Last updated: June 2026
Tax Compliance in Turkey: A Complete Guide for Foreign Companies
Foreign companies operating or planning to conduct business in Turkey must understand the country’s tax compliance requirements. Obligations may arise from establishing a Turkish company, opening a branch, employing personnel, selling goods or services, or conducting certain cross-border transactions.Important: Turkish tax legislation and filing requirements change regularly. Businesses should obtain professional advice based on their activities and the regulations in force at the relevant time.Table of Contents
- When does a foreign company become taxable?
- Corporate income tax
- Value Added Tax
- Withholding tax
- Payroll and employment taxes
- Accounting and electronic records
- Transfer pricing
- Common compliance mistakes
- Tax compliance checklist
When Does a Foreign Company Become Taxable in Turkey?
A foreign company may become subject to Turkish taxation when it:
- Establishes a subsidiary or branch in Turkey
- Maintains a permanent establishment in Turkey
- Employs personnel or operates an office in Turkey
- Provides certain services to Turkish customers
- Imports or sells goods in Turkey
- Earns income sourced from Turkey
- Conducts transactions with related Turkish companies
The applicable obligations depend on the company’s legal structure, activities and the relevant double taxation agreement.
Turkish Subsidiaries
Companies incorporated in Turkey are generally treated as Turkish tax residents. They are normally taxed on their worldwide income and must comply with local accounting, reporting and filing requirements.
Branches and Permanent Establishments
A foreign company operating through a Turkish branch or permanent establishment is generally taxed on income attributable to its Turkish operations. Permanent establishment exposure should be assessed carefully when employees, representatives or dependent agents operate in Turkey.
Corporate Income Tax in Turkey
The general corporate income tax rate in Turkey is currently 25%. Different rates or reductions may apply to certain industries and activities.
Corporate income tax is calculated based on taxable profits rather than accounting profits alone. Certain expenses recorded in the accounts may not be deductible for tax purposes.
Companies are generally required to submit:
- Periodic provisional corporate tax returns
- An annual corporate income tax return
- Supporting financial and accounting records
Value Added Tax in Turkey
Value Added Tax, commonly referred to as VAT or KDV in Turkey, applies to most supplies of goods and services.
| General VAT Rates | Application |
|---|---|
| 1% | Applies to certain specified goods and services |
| 10% | Applies to certain reduced-rate supplies |
| 20% | Standard rate for most taxable supplies |
Businesses registered for VAT must generally:
- Issue compliant invoices
- Record purchase and sales invoices
- Calculate output and deductible input VAT
- Submit periodic VAT returns
- Pay any resulting VAT liability
VAT on Cross-Border Services
Services purchased from foreign suppliers may create Turkish VAT obligations under the reverse-charge mechanism. Consultancy, software, advertising and digital services purchased from abroad should be reviewed individually.
Withholding Tax Obligations
Turkish companies may be required to deduct withholding tax when making certain payments, including:
- Employee salaries and professional service fees
- Rent payments
- Royalties and interest
- Dividends
- Certain payments made to foreign companies
The applicable rate may be reduced or eliminated under a double taxation agreement. A valid certificate of tax residence and other supporting documents may be required to benefit from treaty provisions.
Payroll and Employment Taxes
Companies employing personnel in Turkey must comply with payroll, income tax and social security obligations. Typical employer responsibilities include:
- Registering employees with the relevant authorities
- Calculating monthly gross-to-net salaries
- Withholding employee income tax
- Calculating social security contributions
- Submitting payroll-related declarations
- Paying taxes and contributions within the applicable deadlines
Employment-related liabilities can arise even where the employer is a foreign company without a Turkish subsidiary.
Accounting, Record-Keeping and Electronic Documents
Businesses operating in Turkey must maintain complete accounting records. Required documents may include:
- Sales and purchase invoices
- Bank and expense records
- Payroll documents
- Statutory books and inventory records
- Agreements and supporting transaction documents
Depending on applicable thresholds and activities, companies may also be required to use:
- e-Fatura: Electronic invoices
- e-Arşiv Fatura: Electronic archive invoices
- e-Defter: Electronic statutory ledgers
Eligibility thresholds and mandatory registration rules may change. Companies should review their obligations regularly.
Transfer Pricing and Related-Party Transactions
Transactions between related companies must generally comply with the arm’s-length principle. This can apply to:
- Management and consultancy fees
- Intercompany loans
- Royalty payments
- Product purchases and sales
- Cost-sharing arrangements and group service charges
Companies should retain documentation demonstrating that related-party prices are commercially reasonable.
Double Taxation Agreements
Turkey has signed double taxation agreements with many countries. These agreements may affect:
- Permanent establishment exposure
- Taxation of business profits
- Withholding tax rates
- Employment income
- Dividends, interest and royalties
- Relief from double taxation
Treaty benefits are not always automatic. Supporting documentation may be required.
Common Tax Compliance Mistakes
- Assuming no Turkish company means no Turkish tax liability
- Issuing invoices that do not meet Turkish requirements
- Ignoring VAT obligations on imported services
- Applying treaty provisions without supporting documents
- Sending accounting records to the local accountant too late
- Failing to document intercompany service charges
- Treating employees as independent contractors without reviewing the arrangement
- Missing electronic invoicing and ledger requirements
Tax Compliance Checklist for Foreign Companies
- Confirm Turkish tax registration obligations
- Submit all required tax returns on time
- Maintain complete and accurate accounting records
- Apply the correct VAT and withholding tax treatment
- Meet payroll and social security obligations
- Review and document related-party transactions
- Maintain valid tax residence certificates
- Monitor electronic document requirements
- Reconcile tax filings with accounting records
- Review legislative changes with a local tax professional
How Professional Tax Compliance Support Can Help
A local tax compliance provider can assist foreign companies with:
- Tax registration and corporate income tax compliance
- VAT and withholding tax returns
- Payroll-related declarations
- Accounting and statutory reporting
- Electronic invoicing and electronic ledgers
- Transfer pricing documentation
- Double taxation agreement reviews
- Communication with Turkish tax authorities
Conclusion
Tax compliance in Turkey involves more than submitting an annual corporate tax return. Foreign companies may face corporate tax, VAT, withholding tax, payroll, electronic-document and reporting obligations depending on how they conduct business.
Reviewing these obligations before starting operations can reduce risk, prevent penalties and create a more reliable financial-management process.
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