Turkey Tax Guide for Foreigners: Corporate Tax, VAT, and Incentives (2026)

Ara 13, 2025

Understanding the tax liability is crucial before investing in a new country. Turkey offers a competitive tax regime compared to many OECD countries, but the system relies heavily on procedural compliance. As Vergi Merkezi, we have prepared this technical guide to clarify the primary tax obligations for foreign-owned companies and expats in Turkey for the fiscal year 2026.

İçindekiler Tablosu

1. Corporate Income Tax (Kurumlar Vergisi)

The standard Corporate Income Tax (CIT) rate in Turkey is 25% for the year 2026. This applies to the net profits of the company.

Base: Net profit (Revenue minus deductible expenses).
Declaration: Declared quarterly (provisional tax) and finalized annually in April.
Exemptions: Technology Development Zones (Technoparks) and Free Zones offer significant CIT exemptions for R&D and software companies.

2. Value Added Tax (KDV)

VAT (Katma Değer Vergisi – KDV) is a consumption tax. Your company collects this from customers and pays the difference to the tax office monthly.

Rate	Applicable Goods/Services
Standard Rate (20%)	Most consulting services, SaaS, luxury goods, furniture, general products.
Reduced Rate (10%)	Textiles, clothing, tourism accommodation, basic foodstuffs.
Super Reduced (1%)	Staple foods (bread, wheat), agricultural products.

3. Withholding Tax (Stopaj)

Turkey uses a “source deduction” system called Stopaj. Companies act as tax collectors for certain payments.

Rent Payments: If your company rents a physical office from an individual, there is a 20% withholding tax on the gross rent.
Professional Services: Payments to local self-employed individuals (lawyers, engineers) are subject to 20% withholding.
Employee Salaries: Income tax is deducted from the employee’s gross salary directly.

4. Dividend Repatriation (Profit Withdrawal)

When you want to transfer your company’s profit to your personal account (or to a parent company abroad), a Dividend Withholding Tax applies.

Standard Rate: 10%
Double Taxation Treaties: If Turkey has a tax treaty with your country, this rate may be reduced (often to 5% or 0%).

5. Individual Income Tax for Expats

If you become a tax resident in Turkey (staying more than 6 months in a calendar year), you are taxed on your worldwide income. However, for non-residents (limited taxpayers), only income generated in Turkey is taxed.

2025 Income Tax Brackets (Progressive):

Up to 158.000 TL: 15%
Up to 330.000 TL: 20%
…scaling up to 40% for high income.

2026 Income Tax Brackets (Progressive):

Up to 198.500 TL: 15%
Up to 415.000 TL: 20%
…scaling up to 40% for high income.

Frequently Asked Questions

Does Turkey have Double Taxation Treaties?

Yes. Turkey has signed agreements for the “Avoidance of Double Taxation” with over 85 countries, including the USA, UK, Germany, and China. This ensures you do not pay tax on the same income in both countries.

Are software companies tax-exempt?

Turkey provides massive incentives for software export. If you export your software/services abroad, 50% to 80% of the profit derived from these earnings may be exempt from Corporate Tax under specific conditions.

Compliance Support

Tax optimization requires a proactive strategy, not just bookkeeping. Contact Vergi Merkezi | Mali Müşavirlik to structure your Turkish business efficiently.

📍 Contact Us: English-speaking CPA support available in Istanbul and online.

⚠️ Legal Note: Tax rates mentioned are valid as of January 2025. Rates are subject to change by Presidential Decree.