Accountancy Accountancy in Turkey- Account Management

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Accountancy in Turkey

Among OECD members, Turkey has one of the lowest business tax rates. The corporation tax

legislation in Turkey features notably objective, harmonized, and explicit requirements that are in

accordance with global norms. Three broad categories can be used to categorize Turkish tax law:

1) Income Taxes

2) Taxes on Expenditure

3) Taxes on Wealth

1. Income Taxes

Personal income tax and corporate income tax are the two main income taxes covered by Turkish tax

law.

A) Personal Income Tax

Income earned by real people is subject to personal income tax. Income is the sum of all an

individual's income and profits over the course of a single calendar year. One or more of the revenue

components listed below may make up an individual's income:

● Agriculture revenue

● Business profits

● Wages and salaries

● Earnings from independent personal services

● Income from rights and movable property

● Income from moving assets (capital investment)

● Other earnings and income

The range of individual income tax rates is 15% to 40%.

B) Corporate Income Taxes

Corporations are subject to taxation on their legal entities if they derive any of the income elements

listed in the Income Tax Law.

Turkish corporate income tax rates are set at 25% for 2021 and 23% for 2022 on firm profits.

2. Taxes on Expenditure

A) Value Added Tax (VAT)

The 1%, 8%, and 18% VAT rates that are generally in application. VAT is charged on all deliveries of

products and services resulting from other operations as well as on commercial, industrial,

agricultural, and independent professional goods and services.

B) Special Consumption Tax (SCT)

Four major product categories are subject to SCT at various tax rates:

● Natural gas, lubricating oil, solvents, and derivatives of solvents, as well as petroleum

products

● Vehicles of many kinds, including cars, motorcycles, helicopters, planes, and yachts

● Alcoholic beverages, tobacco goods, and tobacco

● luxurious goods

SCT is billed only once, as opposed to VAT, which is applied to each delivery.

C) Banking and Insurance Transaction Tax

Transactions between banks and insurance companies are still excluded from the VAT but are still

subject to the Banking and Insurance Transaction Tax. This tax is levied on income received by banks,

such as interest on loans. Even though the standard rate is 5%, certain transactions, like interest on

deposit transfers between banks, are only subject to a 1% tax. Since 2008, there has been no tax

imposed on sales resulting from foreign exchange transactions.

D) Stamp Duty

Contracts, payable notes, capital contributions, letters of credit, letters of guarantee, financial

statements, and payrolls are just a few of the papers that are subject to stamp duty. Stamp duty is

assessed at rates ranging from 0.189% to 0.948% of the document's value or is paid as a fixed price (a

pre-set fee) for specific papers.

3. Taxes on Wealth

There are three different types of wealth taxes:

● Tax on real estate.

● Tax on motor vehicles.

● Gift and inheritance taxes.

Real estate taxes in Türkiye are collected on land, houses, and buildings at rates ranging from 0.1% to

0.6%, with an additional 10% going toward contributions for the preservation of movable cultural

property. Taxes on motor vehicles are gathered based on predetermined amounts that change annually

based on the age and engine size of the vehicles. In contrast, gift and inheritance taxes are assessed at

a rate ranging from 1% to 30%.