Foreigners planning to invest in Republic of Turkey can establish a company relatively easily. In particular, the establishment of centralized registration system infrastructure has made the process of establishing a company in Turkey much easier. You can read our detailed article on company formation in Turkey here.
As a result, foreigners who are planning to establish a business in Turkey frequently ask which taxes companies are required to pay under the Turkish tax system and what the applicable tax rates are.
It should be noted that companies in Turkey are generally divided into two main groups according to the principle of liability. The types of companies in which the sole liability of the shareholders is to contribute capital to the company are generally the most preferred types of companies. In the second group of companies, the shareholders are personally liable for the debts of the company with their personal assets. You can read our detailed article on company types in Türkiye and the liability of company shareholders here.
The reason we mention this distinction is that the types of taxes may differ depending on the type of company. First, let us examine the types and rates of taxes applicable to Limited Liability Companies and Joint Stock Companies, where the principle of limited liability applies.
Corporate Tax – This is a tax paid by companies at a rate of 25% of their annual net profit. Limited Liability Companies and Joint Stock Companies add together their annual income obtained from the sale of goods and services. Certain expenses incurred to generate this income are deducted from the total annual income. The resulting amount is the net income, and 25% of this amount is paid by companies to the state each year as corporate tax.
Provisional Tax – This is a tax paid by companies in Turkey every three months based on their profits. In fact, it is similar to paying the corporate tax explained above in three-month periods. The tax office collects the corporate tax, calculated based on the difference between income and expenses at the end of the year, from companies in three-month periods. At the end of the year, the tax is calculated by deducting the tax already paid during these three-month periods from the final tax liability.
Value Added Tax (VAT) – This is a tax that companies pay every month at a rate of 20% on the amount they receive from the sale of goods and services. Under Turkish tax laws, different VAT rates may apply to certain goods and services. For example, the VAT rate on the sale of basic food products is 1%. The VAT rate on food and beverage sales is 10%. However, it can generally be said that reduced VAT rates are exceptions. In other words, the general VAT rate of 20% applies to the sale of goods and services by companies.
Withholding Tax (Muhtasar Vergi) – This is a tax paid by companies in Turkey at a rate of 20% on the rent of business premises. In Türkiye, rents for business premises are generally stated as net and gross amounts. The net amount is the amount that must be paid to the owner of the premises. The gross rent is the net rental amount plus the tax. The taxes accumulated over a three-month period are paid to the tax office. In other words, the company holds the tax amount on behalf of the state from the rental income and pays it to the tax office before the amount reaches the owner of the premises.
Stamp Tax – This is a tax paid based on the value of commercial contracts, lease agreements, and commercial declarations made by companies. For example, stamp tax on commercial contracts is 0.948% of the contract value. For lease agreements, it is 0.189% of the total value of the lease agreement. This tax applies where the relevant contracts are notarized.
Payroll and Social Security Declaration (Prim Hizmet Beyannamesi) – This refers to the tax deductions that companies in Türkiye make from their employees’ salaries on behalf of the tax office. Employees, like everyone else, pay tax on their salaries. In this case, when the employer pays the employees’ salaries, it pays them their net salary. The tax included in their gross salary is not paid to the employees but is paid directly to the tax office. In other words, the employer fulfills on behalf of the employees their obligation to declare their income and pay the relevant tax.
Dividend Tax – If, at the end of the year, the company has made a profit after deducting all of its expenses, the shareholders may receive this profit as dividends. However, they are required to pay tax at a rate of 10% on this profit.
Social Security Contributions – In addition, company shareholders are required to pay Social Security contributions every month. In return for these contributions, they may benefit from healthcare services with state support and may become eligible for retirement in the future.
In general, these are the main taxes paid by Limited Liability Companies and Joint Stock Companies, which are the most commonly preferred types of companies. For sole proprietorships, which fall into the second group of companies, the applicable taxes and rates are different.
On the other hand, sole proprietorships are also subject to similar types of taxes, although the rules differ in some respects. It should be emphasized again that under Turkish law, the liability of shareholders of sole proprietorships is very broad. In other words, it should not be forgotten that they are personally liable for the debts of the business.
Taxes Applicable to Sole Proprietorships with Unlimited Liability of Their Owners
Income Tax – This is a tax paid by sole proprietors and self-employed professionals (such as doctors operating clinics and lawyers who have their own offices) on their annual net income. The tax rate varies between 15% and 40%. When calculating income tax, expenses are deducted from the income obtained during the year from the sale of goods and services, and the resulting amount is subject to taxation. The income tax rate is determined according to the amount of net income earned.
Progressive Income Tax Rates in Turkey. This is the table published by the Turkish Tax Office for 2026.
- 15% on net income up to TRY 190,000;
- 20% on income between TRY 190,000 and TRY 400,000;
- 27% on income between TRY 400,000 and TRY 1,000,000;
- 35% on income between TRY 1,000,000 and TRY 5,300,000;
- 40% on income exceeding TRY 5,300,000.
Provisional Tax – This is a tax paid by companies in Turkey every three months based on their profits. In fact, it is the payment of annual income tax in three-month periods. The tax office collects the income tax, calculated based on the difference between income and expenses at the end of the year, in three-month periods. At the end of the year, the tax is calculated by deducting the tax paid during these three-month periods from the final tax liability.
Value Added Tax (VAT) – This is a tax that companies pay every month at a rate of 20% on the amount received from the sale of goods and services. Under Turkish tax laws, different VAT rates may apply to certain goods and services.
Stamp Tax – This is a tax paid based on the value of commercial contracts, lease agreements, and commercial declarations made by companies. For example, stamp tax on commercial contracts is 0.948% of the contract value. For lease agreements, it is 0.189% of the total value of the lease agreement. This tax applies where the relevant contracts are notarized.
Social Security Contributions – Company shareholders are required to pay Social Security contributions every month. In return for these contributions, they may benefit from healthcare services with state support and may become eligible for retirement in the future.
In general, these are the main taxes payable by companies established in Turkey. Of course, if a company is required to obtain different licenses and permits depending on its activities, additional taxes, fees, and other payments may also arise at those stages.
In our next article, we will examine in detail which expenses companies in Turkey can deduct from their income.
How to Establish a Company in Turkey?
You can read our detailed article on the company formation process in Türkiye here. In general, the company formation process in Türkiye has become much easier with the development of centralized system infrastructure.
What Taxes Does a Limited Liability Company Pay in Turkey?
Limited Liability Companies are established under the principle of limited liability. In general, they are required to pay corporate tax at a rate of 25% of their annual net profit, VAT at a rate of 20% on a monthly basis, provisional tax every three months, and stamp tax on transactions such as contracts and lease agreements.
