Doing Business · Tax
Transactions between a Turkish company and its related parties must be priced at arm's length, following OECD methods. Companies document this in an annual transfer pricing form and report; larger groups also prepare a master file and a country-by-country report. Non-arm's-length profit is treated as a disguised profit distribution.
VAT & compliance
A Turkish company files something almost every month, even with no revenue. The core monthly cycle is the combined withholding and social security return by the 26th, the reverse-charge VAT return (KDV-2) by the 25th, the VAT return by the 28th, and e-ledger uploads by their deadlines. On top come quarterly advance tax returns and the annual corporate tax return by 30 April. Deadlines that fall on a weekend or public holiday move to the next working day.
Update Corporate & international tax
From 2025, a Turkish company's corporate tax cannot be lower than 10% of its profit calculated before certain exemptions and deductions. Companies compute tax twice — under the normal 25% rules and under the 10% minimum — and pay the higher amount. It mainly affects companies that use exemptions, deductions or reduced rates heavily.
Corporate & international tax
When a Turkish company pays a non-resident for services, royalties, rent or interest, it may have to withhold Turkish tax (usually 10% to 20%) from the payment and pay it to the tax office. For services used in Türkiye, it must also calculate 20% VAT itself under the reverse-charge mechanism — and, once that VAT has been paid, can deduct it on its regular VAT return. A double tax treaty can reduce or remove the withholding.
Update Corporate & international tax
Starting with earnings for 2027, income derived from manufacturing activities (and agricultural production) will be taxed at 12.5% instead of the standard 25%. Today, manufacturers holding an industrial registry certificate get a 1-point reduction. The new rate applies only to income from manufacturing itself, so companies that also trade, provide services or earn financial income will need to separate those streams.
Corporate & international tax
Every Turkish company that deals with related parties must price those transactions at arm's length. Turkish corporate taxpayers with related-party transactions are subject to transfer pricing documentation requirements. Depending on the taxpayer and the nature of the transaction, these may include the annual transfer pricing form, an annual transfer pricing report, the General Report (Master File), the country-by-country (CbC) notification form and/or the CbC report. Profits shifted through non-arm's-length prices are treated as disguised profit distribution, taxed again and penalised.
Update Corporate & international tax
Each January, Türkiye updates the figures that drive payroll and tax: the minimum wage, income tax brackets, social security floor and ceiling, and dozens of TRY thresholds revalued by the annual revaluation rate. In 2027 there is also a structural change: income from manufacturing and agricultural production is taxed at 12.5% instead of 25%.
VAT & compliance
Exports of goods and services from Türkiye are exempt from VAT, but the exporter can recover the VAT it paid on related purchases. The refund is claimed through the VAT return and can be taken as an offset against other tax debts or paid in cash. Small claims are processed with standard documents; larger claims need a sworn financial advisor (YMM) report, a tax inspection report or a bank guarantee.
VAT & compliance
Turkish companies must issue invoices and keep their books electronically through the Revenue Administration's (GIB) systems once they meet the relevant conditions. A company becomes obliged to use e-invoice when its gross sales exceed the turnover threshold set by GIB, or immediately if it works in certain sectors. The e-ledger is mandatory for e-invoice users and, from 1 January, for companies required to keep their books on the balance-sheet basis. Once obliged, the company has a fixed period — normally until the start of a following month set by the rules — to switch.
Update Incentives
Türkiye’s 2026 tax reform, designed to position the country as a logistics and financial hub, is now law. It came in two steps. Presidential Decree No. 11257, published on 30 April 2026, raised the service export deduction from 80% to 100% and eased the exemptions for foreign dividends and participation earnings, for income earned from 1 January 2026, provided the earnings are brought to Türkiye. Law No. 7582, published in the Official Gazette on 4 June 2026, then enacted the rest of the package: near-full deductions for transit trade, a Qualified Service Center regime for regional headquarters, longer Istanbul Financial Center (IFC) incentives and a 20-year exemption on foreign-source income for new residents.
Update Incentives
The Istanbul Financial Center (IFC) in Ataşehir is a financial district with its own law, Law No. 7412. Businesses that lease office space there and obtain a Participant Certificate can deduct 100% of qualifying financial service export income from their corporate tax base until 2047, pay no BSMV, stamp duty or fees on those transactions, and offer qualifying expatriate staff a 60–80% income tax exemption. Law No. 7582 of May 2026 extended these benefits and added a Qualified Service Center regime for regional headquarters and group service functions. The certificate is a gateway to incentives; it does not replace a banking, capital markets or payments licence.
Incentives
Türkiye offers two main routes for R&D and software companies. A company located in a technology development zone (technopark) can earn software and R&D profits free of corporate tax, and its R&D staff are exempt from income tax until the end of 2028. A company that sets up a certified R&D centre (at least 15 full-time R&D staff) can deduct 100% of qualifying R&D spending and get large payroll tax exemptions wherever it is located.
Employment & payroll
To hire a foreign national in Türkiye, the employer applies for a work permit online through the Ministry of Labour's e-İzin system before the person starts work. The Ministry generally expects the employer to have at least five Turkish employees per foreigner, a minimum level of capital, sales or exports, and to pay a salary above a set multiple of the minimum wage. Once issued, the work permit also serves as the employee's residence permit.
Employment & payroll
In Türkiye the employer pays social security (21.75%) and unemployment insurance (2%) on top of the gross salary, up to a monthly ceiling of TRY 297,270 in 2026. On a gross salary of TRY 100,000, the employer's cost is about TRY 123,750 before any premium incentive. The employee receives about TRY 76,000 net in January, falling slightly later in the year as income tax brackets rise.
Employment & payroll
An employee with at least one year of service who is dismissed without just cause (and in a few other cases) is entitled to severance pay (kıdem tazminatı) of 30 days' gross pay for each year of service. The amount per year is capped at a ceiling that is revalued twice a year. Severance pay is exempt from income tax up to the ceiling and subject only to stamp tax. It is separate from notice pay and unused annual leave.
