What Taxes Do Foreigners Pay In Turkey

Taxes are part of the income of any country. They contribute to the support of the economy and the development of its key sectors. The source – https://turk.estate/en/ – told about what taxes exist in Turkey, as well as about the peculiarities of taxation for foreigners.

Do Foreigners Need To Pay Taxes In Turkey

Turkey, as other countries, allocates a certain set of taxes for each economic activity. Turkey differs from other countries in its attitude towards foreign citizens. This gave foreign investors the freedom to invest and create their own business in the country, as well as the right to own, sell and buy real estate, like any Turkish citizen, without additional encumbrances. 

The additional expenses required by a foreigner in Turkey are combined with the costs of translating documents or using intermediaries in the territory of the Republic of Turkey, and in some cases, it is combined with the need for translation services.

Advantages Of The Turkish Tax Regime

Turkey is characterized by low tax rates compared to other countries. This is due to the need to encourage foreign investment in the state. Clear and specific laws that leave no room for doubts or miscalculations when investing, create a comfortable and understandable investment atmosphere.

All tax expenses in Turkey are set in accordance with international tax standards. In order to ensure the best investment climate, the state is constantly making amendments to tax legislation. These amendments may include permanent or temporary tax cuts to encourage investment in Turkey.

Types Of Taxes In Turkey

There are three main types of taxes in Turkey:

  • income tax;
  • taxes on expenses;
  • taxes on wealth and property.

There are also many other types of taxes that are subordinated to the main categories.

Income Tax

Income tax is a type of tax levied by the Turkish government on individuals or companies engaged in a certain business or profession, which brings them profit for certain periods of time. 

The amount of income tax is calculated after calculating the total net profit received by an individual within 1 year. This type of tax is levied, including from investment businesses of all types and owners who use real estate as a source of income by renting out a property. 

For individuals, a rate of 15 to 40% is provided. Taxes and fees when buying objects on the secondary real estate market, as a rule, do not exceed 5% of the value of the property.

Income tax for companies and institutions in Turkey ranges from 20% to 22% of the value of their profits. For companies operating in the territory of the state, the rate is 15%.

Taxes On Expenses

This is a tax levied on consumption in its various forms and on various resources consumed. It includes several main types: 

  • VAT;
  • special consumption tax;
  • tax on banking and insurance transactions;
  • stamp duty.

VAT

The value added tax in Turkey is known as the indirect resource consumption tax levied by the Turkish government on various types of imports and commercial, agricultural, industrial and handicraft goods. The amount of tax varies from 1%, 8% and 18%.

Special Consumption Tax

A special consumption tax is paid only once, and this tax is applied to four types of special products with different values of the applicable tax.

Tax On Banking And Insurance Transactions

The bank transaction tax is applied to profits earned from banking transactions, such as interest on bank loans. The maximum amount of tax is up to 5%. The tax on bank deposits is 1%. Transactions with foreign currency are not subject to taxation.

Stamp Duty

Stamp duty in Turkey means taxes levied on paper transactions and written documents. Stamp duty is collected by applying certain types of stamps attached to documents. The cost of stamp duty for some papers and documents is calculated as a percentage and ranges from 0.189% to 0.948%.

Taxes On Wealth And Property

Taxes on wealth and property in Turkey are levied on three types of property:

  • property taxes;
  • taxes on cars;
  • inheritance and gift taxes.

Property Taxes

Property tax is paid annually and is determined by the municipality in which the property is located. This type of tax includes several subspecies: 

Transport Tax: The transfer of ownership tax is paid when transferring ownership of real estate from one person to another, and this is the highest tax among other property taxes. Its value can reach 6.8% of the total value of the property. The transfer of ownership means the process of purchase and sale, as well as the transfer of ownership in cases of inheritance, divorce, and its value in case of transfer of ownership in the process of purchase and sale is 4% of the value of the property.

Capital Tax: tax related to property transfer tax. 

Value Added Tax: related to the type of real estate, its value differs for commercial real estate from residential real estate, it is also paid upon transfer of ownership.

Real Estate Income Tax: levied on real estate sold before the expiration of 5 years from the date of its ownership. The tax is the profit from real estate on the difference in price between the new sale price and the previous purchase price.

Notary Tax: sometimes the process of transfer of ownership is carried out by a notary before it is officially transferred through the state departments of real estate, and is 1% of the value of the property.

On the website of Turk.Estate presents houses for sale in Antalya and other popular cities of Turkey. If you need to get professional advice on the purchase and sale of real estate in Turkey, contact the manager of the company.

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