What do you know about taxes in Turkey

When an investor wishes to establish his investment in Turkey, he must familiarize himself with the tax law there, what are the types of taxes in Turkey?
Types of taxes in Turkey fall into three groups:
1- Income Taxes
2- Consumer spending taxes
3- Wealth and property taxes
Here is an explanation of the differences between them:

First: Income tax in Turkey:

It is a tax imposed on net profits earned annually and is divided into two types: income tax for individuals and income tax for companies.

Speaking of the individual income tax, you should know that it includes:
• business profits
• Freelance Business Profits
• agricultural profits
• proceeds of immovable funds
• proceeds of movable funds
• Monthly salaries
The tax is imposed on any resident in Turkey, provided that the period of his stay exceeds six months during one year, then he must pay income tax on all the profits he made inside and outside Turkey. imposed on his profits within Turkey only.
And moving to talk about the corporate income tax, it is imposed on all companies, institutions, associations, establishments, and joint ventures that generate funds. This tax is calculated from the net profit, and its rate ranges between 20-22%. In most cases, the government adopts the lowest percentage of the tax and You collect it when you distribute profits among the partners.

Second: The Consumer Expenditure Tax:

It is divided into four sections:
1- Value Added Tax, which is a percentage of the price of the product, goods, or services and it is added to the original price. This percentage varies according to the product as follows:
• 1% on the purchase of wheat and its derivatives, and the same percentage is also imposed on real estate with an area of ​​more than 150 square meters.
• 8% is imposed on purchases of basic consumer products such as meat, dairy, cheese, honey, and others.
• 18% is imposed on non-essential products such as electrical appliances, mattresses, and others.
We should also note that there are many cases of tax exemption for value-added, including Turkish exports, imported investment devices, and equipment, airport services, seaports and transit services, delivery of goods by diplomats when dealing with reciprocity, and factories within the free zone, and Oil drilling activities.

2- Special consumption tax, which is a one-time tax, but its percentage varies according to the products
• Petroleum products (oil derivatives, lubricating oils, solvents and their derivatives, natural gas)
• Mechanical vehicles of all kinds: cars/motorcycles/planes and helicopters/yachts.
• Tobacco products and alcoholic beverages
• Entertainment Products

3- Banking and insurance tax, calculated from the income earned by banks, and the insurance tax may reach 5% as the highest limit. As for the interest tax on deposits, it is 1%. Here we note that ÷ taxes resulting from the foreign exchange have been abolished since 2008.

4- Stamp tax, which is imposed when extracting documents and papers and varies according to the document type, and its percentage is fixed according to the value of the document.

Third, wealth and property taxes:

A- Real estate ownership tax, which is divided into
• A one-time purchase tax when buying property in Turkey, ranging from 1-18%, calculated according to the area of ​​the property, the price per square meter, and the type and location of the property in Turkey
The real estate title deed tax is paid upon registration of the property in the title dept. Its value is 4% of the value of the property recognized in the market, to be paid equally between the buyer and the seller.
• The municipality tax, which includes all real estate within a municipality, with a value of 3% of the property value. It is paid annually in exchange for the services provided by the municipality within the area to improve the area to secure a comfortable stay
• Real estate property tax, which includes all apartments, lands, and non-historic owned real estate, with a value of 1-6%, while historical and archaeological properties have a value of 10%.
• The insurance tax against catastrophes, which includes insurance against earthquakes and natural disasters, is paid annually.

B - Car taxes, which are paid annually according to the age of the car and the power of its engine

C- Gift and inheritance tax, which is paid once upon completion of the transfer of ownership to the new owner. Its percentage is determined according to the type of property and the relationship between the two parties, and this percentage may range from 1 to 30%.

Other property taxes include:

Real estate profit tax on resale

If you own a property in Turkey and decide to sell it before 5 years from the date of purchase recorded in the title deed, you must pay a tax that is determined based on the amount of profit you made from this property, and the profits are calculated by subtracting the price at which you purchased the property and which is installed in the title deed. What is more, the original price is considered profits and is subject to tax according to the value of the profit as follows:
• If the profits are less than 6800 liras, no tax will be calculated
• If the value of the profits is from 7000 thousand pounds to 8000 thousand, the tax is calculated at the rate of 15%
• If the value of the profits is from 8000 thousand pounds to 18,000 thousand, the tax is calculated at 25%
• If the value of the profits is higher than 18,000 thousand pounds 40,000 thousand, the tax is calculated at a rate of 27%
• If the profits are more than 40,000 pounds, the tax is calculated at 35%
This is about the tax on profits from reselling the property before five years have passed from the date of its purchase, but if five years have passed, no tax is calculated on the profit, which guarantees you a larger profit margin.

Annual tax on all types of real estate in Turkey
• Residential real estate is taxed at 1% annually
• Commercial real estate is taxed at 4% annually
• Land licensed for the construction of commercial buildings 6% annually
• Agricultural lands 0.2% annually

Do foreigners in Turkey have more taxes than Turks?

• It is normal in any country to impose taxes on any economic activity, but the distinction in Turkey is that the taxes imposed on foreigners are the same as those imposed on Turks without any increase, according to the law of equality that Turkey works on with foreigners and Turks alike.
• You can establish a company and start any business. You can also buy property in Turkey or do any business you only pay the regular Turkish citizens payments if they do the same projects or commercial activities.
• Foreign investors are forced to pay some additional minor costs when translating some documents or when accompanying a translator or the need for mediators and experts residing in Turkey, or when there is a need to employ Turks within the institutions owned by investors, but these matters are not classified within the provisions of the tax law in Turkey. They are needs that you may need and vary according to your ability to do your things on your own or according to the nature of your investment or commercial activity.