Understanding Turkey's corporate tax framework is essential for any foreign entrepreneur or multinational company operating in the country. Turkey's tax system, administered by the Turkish Revenue Administration (Gelir Idaresi Baskanligi), applies a flat corporate income tax rate to resident and non-resident companies, supplemented by value-added tax, withholding taxes, and various sector-specific levies. The system is broadly aligned with OECD standards, making it familiar to international business operators, though it contains several Turkey-specific provisions that require careful attention.
This guide provides a comprehensive breakdown of Turkey's corporate tax rate, VAT structure, withholding taxes, advance tax payment obligations, filing deadlines, and available incentives. All figures reflect the 2026 tax year, and our analysts have verified the rates against current Turkish Revenue Administration publications and Official Gazette announcements.
Corporate Income Tax Rate
Turkey applies a standard corporate income tax rate (Kurumlar Vergisi) of 25% on the taxable income of corporations. This rate applies uniformly to Limited Liability Companies (Ltd. Sti.), Joint Stock Companies (A.S.), and branch offices of foreign corporations.
Resident companies -- those incorporated in Turkey or whose place of effective management is in Turkey -- are subject to corporate tax on their worldwide income. Non-resident companies are taxed only on income derived from Turkish sources.
| Company Type | Tax Rate | Scope of Taxation |
|---|---|---|
| Resident LLC (Ltd. Sti.) | 25% | Worldwide income |
| Resident Joint Stock Company (A.S.) | 25% | Worldwide income |
| Branch Office of Foreign Company | 25% | Turkish-source income only |
| Liaison Office | Exempt | No commercial activity permitted |
| Banks, Financial Institutions | 30% | Worldwide income |
| Insurance and Reinsurance Companies | 30% | Worldwide income |
| Companies in Technology Development Zones | 0% (on qualifying income) | Software and R&D income exempt |
| Companies in Free Zones | 0% to 25% (varies) | Depends on zone and activity |
The 25% corporate tax rate has been stable since 2023, when it was reduced from the temporary elevated rate of 23% that was in effect for 2022. Prior to that, the standard rate was 20% for many years. Our analysts note that legislative proposals to adjust the rate are periodically discussed in the Turkish Grand National Assembly, but no changes have been enacted for 2026. Foreign investors should monitor Official Gazette announcements for any mid-year adjustments.
Minimum Corporate Tax
Turkey introduced a minimum corporate tax mechanism effective from 2025. Under this provision, companies that report losses or very low profits are still required to pay a minimum amount of corporate tax based on a percentage of their gross revenue. The minimum corporate tax rate is set at 10% of taxable income, with the tax base not falling below a specified percentage of gross revenue. This measure is designed to prevent aggressive profit shifting and ensure that all operating companies contribute a baseline amount of tax.
Companies that are in their first three years of operation, those operating in technology development zones, and certain other categories are exempt from the minimum corporate tax requirement.
Value Added Tax (KDV)
Turkey's Value Added Tax (Katma Deger Vergisi, abbreviated KDV) is a consumption tax applied at every stage of the supply chain, with businesses collecting VAT on sales and deducting VAT paid on purchases. The VAT system uses three rates.
| VAT Rate | Applicable Goods and Services |
|---|---|
| 20% (Standard) | Most goods and services, professional services, electronics, furniture, automobiles, industrial goods |
| 10% (Reduced) | Basic foodstuffs, accommodation services, restaurant services, medical products not covered by social security, textile and clothing, certain agricultural inputs |
| 1% (Super-reduced) | Certain unprocessed agricultural products, newspapers and periodicals, residential property sales (first delivery, under 150 sq meters), certain leasing transactions |
VAT-registered businesses must file monthly VAT returns. The return for each month is due by the 28th of the following month, and any net VAT liability must be paid by the same date. VAT refunds for exporters and other qualifying businesses are processed by the Tax Administration, though processing times can vary from several weeks to several months depending on whether the refund is subject to a tax audit.
Foreign companies selling digital services to Turkish consumers are required to register for VAT in Turkey and charge VAT at the standard 20% rate. This obligation applies regardless of whether the company has a physical presence in Turkey. The registration is done through a simplified online system maintained by the Turkish Revenue Administration.
VAT Exemptions
Several categories of transactions are exempt from VAT, meaning no VAT is charged and no input VAT credit is available. Key exemptions include:
- Export of goods and services (zero-rated, with input VAT credit available)
- International transportation services
- Deliveries to diplomatic missions and international organizations
- Deliveries and services within technology development zones (for software and R&D activities)
- Certain banking and insurance transactions (subject to separate Banking and Insurance Transaction Tax)
- Deliveries under investment incentive certificates (VAT exemption on machinery and equipment)
Withholding Taxes
Turkey imposes withholding taxes on various types of payments made to both residents and non-residents. The withholding agent (the payer) is responsible for deducting the tax and remitting it to the Tax Administration.
| Payment Type | Domestic Rate | Rate to Non-Residents | Treaty Rate (Typical) |
|---|---|---|---|
| Dividends | 10% | 10% | 5% - 15% |
| Interest (bank deposits) | 0% - 15% | 0% - 15% | 5% - 15% |
| Interest (bonds/bills) | 0% - 10% | 0% - 10% | 5% - 15% |
| Royalties | N/A | 20% | 5% - 10% |
| Technical service fees | N/A | 20% | 0% - 15% |
| Rent (real estate) | 20% | 20% | Varies |
| Professional service fees | 20% | 20% | 0% - 15% |
| Payments to tax haven jurisdictions | 30% | 30% | N/A |
Withholding tax rates on payments to non-residents can be significantly reduced through Turkey's extensive network of double taxation treaties. Turkey has signed agreements with over 80 countries, and the treaty rates frequently reduce dividend withholding to 5-15%, interest to 5-15%, and royalties to 5-10%. For a detailed analysis of Turkey's treaty network, see our guide to Turkey's double taxation treaties.
Turkey applies an elevated withholding rate of 30% on payments made to entities resident in countries or territories designated as tax havens (countries with no or very low tax rates and inadequate information exchange arrangements). The list of designated jurisdictions is published and periodically updated by the Ministry of Treasury and Finance.
Advance Tax Payments (Gecici Vergi)
Turkish companies are required to make quarterly advance corporate tax payments, known as gecici vergi (provisional tax). These payments function as installments toward the annual corporate tax liability.
The advance tax rate matches the standard corporate tax rate of 25%. Companies calculate their taxable income for each quarter on a cumulative basis and pay 25% of the cumulative taxable income, less any advance tax already paid in prior quarters of the same year.
| Quarter | Period Covered | Filing Deadline | Payment Deadline |
|---|---|---|---|
| Q1 | January - March | May 17 | May 17 |
| Q2 | January - June | August 17 | August 17 |
| Q3 | January - September | November 17 | November 17 |
| Q4 | Not filed separately | Covered by annual return | Covered by annual return |
The fourth quarter advance tax payment is not filed separately. Instead, the annual corporate tax return, due by April 30, covers the full year. Any advance tax payments made during the year are credited against the annual corporate tax liability. If the advance payments exceed the annual liability, the excess is refunded or offset against other tax liabilities.
Annual Corporate Tax Filing
The annual corporate tax return (Kurumlar Vergisi Beyannamesi) must be filed electronically through the Interactive Tax Office (Interaktif Vergi Dairesi) system. Paper filing is not accepted for corporate entities.
Filing deadline: April 30 of the year following the fiscal year-end (for companies using the calendar year).
Payment deadline: The corporate tax liability shown on the annual return must be paid by April 30, the same day as the filing deadline.
Fiscal year: Turkish companies use the calendar year (January 1 to December 31) by default. Companies may apply to the Ministry of Treasury and Finance for permission to use a special fiscal year that differs from the calendar year. If approved, the filing deadline shifts to the last day of the fourth month following the special fiscal year-end.
Transfer pricing documentation: Companies that engage in transactions with related parties must prepare transfer pricing documentation and submit an annual transfer pricing form as an appendix to their corporate tax return. Turkey follows the OECD Transfer Pricing Guidelines, and the documentation requirements include a master file, local file, and country-by-country report (for multinational groups with consolidated revenue exceeding 750 million EUR).
Deductible Expenses
Turkish tax law allows the deduction of expenses that are directly related to the earning and maintenance of business income. Key deductible expense categories include:
- Employee salaries, wages, bonuses, and fringe benefits
- Social security contributions (employer's share)
- Rent, utilities, and office operating costs
- Professional service fees (accounting, legal, consulting)
- Depreciation on tangible and intangible fixed assets
- Bad debts that meet specific legal criteria
- Interest on business loans
- Advertising and marketing expenses
- Travel and accommodation expenses related to business activities
- R&D expenditures (with additional super-deduction available)
- Charitable donations to approved foundations and associations (up to 5% of taxable income)
Non-Deductible Expenses
Certain expenses are explicitly disallowed for corporate tax purposes:
- Fines and penalties imposed by government authorities
- Corporate tax payments themselves
- Expenses related to tax-exempt income
- Excessive interest payments to related parties (thin capitalization rules apply when the debt-to-equity ratio from related parties exceeds 3:1)
- Expenses that are not documented with proper invoices or receipts
- Entertainment expenses exceeding reasonable limits
- Provisions that do not meet specific legal criteria
Depreciation
Turkey uses both straight-line and declining-balance depreciation methods. Companies may choose either method at the time they begin depreciating an asset, but they cannot switch from the declining-balance method to the straight-line method for the same asset.
The useful life of assets is determined according to lists published by the Ministry of Treasury and Finance. Common useful life periods include:
| Asset Category | Useful Life (Years) | Annual Straight-Line Rate |
|---|---|---|
| Buildings (concrete/steel) | 50 | 2% |
| Office furniture and fixtures | 5 | 20% |
| Computer hardware | 4 | 25% |
| Software | 3 | 33.3% |
| Motor vehicles | 5 | 20% |
| Machinery and equipment | 5 - 15 | 6.7% - 20% |
| Leasehold improvements | Lease term or useful life | Varies |
Tax Incentives and Reduced Rates
Turkey offers several incentive programs that can substantially reduce the effective corporate tax rate. These incentives are available to both domestic and foreign investors on equal terms.
Technology Development Zones: Companies operating in registered technology development zones (technoparks) benefit from a full corporate tax exemption on income derived from software development and R&D activities conducted within the zone. This exemption is in effect through December 31, 2028. For details, see our guide to tax incentives for foreign investors.
Free Zones: Manufacturing companies in designated free zones enjoy corporate tax exemption on income from exported goods. The exemption continues until Turkey's EU accession date. Non-manufacturing companies in free zones may also receive benefits depending on the specific zone regulations.
Investment Incentive Certificates: Companies that obtain an investment incentive certificate from the Ministry of Industry and Technology receive reduced corporate tax rates that vary by region and investment scale. In the least developed regions of Turkey (Region 6), the effective corporate tax rate can be reduced to 0% on income attributable to the incentivized investment, up to a contribution amount equal to a specified percentage of the investment.
R&D and Design Center Incentives: Companies that establish certified R&D or design centers benefit from a 100% additional deduction on qualifying R&D expenditure (effectively a 200% total deduction), income tax withholding exemption for R&D personnel, and a 50% reduction in employer social security contributions for R&D employees.
Our analysts consistently identify the technology development zone exemption and the investment incentive certificate program as the two most impactful tax planning tools available to foreign investors in Turkey. The technology zone exemption is particularly valuable for software and technology companies, while the investment incentive certificate is broadly applicable across manufacturing, services, and infrastructure sectors. Both programs can reduce the effective corporate tax rate to near zero for qualifying income.
Banking and Insurance Transaction Tax (BSMV)
Financial sector transactions that are exempt from VAT are instead subject to the Banking and Insurance Transaction Tax (Banka ve Sigorta Muameleleri Vergisi, BSMV) at a rate of 5%. This tax applies to interest earned by banks, commission income, insurance premiums, and other financial transactions. Foreign exchange transactions conducted by banks are subject to BSMV at a rate of 0.2%.
This tax is relevant to non-financial companies primarily when receiving banking services, as the BSMV charged by banks on interest and commission payments is not creditable against VAT.
Stamp Tax (Damga Vergisi)
Turkey levies a stamp tax on a wide range of documents, including contracts, agreements, financial statements, and payroll records. The stamp tax rate for most contracts is 0.948% of the contract value, with an annual cap that is adjusted each year (approximately 16,929,362 TRY for 2026).
Foreign investors should be aware that contracts signed between parties in Turkey are subject to stamp tax regardless of the currency in which they are denominated. Contracts signed outside Turkey are generally not subject to stamp tax unless they are submitted to Turkish authorities or used in Turkey.
Tax Losses and Carry-Forward
Corporate tax losses may be carried forward for up to five years and offset against future taxable income. Losses cannot be carried back to prior years. The five-year carry-forward period begins from the year in which the loss was incurred.
Companies that are acquired or undergo a change of ownership may continue to carry forward pre-acquisition losses, provided that the company continues substantially the same business activities. Anti-avoidance rules may apply if the Tax Administration determines that the ownership change was primarily motivated by the desire to utilize the tax losses.
Tax Audits and Penalties
The Turkish Revenue Administration conducts tax audits through tax inspectors assigned to companies on a risk-based selection system. Audits may cover one or more tax years and typically focus on areas such as transfer pricing, related-party transactions, VAT refund claims, and sector-specific issues.
Penalties for tax non-compliance in Turkey include:
- Late filing penalty: A fixed penalty amount (adjusted annually, approximately 20,000 to 50,000 TRY depending on the return type) plus a tax loss penalty if the late filing results in additional tax
- Tax loss penalty: An additional tax equal to 50% to 300% of the underpaid tax, depending on whether the underpayment is classified as a tax loss, a tax evasion, or a fraudulent act
- Late payment interest: 3.5% per month (simple interest) on overdue tax amounts
- Fraudulent activity: Criminal prosecution is possible for deliberate tax evasion, with penalties including imprisonment
Our analysts strongly recommend engaging a qualified Certified Public Accountant (Yeminli Mali Musavir, YMM) or Independent Accountant and Financial Advisor (Serbest Muhasebeci Mali Musavir, SMMM) for all tax compliance matters. The complexity of Turkish tax law, combined with frequent regulatory changes and the severity of penalties, makes professional tax compliance assistance a necessity rather than an option for foreign-owned companies.
Practical Tax Planning Considerations
Foreign investors should consider the following strategies when planning their corporate tax position in Turkey.
Structure matters. The choice between an LLC, a Joint Stock Company, and a branch office has direct tax implications. Branch offices remit profits to their head office without withholding tax (subject to treaty provisions), while subsidiaries face withholding tax on dividend distributions. For details on company structure options, see our guide to LLC vs Joint Stock Company in Turkey.
Use the participation exemption. Turkey provides a 100% participation exemption on dividends received from qualifying Turkish subsidiaries and a 50% exemption on capital gains from the sale of shares held for at least two years. Proper structuring of holding and subsidiary relationships can significantly reduce the overall tax burden.
Leverage treaty networks. Routing investments through jurisdictions with favorable treaty provisions can reduce withholding taxes on cross-border payments. Turkey's extensive treaty network offers planning opportunities for dividend, interest, and royalty flows.
Plan for transfer pricing. Related-party transactions must be conducted at arm's length, and documentation requirements are substantial. Establishing clear transfer pricing policies at the outset is far less costly than defending positions during an audit.
Monitor legislative changes. Turkey's tax legislation is amended frequently through Presidential decrees, Official Gazette announcements, and general communiques. Our analysts recommend reviewing your tax position at least quarterly to account for any changes that may affect your planning.
For information on the costs involved in establishing your company, see our guide to the cost of starting a business in Turkey. For a broader overview of Turkey's business regulatory environment, see our guide to Turkish business laws.
Conclusion
Turkey's corporate tax system applies a competitive 25% standard rate with straightforward compliance requirements that are well-aligned with international norms. The quarterly advance payment system and electronic filing infrastructure make compliance manageable for companies with competent accounting support. Combined with a VAT system that allows full input credit recovery and a generous set of incentive programs that can reduce the effective rate substantially below the headline 25%, Turkey's tax framework supports business growth while maintaining adequate revenue collection.
The key to effective tax management in Turkey is professional preparation: engage qualified advisors, maintain proper documentation, meet all filing deadlines, and proactively utilize the incentive programs for which your company qualifies. Companies that approach Turkish tax compliance with this mindset will find the system predictable and navigable.
Frequently Asked Questions
What is the corporate tax rate in Turkey in 2026?
The standard corporate tax rate in Turkey for the 2026 fiscal year is 25%, applied to the worldwide income of resident companies. Non-resident companies are taxed at the same 25% rate but only on income sourced within Turkey. Certain sectors such as banking, financial leasing, and insurance companies may be subject to higher rates. Companies operating in technology development zones or free zones may qualify for full or partial exemptions from this rate.
When are corporate tax returns due in Turkey?
Turkish companies must file their annual corporate tax return (Kurumlar Vergisi Beyannamesi) by the last day of the fourth month following the end of their fiscal year. For companies using the standard calendar year (January to December), the filing deadline is April 30 of the following year. The tax due must be paid by the end of April as well. Advance tax payments (gecici vergi) are made quarterly throughout the fiscal year, due by the 17th day of the second month following each quarter.
What is the VAT rate in Turkey?
Turkey applies three VAT (KDV) rates: the standard rate of 20% for most goods and services, a reduced rate of 10% for basic foodstuffs, accommodation, and certain other categories, and a super-reduced rate of 1% for specific items including certain agricultural products, newspapers, and residential property sales. Businesses must file monthly VAT returns by the 28th of the following month.