Income Taxes | Law

1.  Direct Taxes

1.1. Corporate Income Tax (CIT)

According to CIT Law, the gains derived by corporations within one fiscal year are subject to corporation tax. Irrespective of their sources, all gains and proceeds derived by corporations are considered as corporate profits and are taxed accordingly. Although as a general rule the fiscal year corresponds to calendar year, provided that permission is received from the Ministry of Finance, any other period of 12 months can be determined as a fiscal year.

Corporate taxpayers defined in the law are as follows:

Capital companies,
Public economic enterprises,
Economic enterprises owned by associations and foundations,
Joint ventures

The current rate of Corporate Income Tax is 20%. During the relevant fiscal year, the corporations are required to pay a temporary (prepaid) tax over the taxable gains as of the 3rd, 6th, 9th and 12th months.

Dividend distribution is subject to withholding tax at a rate of 15%. In the event the profit is not distributed, withholding tax shall not be applicable.

As a share capital increase by the corporation using the retained earnings is not considered to be a dividend distribution, no withholding tax for dividends applies. The withholding tax is applied on the amount after the deduction of corporate income tax from taxable branch profits.

1.2.      Personnel Income Tax

The income tax is levied on the income of individuals. An individual’s income may consist of one or more income elements listed below;

Business profits,
Agricultural profits,
Salaries and wages,
Income from independent personal services,
Income from immovable property and rights (rental income),
Income from movable property (income from capital investment),
Other income and earnings without considering the source of income.

Individual income tax rates applicable for 2015 are as follows:

Income Scales (TRY) Rate (%) Income Scales (TRY) Rate (%)

(Employment Income)
Up to 12,000
106,001 and over


(Non-Employment Income)
Up to 12,000
66,001 and over