Turkey offers various incentives based on volume, project, type of investment, or region. The incentives include:
Turkey taxes its residents on their worldwide income, whereas non-residents are taxed on Turkish-source earnings only. Income tax is levied on taxable income at progressive rates after certain deductions and allowances. There is no special tax regime for expatriates.
The following rates apply to employment income from 1 January 2022 (numbers in parentheses represent rates and brackets applicable to non-employment income):
Taxation of certain income from certain financial instruments is carried out by withholding tax (WHT), and the rates are 0%, 10%, 15%, or 18%, depending on the type of income and instruments.
There are no local taxes on personal income in Turkey.
There are no provincial or municipal taxes on corporate income in Turkey.
There are Turkey, companies (other than those in the financial sector) are subject to a standard corporate income tax rate of 20%. However, the rate is temporarily increased to 25% for the income generated in 2021 and to 23% for the income generated in 2022. The applicable rate as of 2023 will return to 20% unless the legislation is amended. For financial sector companies, the corporate income tax rate is 25%.
Companies (other than banks, financial institutions, insurance companies, and pension funds) offering at least 20% of their shares via their first initial public offering (IPO) on the Istanbul stock exchange are subject to a CIT rate reduced by two percentage points (i.e. 21% instead of 23% for 2022) for five years starting from the year when the IPO is made.
The taxable income of a company is computed based on its net accounting profits after adjustment for exemptions and deductions and including prior-year losses carried forward, to a limited extent. no local taxes on personal income in Turkey.
Foreign businessmen who wish to open a company in Turkey can choose between a limited liability company, joint stock company, limited partnership, or commercial partnership.
A joint stock company is a company whose capital is definite and divided into shares and which is responsible for its debts only with its property holdings. Shareholders are only liable to the company with the capital shares they have committed. Joint stock companies may be established for any economic purpose and subject that is not prohibited by law.
Joint stock companies are the only type of company whose shares are offered to the public and whose shares are traded on the stock exchange.
A limited company is a company whose capital is definite and divided into shares and is responsible for its debts only with its property holdings. Limited companies cannot be offered to the public. A limited company with a single shareholder can be established. The number of shareholders may not exceed fifty. Partners of a limited company may be real or legal persons.
The collective company is established with at least two partners. Each partner has the right and duty to manage the company separately. However, management business may be assigned to one, several, or all of the partners, either by company agreement or by the majority of partners. Only real persons may be partners in the collective company. The partners of the company are second-degree unlimited liable to the creditors of the company.
There is no capital requirement for collective companies.
The ordinary limited partnership is a private company, and the limited partnership divided into shares is a capital company. A limited partnership can be established by at least two people, one of which is an active partner (unlimited responsible) and the other one is a dormant partner (limited responsible). The active partners can only be real persons. The dormant partners can be both real and legal persons. The responsibility of the dormant partners is limited by the amount of capital that they put in or commit. Dormant partners cannot manage the company. There are two kinds of limited partnership companies; ordinary limited partnership and limited partnership divided into shares.
The cooperative can be established with at least seven partners, without prejudice to special types. Each partner undertakes at least one, at most five thousand shares. The value of a partnership share is 100 Turkish Liras.
All partners, except those who were not partners three months before the general assembly, may participate in the cooperative general assembly. This requirement is not required in building cooperatives.
The board of directors consists of at least three persons who are Turkish citizens and who meet the other requirements depicted in the Law. members of the board of directors may be elected for a maximum term of four years. Unless otherwise provided for in the articles of association, they may be re-elected.
Chandrawat & Partners is a prominent full-service firm dedicated to delivering top-tier professional services to clients both within the domestic and international spheres.
Chandrawat & Partners stands as a dynamic and rapidly expanding full-service firm, specializing in the delivery of exceptional professional and corporate services to a diverse clientele, both foreign and local. We proudly represent companies and individuals across a wide spectrum of sectors through distinct entities established in various countries worldwide.
Chandrawat & Partners stands as a dynamic and rapidly expanding full-service firm, specializing in the delivery of exceptional professional and corporate services to a diverse clientele, both foreign and local. We proudly represent companies and individuals across a wide spectrum of sectors through distinct entities established in various countries worldwide.
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