Turkey offers significant opportunities for foreign investors through its dynamic economy and strategic location. However, foreign-owned companies operating in Turkey must comply with detailed corporate tax obligations under Turkish tax law. From corporate income tax to transfer pricing audits, non-compliance can lead to serious financial penalties. Working with a trusted Turkish Law Firm ensures legal clarity, tax efficiency, and operational stability.
At ER&GUN&ER Law Firm, our English Speaking Turkish Lawyers advise multinational clients on tax planning, corporate structuring, and regulatory reporting. Whether your business operates as a Limited Company (LTD), Joint Stock Company (A.Ş.), branch office, or liaison office, our tax advisory services help you avoid common mistakes and remain fully compliant with Turkish corporate tax rules. As a best lawyer firm in Turkey for international clients, we combine legal and fiscal precision to protect your commercial interests.
Corporate Income Tax (CIT) in Turkey
Corporate Income Tax is levied on the net profits of companies registered in Turkey. As of 2025, the standard rate is 25% but this may vary based on sector-specific regulations or incentive zones.
- Applied to both Turkish-owned and foreign-owned entities
- Tax base = Total revenue - Allowable expenses
- Payable in quarterly advances and annual reconciliation
- Filed through electronic tax portals (e-beyanname)
Our Turkish Law Firm works with certified accountants to optimize your declarations and reduce audit exposure.
Withholding Tax on Dividends and Payments
Foreign shareholders receiving payments from Turkish entities may be subject to withholding tax on:
- Dividends
- Interest payments
- Royalties and service fees
- Rental income
The default withholding rate is 15%, but reduced rates may apply under Double Taxation Treaties (DTTs) signed by Turkey. Our lawyers evaluate your corporate structure and treaty eligibility to minimize withholding liabilities.
Transfer Pricing and Related-Party Transactions
Transfer pricing rules apply when foreign-owned companies in Turkey engage in business with affiliated companies abroad. Key requirements include:
- Market-based pricing for cross-border transactions
- Annual transfer pricing documentation
- Submission of Form 1 and Local File to Turkish Revenue Administration (TRA)
- Risk of audits and retroactive penalties for non-compliance
We support clients in preparing compliant documentation, intercompany agreements, and proactive disclosure strategies.
Thin Capitalization and Interest Deductibility
If a foreign shareholder provides loans to its Turkish subsidiary, thin capitalization rules may apply. Interest expenses may be reclassified as dividends and become non-deductible. The rules apply if:
- Related party loans exceed 3x equity for non-financial firms
- Loan terms are not arm’s length
- Interest payments are disguised capital transfers
Our Turkish Law Firm helps clients structure intra-group financing legally and avoid interest reclassification.
Value Added Tax (VAT) in Turkish Corporate Transactions
VAT (KDV in Turkish) is levied on the sale of goods and services within Turkey. Standard rate: 20%. Foreign-owned companies must:
- Register for VAT
- Issue e-Invoices and e-Archive documents
- File monthly declarations
- Offset input VAT against output VAT where applicable
We ensure VAT compliance for trading companies, service exporters, and digital platform operators. Our Turkish Law Firm also assists with VAT refund claims and cross-border VAT neutrality structuring.
Corporate Tax Incentives and Special Zones
Foreign-owned companies operating in certain industries or zones may benefit from tax exemptions or reductions, including:
- Free Zones: Exemption from CIT and VAT for export-focused entities
- Technoparks: Tax breaks for software and R&D companies
- OIZs (Organized Industrial Zones): Incentives on land, energy, and local tax
- Turquality and Investment Incentive Certificates: Sector-based tax relief
We guide foreign investors in selecting the right structure and applying for tax incentive schemes in Turkey.
Annual Corporate Tax Return and Reporting Timeline
- Quarterly advance tax returns: Due in April, July, October, January
- Annual corporate tax return: Due by April 30 of the following year
- Transfer pricing forms: Must be submitted with annual returns
- General Assembly meeting minutes: Required to approve balance sheets and profit allocation
Our English Speaking Turkish Lawyers work with your accountant to ensure timely and compliant filings to the Turkish Revenue Administration.
Internal Resources for Foreign-Owned Companies
- How to Form a Company in Turkey
- Corporate Tax Advisory in Turkey
- International Trade Structuring
- Legal Risk for Company Directors
- Joint Ventures and Tax Structuring
Frequently Asked Questions (FAQs)
- Do foreign companies pay corporate tax in Turkey? Yes, if they operate through a registered Turkish entity, they are subject to Corporate Income Tax.
- What is the corporate tax rate? The standard rate is 25% as of 2025, but incentives may reduce this in certain industries.
- How can I reduce withholding tax? By structuring cross-border payments under applicable Double Taxation Agreements (DTTs).
- What is transfer pricing? It's the pricing of transactions between related parties. Turkey requires documentation and market-based benchmarks.
- Do I need to file tax returns in Turkish? Yes. All official filings must be in Turkish and submitted via the official online portal.
- Is dividend income taxed? Yes. Dividend distributions to foreign shareholders are subject to 15% WHT unless reduced by treaty.
- Can I benefit from Free Zone tax incentives? Yes, if your company is export-oriented and licensed by the Ministry of Trade.
- How can a Turkish Law Firm help? We ensure full tax compliance, reduce risks, structure intercompany operations, and represent you in audits and disputes.
Work with a Turkish Law Firm for Corporate Tax Compliance
Whether you're launching a new Turkish subsidiary, managing cross-border payments, or navigating an audit, corporate tax compliance is not optional—it's essential. Foreign-owned companies face not only financial but also reputational risks when they fail to follow Turkish tax laws.
At ER&GUN&ER Law Firm, our English Speaking Turkish Lawyers provide comprehensive legal and fiscal support for international companies. As a proven Turkish Law Firm in corporate advisory, we draft legal documents, liaise with tax authorities, and ensure your business runs with clarity, precision, and confidence.