Taxation of Foreign Companies in Türkiye

Note on sources. The official legal texts of Türkiye are in Turkish. Each provision below is quoted verbatim in Turkish (the authoritative text) and followed by an unofficial English translation for convenience only. Where exact wording matters, the Turkish text governs.

Short Answer

The taxation of a foreign company in Türkiye depends not on “being foreign” but on the type of liability. A foreign corporation whose legal and business centre is outside Türkiye is a limited taxpayer and is taxed only on the income it derives in Türkiye (Article 3 of Law No. 5520). The general corporate tax rate is 25 percent (Article 32) — but this rate has changed over time, so in any investment decision the current rate must be verified at the time of the transaction.

Is This You?

This guide is relevant if you are:

• A foreign company operating in Türkiye through a branch or place of business,
• A foreign investor planning to set up a company in Türkiye,
• Trying to understand how your Turkey-source income will be taxed,
• Assessing the risk of double taxation,
• Part of the finance team of a foreign-owned Turkish company.

The Key Distinction: Full and Limited Liability

The key to taxing a foreign company is this distinction:

“Dar mükellefiyet: Kanunun 1 inci maddesinde sayılı kurumlardan kanunî ve iş merkezlerinin her ikisi de Türkiye’de bulunmayanlar, sadece Türkiye’de elde ettikleri kazançları üzerinden vergilendirilirler.”

(5520 sayılı Kurumlar Vergisi Kanunu m.3)

Unofficial translation: “Limited liability: Among the corporations listed in Article 1 of the Law, those whose legal and business centres are both not located in Türkiye are taxed only on the income they derive in Türkiye.”

It follows that:

• Full taxpayer: a corporation whose centre is in Türkiye — taxed on the entirety of its domestic and foreign income.
• Limited taxpayer: a foreign corporation whose centre is abroad — taxed only on its Turkey-source income.

An important consequence: a company set up with its centre in Türkiye is a full taxpayer even if foreign-owned. “Being foreign” alone does not create a different tax regime; what matters is where the centre is. The formation steps themselves are covered in setting up a company in Türkiye as a foreigner.

The Corporate Tax Rate

The general rate is set out in the Law:

“Kurumlar vergisi, kurum kazancı üzerinden %25 oranında alınır.”

(5520 sayılı Kurumlar Vergisi Kanunu m.32)

Unofficial translation: “Corporate tax is levied on corporate income at a rate of 25 percent.”

This 25 percent general rate was set by the 2022 legislative amendment. The article also provides a different rate for certain corporations (such as banks and financial institutions).

Withholding at Source: How a Limited Taxpayer Actually Pays

For the income listed in Article 30, the tax on a limited taxpayer is not collected through a return the foreign company files. It is deducted by the Turkish party making the payment:

“(1) Dar mükellefiyete tâbi kurumların aşağıdaki kazanç ve iratları üzerinden, bu kazanç ve iratları avanslar da dahil olmak üzere nakden veya hesaben ödeyen veya tahakkuk ettirenler tarafından % 15 oranında kurumlar vergisi kesintisi yapılır:”

(5520 sayılı Kurumlar Vergisi Kanunu m.30/1)

Unofficial translation: “On the following income and revenues of corporations subject to limited liability, corporate tax is withheld at a rate of 15 percent by those who pay them in cash or on account, advances included, or who accrue them:”

The obligation rests on the payer. A Turkish company buying a service from a foreign supplier is the party that must withhold the tax, declare it and remit it; the foreign recipient is paid the net amount. The list in Article 30 covers professional service income, income from immovable property and income from movable capital, among others. Filing remains possible but is not required: under Article 30/9, for income other than commercial and agricultural income on which tax has been taken by withholding under this article, filing a return is optional. The same paragraph carves out an exception: certain movable-capital income and distributions from fund participation certificates and investment trust shares must be included in a return where one is filed. Commercial income earned through a workplace or permanent representative is a different case and is declared on a return, which is the situation Article 30/6 below addresses. Rental income earned by a foreign owner of Turkish real estate falls into this category, and the acquisition side of that question is set out in property acquisition by foreigners in Türkiye.

Two points decide how much is actually withheld.

The rate in the Law is not necessarily the rate applied. Article 30 sets 15 percent, but paragraph 8 of the same article authorises the President to determine the withholding rates separately for each type of income or field of activity, to reduce them to zero, or to raise them to twice the stated rate. The rate for a given payment therefore comes from the Presidential decision in force, not from the 15 percent figure alone. The tax administration has recorded that difference for professional service payments:

Gelir İdaresi Başkanlığı özelgesi (idari görüş, bağlayıcı emsal değil): “aynı fıkranın (b) alt bendi ile serbest meslek kazançları tevkifat kapsamındaki kazanç ve iratlar arasında sayılmış, tevkifat oranı ise 03/02/2009 tarihinden itibaren yürürlüğe giren 2009/14593 sayılı Bakanlar Kurulu Kararı ile %20 olarak belirlenmiştir.”

(İstanbul Vergi Dairesi Başkanlığı, B.07.1.GİB.4.34.16.01-KVK 30-699, T. 23.02.2012)

Unofficial translation: “sub-paragraph (b) of the same paragraph lists professional service income among the income and revenues within the scope of withholding, and the withholding rate was set at 20 percent by Council of Ministers Decision No. 2009/14593, in force as from 03/02/2009.”

A ruling of this kind is an administrative opinion given under Article 413 of Law No. 213. It is not a court decision, and it protects only its addressee against tax penalties and default interest. It is reproduced here to show how the administration applies the rule, not as binding precedent. The ruling dates from 2012 and states the rate then in force; the rate applicable to a current payment must be verified against the Presidential decision in force on the payment date.

A branch is taxed a second time when it sends profit home. Profit that a limited taxpayer transfers to its head office after corporate tax is subject to a further withholding:

“(6) Yıllık veya özel beyanname veren dar mükellef kurumların, indirim ve istisnalar düşülmeden önceki kurum kazancından, hesaplanan kurumlar vergisi düşüldükten sonra kalan kısımdan ana merkeze aktardıkları tutar üzerinden, kurum bünyesinde % 15 oranında kurumlar vergisi kesintisi yapılır.”

(5520 sayılı Kurumlar Vergisi Kanunu m.30/6)

Unofficial translation: “On the amount that limited taxpayer corporations filing an annual or special return transfer to their head office out of the part remaining after the calculated corporate tax has been deducted from the corporate income before deductions and exemptions, corporate tax is withheld at a rate of 15 percent within the corporation.”

This second layer is why the choice between a branch and a subsidiary is a tax question and not only a company-law one. A liaison office, which may not carry on commercial activity at all, sits in a different position again; its permitted scope and its tax and personnel status are covered in liaison office of a foreign company in Türkiye.

Rates Change: The Most Important Caveat

Tax rates are the most variable element in this area. The general corporate tax rate has been changed more than once in recent years; the 25 percent above is the rate in force, but it is not guaranteed to be permanent. VAT rates, exemptions and figures such as the minimum-wage tax exemption are also updated each year.

Practical consequence: a rate seen online or in a promotional brochure belongs to the year that text was written. When making an investment decision, the tax burden must be calculated according to the legislation in force on the date of the decision. This article states the rates as in force; the final calculation must be made against the text on the transaction date.

A current example shows how quickly the picture moves. Paragraph 8 of Article 32, as amended on 21 May 2026 by Law No. 7582, applies a reduced rate to production income:

“Kurumlar vergisi oranı, sanayi sicil belgesini haiz ve fiilen üretim faaliyetiyle iştigal eden kurumların münhasıran üretim faaliyetlerinden elde ettikleri kazançları ile zirai üretim faaliyetiyle iştigal eden kurumların münhasıran bu üretim faaliyetlerinden elde ettikleri kazançlarına %12,5 olarak uygulanır.”

(5520 sayılı Kurumlar Vergisi Kanunu m.32/8)

Unofficial translation: “The rate of corporate tax is applied as 12.5 percent to the income that corporations holding an industrial registry certificate and actually engaged in production activity derive exclusively from their production activities, and to the income that corporations engaged in agricultural production activity derive exclusively from those production activities.”

A foreign investor setting up manufacturing in Türkiye is therefore not necessarily taxed at the 25 percent general rate on production income. The reduced rate is tied to conditions in the same paragraph, including the industrial registry certificate and the requirement that the income come exclusively from production activity, so it has to be assessed against the company’s actual activity rather than assumed.

Zone-based regimes carry their own, separately legislated advantages that change on their own timetable; the four main zone types are set out in investment zones: free zones, technoparks, OSB.

Double Taxation and Treaties

The same income may be taxed twice: once in Türkiye at source and again in the investor’s own country. Türkiye has double-taxation treaties with many countries, and where one covers the payment it displaces the domestic withholding rate. The basis for that priority is constitutional:

“Usulüne göre yürürlüğe konulmuş Milletlerarası andlaşmalar kanun hükmündedir. Bunlar hakkında Anayasaya aykırılık iddiası ile Anayasa Mahkemesine başvurulamaz.”

(Türkiye Cumhuriyeti Anayasası m.90)

Unofficial translation: “International agreements duly put into effect have the force of law. No application may be made to the Constitutional Court in respect of them on the ground of unconstitutionality.”

The tax administration applies the same order of priority to withholding:

Gelir İdaresi Başkanlığı özelgesi (idari görüş, bağlayıcı emsal değil): “Diğer taraftan, yurt dışındaki firmanın mukimi olduğu ülke ile ülkemiz arasında çifte vergilendirmeyi önleme anlaşmasının bulunması ve bu anlaşmalarda söz konusu ödemelere ilişkin bir hükmün bulunması durumunda, öncelikle bu hükümlerin dikkate alınacağı tabiidir.”

(İstanbul Vergi Dairesi Başkanlığı, B.07.1.GİB.4.34.16.01-KVK 30-699, T. 23.02.2012)

Unofficial translation: “Moreover, where a double-taxation treaty exists between our country and the country in which the foreign firm is resident, and those agreements contain a provision concerning the payments in question, it is self-evident that those provisions will be taken into account first.”

The priority is not self-executing. In the same ruling the administration recalls the condition set by its own circular ÇVÖA/2007-1 of 13/02/2007: the recipient must obtain a certificate of residence from the competent authority of its own country and submit it, together with a Turkish translation certified by a notary or by the Turkish consulate in that country, to the party responsible for withholding. Where the certificate is not produced, the circular states that the domestic provisions apply in place of the treaty (“ilgili anlaşma hükümleri yerine iç mevzuat hükümlerimiz uygulanacaktır”).

For a foreign company this turns the certificate of residence into a practical precondition rather than a formality. Without it in the payer’s hands at the time of payment, the Turkish party will withhold at the domestic rate, and the treaty rate then has to be pursued afterwards as a separate refund question.

Common Mistakes

• Treating “being foreign” as a different rate. What matters is full/limited liability; a foreign-owned company with its centre in Türkiye is a full taxpayer (Article 3).
• Planning on an old rate. The corporate tax rate changes; the current rate must be verified on the transaction date (Article 32).
• Assuming a limited taxpayer is taxed on all income. A limited taxpayer is taxed only on Turkey-source income (Article 3).
• Planning on the statutory 15 percent. Article 30 states 15 percent, but Article 30/8 lets the President set the rate separately per income type; the rate actually withheld may differ.
• Forgetting the branch profit transfer. A branch is withheld a further 15 percent on profit remitted to the head office (Article 30/6).
• Skipping the double-taxation treaty. Where a treaty applies, the tax burden and taxing right may change. The treaty rate is applied only if the certificate of residence is produced to the payer.
• Ignoring VAT. Supplies and services in Türkiye are, as a rule, subject to VAT; rates may change.

Summary

The taxation of a foreign company in Türkiye depends on the type of liability: a foreign corporation whose centre is abroad is a limited taxpayer, taxed only on Turkey-source income; a company whose centre is in Türkiye (even if foreign-owned) is a full taxpayer (Article 3 of Law No. 5520). The general corporate tax rate is 25 percent (Article 32, 2022 amendment), but because rates change frequently the current rate must always be verified on the transaction date. For most Turkey-source income the tax is not paid on a return but withheld at source by the Turkish payer (Article 30), and a branch is withheld again on profit it transfers to its head office (Article 30/6). Double-taxation treaties and VAT also affect the real tax burden, and a treaty rate is applied only where the certificate of residence reaches the payer. A financial assessment based on the legislation in force should therefore be carried out before any investment decision.