Turkish Tax Law

Turkish Tax Law examines issues related to allowances received based on public power to ensure the regularity and continuity of public services. Tax law is the field of law that is applied to the problems that arise related to taxes at the same time as regulating the legal compliance of tax collection.

Tax disputes arise when there is a difference in the interpretation of tax-related laws. Other issues related to this field, such as tax disputes, are also referred to as Turkish Tax Law. As Istanbul Lawyer Firm, we provide legal advice by our tax lawyers in Turkey.

Objectives of Tax Law in Turkey

The objectives of Tax Law in Turkey are to ensure the continuity of taxes in a way that is in the public interest, to ensure public expenditures, and to increase the qualifications of the taxes provided. The Tax Law is applied to the issues listed below:

  • Taxation process
  • Determination of tax parties
  • Tax crimes and penalties
  • Cancellation of tax

The way to request changes related to taxes is to file a lawsuit. There are two ways to resolve tax disputes, judicial and administrative. The judicial path includes a trial process and a verdict is given at the end of the trial. The administrative way is carried out through reconciliation and remission.

As Istanbul Lawyer Firm, the consulting services we offer to our Turkish and foreign clients are as follows:

  • Preparation of tax complaint
  • Preparation of applications to the Commission of Conciliation 
  • Examination of reports prepared about taxpayers
  • Nullity suits

You can create an appointment by contacting us and have the advantage of getting professional assistance from expert lawyers.

Turkish Tax Code for Individuals

The Turkish Tax Law is related to the Turkish Income Tax Law for individuals. Within article 4 of this law, Turkish citizens whose residence is located in Turkey and who spend a minimum of 6 months of one-year periods in Turkey are responsible for income tax.

The types of earnings that can be considered income are:

  • Commercial gains
  • Fees
  • Income from agriculture
  • Security İncome
  • Other earnings

In cases where it is necessary to calculate, the real earnings of people are used for calculation.

Turkish Tax Code for Corporations

Corporate Tax Law No. 5520 applies to capital companies, funds, cooperatives, public economic organizations, agricultural enterprises, and commercial enterprises. This law includes the definition of companies, the tax process, the amount of taxes, and possible penalties. 

According to the Corporate Tax Law, the following situations are taken into account when determining and collecting taxes:

  • Whether there is a seek profit or not
  • Fail to profit
  • The situation of cost recovery

Issues such as the acceptance of corporations as economic enterprises due to sales transactions, the definition of economic enterprises, and taxation in business partnerships, even if they do not have the purpose of seeking profits, are also within the Corporate Tax Code. 

In addition, according to Article 94 Turkish Income Tax Law, exceptions to the tax process applied to self-employed earnings are excluded from Corporate Income Tax. You can get detailed information about this issue by consulting our team members, who are Turkish Inheritance Lawyers.

Turkish VAT System

According to the Turkish VAT system, tax rates can be changed between 1% and 40%. The generally accepted VAT rate is 18%. VAT is an excise tax and is provided in addition to the price of the products purchased. VAT was introduced in Turkey in 1985. This type of tax is a consumption tax. VAT is included in the pricing of many products made in Turkey. Turkish Real Estate Law area is used for taxes received from sales. 

Penalties Under the Turkish Tax Law

Penalties within the scope of the Turkish Tax Code are related to the crimes defined in this field. The first of these crimes is the loss of tax. Loss of tax penalty; one-fold of the lost tax, for the period from the normal due date of this tax specified in its law to the date of issuing the notification of the penalty, according to Article 112 of the TPL, based on the amount of tax losses will be calculated by adding half of the calculated interest of default.

The penalty is three times the tax loss caused for tax evasion. For the penalty to be imposed, there is a need for willfulness regarding tax evasion. If it is determined that the case of tax evasion was carried out intentionally, it is possible to impose a prison sentence. However, a maximum sentence of 3-4 years can be given.

The amounts of the first and second-degree irregularity penalty are as follows:

-Company with share capital: 12.000.000/7.000.000 TL

-Traders: 8,000,000/4,000,000 TL

-Second class traders: 4,000,000/2,000,000 TL

-Persons subject to other income tax: 2,000,000/1,000,000 TL

If the fact of irregularity also includes defects related to taxes, these penalty amounts are doubled.

The penalty for wilful default is defined as intentionally causing a mistake in the tax statement. A fine of twice the amount of the missing tax specified in the declaration is deducted. If there is a penalty for negligence, a penalty of half the amount of the lost tax is imposed.

If the crime committed is tax evasion, closure of the workplace, imprisonment, or a fine may be applied.

Types of Crimes Under the Turkish Tax Law

The types of crimes covered by the Turkish Tax Code include definitions of the criminal act committed. The penalties for crimes vary depending on the period in which the crime was committed or if it was committed again. The following are the types of crimes covered by Turkish Tax Law:

Tax loss

Situations such as opening a tax account under false names, hiding tax records, and forgery in documents are the basis of the tax loss crime.

General irregularity

Cases such as companies' or firms' failure to make the written notifications mentioned in the tax laws on time, forgery, or concealment of documents in the document are covered by general irregularities.

Special irregularity

Crimes such as failure to comply with the legally specified document order, forgery in the invoice, failure to write a receipt, or failure to deliver the receipt to the required places are covered by special irregularities.

Tax Evasion

Obtaining expenses such as electricity and water to be used at work from different places and officially concealing the workplace are covered by tax evasion. Concealing real earnings or making false tax declarations are also examples of tax evasion crimes.

FAQ About Tax Law in Turkey

We have compiled some of the frequently asked questions about tax law and regulations in Turkey for you.

Do foreigners have to pay taxes in Turkey?

Foreigners who do not live in Turkey are only obliged to pay income tax. The tax in question is obtained from VAT.

How do taxes work in Turkey?

Tax Law in Turkey is calculated on the income of individuals.

How much is the salary tax in Turkey?

An average of 15-35% of sales tax is collected in Turkey.