Tax and accounting regulations

Summary of Requirements for a Limited Liability Company (Ltd Si):

General Information
Type of Company Limited Liability Company
Timescale to incorporate Approx. 14 working days
Taxation Progressive Taxation System. Corporate Tax Rates vary between 15% and 35%, the standard rate being 20%.
Double Tax Treaty Access: Yes, over 70 DTT’s in place
Directors
Minimum No. Required 1, Foreign Director permitted however it is advisable to have a local director
Local Director Required No, but advisable
Publicly accessible information Yes
Location of Meetings Anywhere
Shareholders
Minimum No. Required 2
Publicly accessible information Yes
Location of Meetings Anywhere
Company Secretary
Required No
Local Secretary Required N/A
Registered Office Required Yes
Share Capital
Standard Currency TL, Turkish Lira (1 TL = €0.45)
Minimum Authorised 5,000 TL (approx. €2,260.00 )
Minimum Paid Up Capital 25% of Authorised Share Capital must be paid-up within the incorporation period and the balance of the subscribed capital paid within 3 years.
Accounting & Compliance
Requirements to prepare Accounts Yes. A foreign owned company is required to appoint a local accountant before the incorporation process is completed.
Requirement for Audit A company can be exempt from audit if it meets the following criteria:

 

  • Annual turnover less than 4,264,000 TL (approx. €2 million )
  • Balance sheet total is less than 8,528,000 TL (approx. €3.8 million )
Local Auditor Required Yes
Requirement to File Accounts Yes
Requirement to file Annual Return Yes
Additional Information
VAT VAT is imposed on goods delivered and services rendered including imported goods and services. General rate of VAT is 18%. Returns are filed monthly.
Bank Account Opening The beneficial owner must visit the bank in order to open an account.

Taxation:

Individual Tax Rate:
  • 15% – 35%
Corporate Income Tax Rate:
  • 20%. Companies are required to pay advanced corporation tax based on their quarterly balance sheets and income statements. Advanced corporate tax paid during the year is offset against the corporate tax liability calculated over the annual corporate tax return. The balance of advance tax can be refunded or used to offset against other tax liabilities.
  • Deductions of ‘all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on trade or business’ are allowed
  • Corporate losses may be carried forward for 5 years but not carried back.
Capital Gains Tax Rate:
  • Capital gains are subject to 20% corporation tax.
Withholding Tax:
  • Dividends distributions to individuals and non-resident corporate shareholders are subject to withholding tax at a rate of 15%. Reduction however can be achieved through utilization of a Tax Treaty.
Royalties:
  • 20%
Taxable Income:
  • According to Turkish Tax Legislation, income taxation differs significantly based on where the taxpayer is resident.
  • If both the legal and business headquarters of a company are located outside of Turkey then the company is regarded as a non-resident entity
  • If only one of the headquarters are located within Turkey the company is regarded as a resident entity
  • Resident entities are subject to tax on worldwide income whereas non-resident entities are taxed solely on the income from activities in Turkey.

  

Summary of Turkish Branch Characteristics:

Legal Status:
Governing Law Turkish Commercial Code
Legal Status Foreign Entity
Approval Ministry of Industry and Commerce, Turkey
Timescale for Establishment
  • Approximately 15-20 working days.
  • Special permission is required from the Ministry of Commerce and the time taken for this does vary and timescale cannot be guaranteed.
Structure & Management:
Founding Shareholders Not Permitted
Founders Nationality Any
Capital Requirements Capital dividends into shares
Branch Capital Not Required
Liability Liability of the Parent Company
Issuing Stocks Not Permitted
Dividends Permitted
Management At least 1 Branch Director
Governance Branch Directors Power of Attorney
Deposit Account Permitted
Transfer of Shares Permitted
Foreign Currency Foreign Currency usage permitted
Taxation:
Taxation Liabilities Non-resident status – liability only on Turkish sourced income
Dividend withholding tax Applicable only if profits are transferred to the parent company
Billing
  • In Turkish Lira only to Turkish entities.
  • Indexation of TL amount on the invoice to foreign currency allowed.

Take the next step, we are here to help.

Register a Turkey company.
Open a Turkey bank account.

  Resources:

 

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