Turkey country profile - 2019 - KPMG Global
Share with your friends

Turkey country profile - 2019

Turkey country profile

Key tax factors for efficient cross-border business and investment involving Turkey.


Related content

business people standing in a modern courtyard

EU Member State


Double Tax Treaties

With the following countries, territories and jurisdictions:

Albania France Luxemburg Singapore
Algeria Gambia Macedonia Slovakia
Australia Georgia Malaysia Slovenia
Austria Germany Malta Somalia(a)
Azerbaijan Greece Mexico South Africa
Bahrain Hungary Moldova Spain
Bangladesh India Mongolia Sudan
Belarus Indonesia Montenegro Sweden
Belgium Iran Morocco Switzerland
Bosnia & Herzegovina Ireland Netherlands Syria
Brazil Israel New Zealand Tajikistan
Bulgaria Italy Norway Thailand
Canada Ivory Coast(a) Oman TRN Cyprus
Chad(a) Japan Pakistan Tunisia
China Jordan Philippines Turkmenistan
Croatia Kazakhstan Poland UAE
Czech Rep. Rep. of Korea Portugal UK
Denmark Kosovo Qatar Ukraine
Egypt Kuwait Romania US
Estonia Kyrgyzstan Russia Uzbekistan
Ethiopia Latvia Saudi Arabia Vietnam(a)
Finland Lebanon Senegal(a) Yemen
  Lithuania Serbia  


(a) Treaties not yet in force.

Most important forms of doing business

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

Legal entity capital requirements

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

Residence and tax system

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

Compliance requirements for CIT purposes

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 25 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 14th and paid until the 17th of the second month following the end of each quarter.

Corporate income tax rate

The standard corporate income tax rate is 20 percent. Please note that the CIT rate has been increased to 22 percent for the years 2018, 2019 and 2020 only. Reduced rates may be available for companies who hold a certificate for incentivized investments.

Withholding tax rates

On dividends paid to non-resident companies

15 percent.

On interest paid to non-resident companies

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

On patent royalties and certain copyright royalties paid to non-resident companies

20 percent.

On fees for technical services

20 percent.

On other payments

20 percent.

Branch withholding taxes

15 percent.

Holding rules

Dividend received from resident/non-resident subsidiaries

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.

Capital gains obtained from resident/non-resident subsidiaries

Subject to tax at 20 percent. 22 percent for the years 2018, 2019 and 2020. 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.

Tax losses

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

Tax consolidation rules/Group relief rules


Registration duties

0.04 percent fund payable on capital contribution.

Transfer duties

On the transfer of shares


On the transfer of land and buildings

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

Stamp duties

Agreements are normally subject to stamp tax at 0.948 percent (capped at TRY 2.642.810 for 2019) but there are certain exemptions which may apply based on certain conditions.

Real estate taxes

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 property).

Controlled Foreign Company rules

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

Transfer pricing rules

General transfer pricing rules

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

Documentation requirement

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. 

Thin capitalization rules

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).

General Anti-Avoidance rules (GAAR)

Substance over form principle applies.

Specific Anti-Avoidance rules / Anti Treaty Shopping Provisions / Anti-Hybrid rules

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

Advance Ruling system


IP / R&D incentives

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

Other incentives

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.

Other relevant points of attention

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

Contact us

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

Connect with us


Want to do business with KPMG?


Request for proposal