Tax Compliance

With Enterslice's professional services, navigating tax compliance in Turkey can be made simple and hassle-free. Package inclusions: Tax Compliance Services Advisory on types of tax in Turkey International Tax Planning Corporate Tax Services and Advice International Tax Advisory

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Overview of Tax Compliance in Turkey

Turkey is a transcontinental country located primarily on the Anatolian Peninsula in Western Asia, with a smaller section on the Balkan Peninsula in Southeastern Europe. It shares borders with Greece, Bulgaria, Georgia, Armenia, Azerbaijan, Iran, Iraq, and Syria. Turkey bridges Europe and Asia due to its strategic location and rich historical and cultural history. Turkish lira (TRY) is the country's official currency, and Ankara is its capital. Turkish is the official language of Turkey. There are no national restrictions under Turkey's territorial tax system, which exempts overseas profits and capital gains income. Businesses frequently extend outside their native nations to reach clients worldwide in an increasingly globalized economy. The central government collects most taxes. 

Types of Taxes in Turkey

  • Corporate Income Tax: Turkey's standard corporate income tax is 20%, which applies to all businesses, while businesses in financial sectors have 25% as the corporate income tax rate.
  • Value-Added Tax: Value Added Tax (VAT) is a tax that is levied on all goods and services in Turkey, including imports. The VAT rates commonly range from 1% to 18%, depending on the specific goods or services. The end consumer, who is not allowed to deduct the VAT, is ultimately responsible for paying the VAT. A VAT-registered business must determine the entire amount of VAT levied on sales for a certain reporting period to calculate the VAT liability. The VAT paid to suppliers for purchasing goods and services, and the VAT owed on imports and purchases made in other EU nations can then be deducted. Tax authorities receive payment for the surplus between input and output VAT.
  • Customs and Foreign Trade Tax: The term "customs and foreign trade tax," often known as "import tax" or "import duty," is a fee a government imposes on products and services that are brought into the country from another country. It is an indirect tax that the government uses to protect domestic industries, control commerce, and raise money. The tax rate varies across various items and nations and often depends on the price or volume of the imported goods. Customs and foreign trade taxes are essential for limiting imports and fostering the home industry. And managing global trade ties.

Turkey has a number of Free Trade Agreements (FTAS) with trading partners in the European Union to simplify its international commerce. Value Added Tax (VAT) is also charged on imported goods. The VAT rate matches the rate in effect in the nation of origin. The categories of imported products define the specific VAT rates (1%, 8%, and 18%). With the exception of agricultural and steel items, Turkey implements the Common Customs Tariff of the European Union.

  • Special Consumption Tax: This tax is a one-time tax that is imposed. Four main product categories are subject to the special consumption tax, each with a different tax rate:
    • Alcoholic beverages, as well as tobacco and tobacco products
    • Luxurious goods
    • Petroleum Products 
    • Vehicles
  • Property Tax: Property tax is a mandatory charge levied by the government on people or organizations that possess real estate or other tangible goods. It is a type of direct tax that local governments employ to raise money, normally computed based on the property’s assessed value. Different yearly real estate tax rates are levied on land and buildings in Turkey.
  • Stamp Tax: The government levies a charge known as stamp duty on specific legal necessary papers, such as contracts, agreements, and real estate transactions. People or organizations must pay a fee for the government to approve and legalize these papers. The value of the transaction or the property involved is often used to determine the stamp duty amount. Stamp tax is assessed at rates ranging from 0.189% to 0.948% of the value listed on the contract.
  • Banking and Insurance Transactions Tax: Certain financial transactions within the banking and insurance industries are subject to the Banking and Insurance Transactions Tax (BITT) in Turkey. It is a particular kind of indirect tax assessed on a number of activities connected to banking and insurance operations. Value Added Tax (VAT) on transactions is normally not applied to licensed banks and insurance organizations in Turkey. The Banking and Insurance Transactions Tax (BITT), which has a regular rate of 5%, is still due from them. It's crucial to remember that some transactions could be subject to 1% or even 0% BITT. These corporations' profits from their numerous financial operations are subject to this tax.

Tax Audit Process

A taxpayer's financial records and tax returns are examined by tax authorities to determine their correctness and compliance. This procedure is known as a tax audit. Tax audits are not conducted consistently across the board for all taxpayers in Turkey. Instead, they are often initiated by risk assessment software that picks taxpayers according to specific risks. In order to assure tax adherence, the tax authorities can then conduct audits focused on specific industries or particular problems. Instead of a standard procedure for all Turkish taxpayers, this technique permits focused and effective audits tailored to the risks involved.

Return of Taxes

Turkey has a self-assessment system that mandates that entities holding Permanent Establishments (PE) in Turkey, whether residents or non-residents, adhere to several tax requirements. These requirements include registering for all relevant Turkish taxes, such as the stamp, withholding, value-added, and corporate income tax. In addition, they must submit yearly CIT reports. The CIT return must be submitted by the 30th day of the fourth month after the fiscal year-end. This deadline is April 30 for organizations that file CIT returns based on the calendar year.

Tax Period in Turkey

The allotted time period in Turkey during which taxpayers must inform the appropriate authorities of their income and complete their tax duties is referred to as the tax period. Both individuals and businesses must abide by tax laws and provide accurate and timely information about their financial activity.

Turkey's tax year normally runs from January 1 to December 31 and is based on the calendar year. However, other taxpayers, including corporations and partnerships, could have a different fiscal year that is consistent with their commercial activities. The tax authorities must beforehand authorize this alternate fiscal year. Tax returns must be filed on time and accurately to avoid fines and guarantee that the law is followed.

Services Offered by Enterslice

Enterslice provides a range of services to cater to the needs of businesses in various areas of taxation and regulatory compliance. These services include:

  • International tax advisory services: In today's globalized economy, companies often conduct complex cross-border transactions with significant international tax repercussions. Enterslice provides thorough guidance on worldwide tax compliance and international tax planning. Their knowledge aids businesses in navigating the complexity of worldwide taxes and improving their overall tax situation.
  • Corporate Tax and Regulatory Compliance: To stay financially sound and stay out of trouble, businesses must abide by corporate tax rules. By offering professional advice on tax planning, compliance, and reporting, Enterslice helps businesses comply with their corporate tax requirements. They make sure that firms minimize risks and optimize their tax strategies while keeping up with the ever-changing tax laws.
  • Assistance with Income Tax Notices: Receiving an Income Tax Notice might be intimidating, but Enterslice is prepared to offer knowledgeable guidance and support. In order to ensure compliance with pertinent laws and regulations, their team of professionals assists customers in understanding and responding to income tax notifications.
  • Corporate Tax (Research and Development Tax): Enterslice understands the value of R&D projects for businesses. They provide thorough company tax services, which include expert guidance on getting R&D tax benefits. Customers may make use of their experience to strengthen their tax position and increase the benefits of R&D tax credits.
  • Services for Corporate Tax Advice: Enterslice offers corporate tax advisory services that are specialized to the needs of companies in a variety of sectors. Their skilled tax professionals offer individualized solutions like tax structuring, planning, and risk management techniques. Businesses may make educated decisions, reduce tax obligations, and increase profits by utilizing their experience.
  • International Tax Planning: Enterslice provides thorough international tax planning services with a thorough grasp of international tax rules and regulations. By finding tax-efficient structures, assessing cross-border transactions, and assuring compliance with international tax rules, they help corporations optimize their worldwide tax positions. These services let companies grow internationally while paying as little tax as possible.

Frequently Asked Questions

The tax period in Turkey is one calendar year, i.e. 12 months – from January 1 to December 31.

The standard corporate income tax in Turkey is 20%, which is applicable to all businesses, while businesses which are in financial sectors have 25% as the corporate income tax rate.

 

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Yes, non-compliance with tax rules and regulations can lead to punishments and penalties.

Yes, Turkey has a self-assessment system.

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