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• Controlled Foreign Company rules
• Transfer pricing rules
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No

With the following countries, territories and jurisdictions:

^{(a) Treaties not yet in force.}

Joint-stock corporation (Anonim Sirket - AS)
Limited liability company (Limited Sirket - Ltd)

AS: TL 50,000
Ltd: TL 10,000

A company is resident if either its legal seat or its effective place of management is located in Turkey or both. Resident companies are taxed on their worldwide income.

Generally, fiscal year is the same as calendar year. Corporate tax declarations are made on an annual basis through a corporate tax return. This return can be filed until April 30 following the close of the fiscal year. Companies must file advance tax returns for their quarterly profits. Total corporate taxes declared through the advance tax returns are offset against the final corporate tax payable. Advance tax returns can be filed until the 17^th and paid until the 17^th of the second month following the end of each quarter.

The standard corporate income tax (CIT) rate is 20 percent. Please note that the CIT rate has been increased to 25 percent for the year 2021 and 23 percent for the year 2022. Reduced rates may be available for companies who hold a certificate for incentivized investments.

15 percent.

Rates vary from 0 percent to 15 percent depending on the type of interest and type of the receiving entity.

20 percent.

20 percent.

20 percent.

15 percent.

Dividends received from resident subsidiaries are exempt from corporate tax without further conditions. Dividends received from non-resident subsidiaries may be exempt under certain conditions; otherwise credit method is applicable:

• participation requirement: 10 percent of the paid-in capital of the subsidiary;
• minimum holding period: one year as of the date that earnings are generated;
• taxation requirement: 15 percent (including corporate and dividend taxes), or 20 percent (if financing, insurance or capital investments companies);
• dividends should be transferred to Turkey before the corporate tax filing date of the related fiscal year.

Subject to tax at 25 percent for 2021 and 23 percent for 2022. Exemption (75 percent) of capital gains derived from disposal of shares and 50 percent exemption for capital gains derived from immovable property held for two full years, subject to certain conditions.

Specific exemption (100 percent) related to sale of shares in foreign subsidiaries (10 percent minimum shareholding) held for two full years subject to certain conditions.

Losses can be carried forward for a five-year period. Loss carry-back is not possible.

No

0.04 percent fund payable on capital contribution.

No

2 percent for seller and buyer separately over the sales amount.

Agreements are normally subject to stamp tax at 0.948 percent (capped at TRY 3,534,679.90 for 2021) but there are certain exemptions which may apply based on certain conditions. 

For buildings: 0.1 percent, 0.2 percent and 0.4 percent of the value calculated by using the value per square meters set by the Authorities. For land and plots: 0.1 percent, 0.2 percent, 0.3 percent and 0.6 percent (depending on the location of the property).

Yes (foreign subsidiaries that are at least 50 percent controlled by Turkish residents may be qualified as a Controlled Foreign Company (CFC) under certain conditions).

According to transfer pricing rules, if companies enter into transactions with related individuals/parties by setting prices or amounts that are not in line with the arm’s length principle, related profits will be treated as if they were wholly or partially distributed.

Yes, transfer pricing rules set forth detailed documentation requirements to explain and support the determination of the transfer prices used in dealings with related parties. Submission (upon request) of a transfer pricing report is required if:

• the company is a large company (based on annual net sales), registered with the VIP tax office;
• the company is not a large company but has transactions with foreign related parties or related parties that operate in free trade zones.

Transactions between domestic parties do not require a transfer pricing report for small and medium-sized companies. 

Also Country-by- Country Report/Masterfile/Country File Requirements are introduced by 2020.

A 3:1 debt-to-equity ratio applies in the case of borrowings obtained directly or indirectly from related parties. The ratio is 6:1 if the related party providing the loan is a bank or financial institution (excluding those which are solely involved in the financing of group companies).

Substance over form principle applies.

CFC, thin capitalization rules, transfer pricing rules, taxation of payments to low tax jurisdictions.

Yes

R&D Incentives - 100 percent deduction in the CIT calculation; also exemption from income tax and social security contribution of R&D employees.

Incentives under Investment Incentive Regime (reduced rate corporate tax, VAT, customs duty, social security, income tax, stamp tax) available for investments under certain conditions and subject to an Investment Incentive Certificate.

The standard rate is 18 percent, and the reduced rates are 8 and 1 percent.

Turkey also has special tax exemptions for holding companies that are established for investment in foreign subsidiaries.

The Turkish Government announced a limitation on the deduction of financial expenses (Presidential Decision no. 3490 published in the Official Gazette dated February 4, 2021), according to which 10 percent of the sum of financing expenses (e.g. interest, commissions, foreign exchange losses, and similar costs and expenses) related to borrowings that exceed the value of shareholders’ equity is not tax-deductible. The limitation applies to earnings in financial years starting on or after January 1, 2021 .

For country specific information and updates on the EU Mandatory Disclosure Rules please visit KPMG’s EU Tax Centre’s MDR Updates page.

Eray Buyuksekban 
KPMG in Turkey
T: +90 21 231 66 000
E: ebuyuksekban@kpmg.com

Cakmak Timur
KPMG in Turkey
T: +90 21 231 66 000
E: tcakmak@kpmg.com

Mehmet Dogan
KPMG in Turkey
T: +90 21 231 66 000
E: mdogan@kpmg.com