entitled to the entire estate.

Environmental Tax

Municipalities are authorised to collect an Environments Tax as a contribution towards the financing of certain services such as garbage collection. This Tax is levied at scheduled fixed amounts that vary according to the location of the house or office. This Tax is paid through the water bill of the property by the person who lives or occupies that home or office.

Capital Gains Tax

From 1st January 2003 to 31 December 2008, gains made by individuals on the sale of residential property are exempt provided the property has been held for at least 4 years. This 4 year requirement does not apply if the property has been inherited. Otherwise, gains are taxed as ordinary income at your normal rate.

Tax issues vary from region to region, please select below the area you are insterested in.