Corporate profit tax in Turkey

What is corporate tax?

It is the tax imposed on the profits made by companies or institutions. Corporate tax is calculated from the net profits achieved during the financial period, which lasts three months, where 20% of the net profits made by companies, institutions, and entities is deducted as profit tax after calculating the institution's revenues and expenses.

Which entities pay profit tax in Turkey?

• Capital companies (limited and joint-stock companies).
• Associations and cooperative institutions.
• Public economic institutions.
• Economic institutions affiliated with associations, foundations, unions, and groups.
• Cooperation bodies and partnerships.

Full and limited liability regarding corporate profit tax

Full liability: This is the deduction of profit tax from all profits (profits obtained inside and outside Turkey) earned by institutions or companies based in Turkey.

Limited liability: This is the deduction of profit tax from profits obtained only inside Turkey by institutions not based in Turkey.

Corporate profit tax law in Turkey

Corporate tax is declared to the tax office to which the company or institution is affiliated, or to the administrative unit in which the company or institution is located, during the period from the first day until the evening of the twenty-fifth day of the month following the financial period. Each institution submits a declaration regarding all its taxable profits.

How to calculate corporate tax in Turkey

The tax is deducted from the net profit value, so the profit tax can be calculated by deducting the expenses incurred by the company or institution from the total revenues obtained during the financial period, according to Article 40 of the income tax law in Turkey.

It is also possible to deduct losses resulting from the company's or institution's commercial activities from the profits earned in the next financial period. The losses for each year are shown separately in the tax declaration, provided they do not exceed five years, and these losses from previous declarations are deducted from the taxable profits. The tax is paid by the end of the month in which the declaration is submitted.

Other important information and topics to know:

• Comprehensive information about luxury real estate tax in Turkey.
• Buying an apartment in Turkey in installments: Important conditions and legal matters.
• Important matters about real estate tax in Turkey.

Edited by: Imtilak Real Estate©