Taxes in Turkey in 2026

Who is considered a taxpayer in Turkey?

As a general rule, Turkish tax residents are taxed on their worldwide income, while non-residents are taxed only on income derived from sources in Turkey. However, Turkish legislation may provide exemptions for certain types of foreign income received by some individuals who have recently become tax residents.

An individual is generally considered a Turkish tax resident if they spend more than 183 days in Turkey during a calendar year. Other criteria established by Turkish law may also be taken into account when determining tax residency.

Tax residency should not be confused with a Turkish tax identification number (Vergi Numarası). A tax number is a unique taxpayer identifier used when dealing with government authorities and completing many legal and financial transactions in Turkey. It can usually be obtained online through the Turkish Revenue Administration (GİB) website or in person at a local tax office.

A Turkish tax number is commonly required for:

• purchasing property;
• opening a bank account;
• registering a business;
• paying taxes;
• accessing certain government and notarial services.

Foreign nationals who are in Turkey for education, medical treatment, tourism, temporary work assignments, or who are unable to leave the country due to circumstances beyond their control—such as illness—are generally not considered Turkish tax residents, even if they remain in Turkey for more than 183 days during a calendar year.

A company is considered a Turkish tax resident if either of the following applies:

• its registered office is located in Turkey;
• its place of effective management is in Turkey, meaning that the company’s key management and strategic decisions are made there.

Turkish tax-resident companies are generally taxed on their worldwide profits. Foreign companies, by contrast, are taxed only on income derived from sources in Turkey.

When do you lose Turkish tax residency?

Tax residency is assessed separately for each calendar year. An individual will generally cease to be a Turkish tax resident once they no longer meet the relevant residency criteria—for example, if they no longer spend sufficient time in Turkey and move their centre of vital interests to another country.

After Turkish tax residency ends, the individual is generally taxed in Turkey only on income derived from Turkish sources.

What Changed in Turkey’s Tax System in 2026?

One of the most significant tax changes introduced in 2026 affects foreign nationals and Turkish citizens who become Turkish tax residents after an extended period of living abroad. Those who meet the eligibility requirements may receive a 20-year exemption from Turkish personal income tax on qualifying foreign-source income.

The exemption applies to individuals who become resident in Turkey on or after January 1, 2026, provided that during the three preceding calendar years they:

• did not have a place of residence in Turkey; and
• were not registered as taxpayers in Turkey.

Having previously been subject to limited tax liability—for example, because of income from Turkish property, investments, or capital gains—does not, by itself, make an individual ineligible for the exemption.

The exemption covers only income derived from sources outside Turkey. Turkish-source income remains taxable under the standard rules. Qualifying foreign income does not need to be included in the annual income tax return, even when the individual is required to file a return for other taxable income.

To claim the exemption, the taxpayer must apply to the relevant tax office and obtain a Certificate of Exemption for Income and Revenue Derived from Abroad (Yurt Dışından Elde Edilen Kazanç ve İratlar İçin İstisna Belgesi). The application and certification procedure is set out in Income Tax General Communiqué No. 333.

Several limitations should be taken into account:

• foreign taxes paid on exempt income cannot be credited against other Turkish tax liabilities;
• expenses associated with exempt income cannot be deducted from taxable income in Turkey;
• if the tax authorities determine that the eligibility conditions were not met, they may reassess the income and impose additional tax.

The exemption is determined by the source of the income, not by the location of the bank account or the country from which the payment is transferred. A payment from a foreign company is therefore not automatically treated as foreign-source income. The nature of the work, where it was performed, and the circumstances in which the income arose must also be considered.

This new provision represents a major exception to the general rule that Turkish tax residents are taxed on their worldwide income. However, it is not available to every new resident. Before relying on the exemption, taxpayers should determine the source of each category of income and formally confirm their eligibility with the relevant Turkish tax office.

Income tax rate in Turkey

Turkish income tax is the main type of direct tax paid by individuals on all monetary income:

• Salary, including bonuses and premiums;
• Income from entrepreneurship and professional activity if you provide services as a self-employed person;
• Income from renting out real estate;
• Interest on deposits, dividends, and investment profits.

In Turkey, individual income tax is paid on a progressive scale. The higher your annual income, the higher the rate. The current rates for 2026 are shown in the table below:

Your tax liability is calculated based on portions of your income, not the entire amount.

For example: Your annual income is TRY 300,000. The first TRY 190,000 is taxed at 15%, resulting in a tax of TRY 28,500 (190,000 × 0.15). For the remaining TRY 110,000, a 20% tax rate is applied. You pay 110,000 × 0.2 = TRY 22,000 on this amount. Therefore, your total tax is TRY 50,500 (TRY 28,500 + TRY 22,000).

Taxes for nonresidents

Foreigners who are not tax residents are subject to the same income tax rates in Turkey, ranging from 15% to 40%. However, under Turkish tax legislation, only income earned within Turkey (employment income or rental income) is taxable. Income generated abroad by a non-resident is not subject to taxation in Turkey.

Tax deductions

Deductions are only available to tax residents of Turkey. The following can be deducted from annual income:

• Educational or healthcare expenses for the taxpayer and their family members — up to 10%;
• Insurance premiums — up to 15%;
• Charitable donations to certain organizations;
• Up to 15% of rental income.

Property taxes in Turkey

Property owners pay an annual tax based on the cadastral value of their property. The real estate tax is paid to the municipality where the property is located twice a year: from March to May and from November to December. Property tax rates are determined by the property’s category and location:

The real estate purchase tax (also known as the registration fee), is 4% of the price stated in the purchase agreement. It is paid when ownership is registered. Typically, the tax on apartment purchases is split equally between the seller and buyer, with each paying 2%. Similar rules apply to foreigners.

In addition to low taxes and high profitability, buying real estate in Turkey offers the opportunity to obtain a residence permit or even Turkish citizenship. Our lawyers are ready to discuss all the details during a personal consultation.

If they have owned the property for no more than 5 years, the seller of real estate pays capital gains tax. Capital gains tax is calculated as the difference between the sale price and the original purchase price. The standard income tax rate of 15 to 40% applies to this profit.

There is no separate rental tax in Turkey. If a property owner earns rental revenue, it is included in their total annual earnings and taxed under the standard income tax rate of 15% to 40%.

When purchasing an existing home, the buyer does not pay VAT. If the property is new, however, the value-added tax is only 1%. A 20% rate applies to commercial properties.

VAT in Turkey (KDV)

VAT in Turkey is called Katma Değer Vergisi (KDV). It is an indirect tax on goods and services levied at all stages of production and distribution, including the consumer level. The standard KDV rate in Turkey is 20%. This rate applies to most goods and services. Reduced rates are also available:

• 10% — applies to essential goods and services, such as basic food and medicine;
• 1% — applies to certain essential goods and services, such as unprocessed agricultural products and assistive devices for people with disabilities.

VAT returns are submitted monthly. The declaration is due on the 24th day of the month following the reporting period. Payment is due by the 26th.

Goods and services exported abroad are subject to a VAT tax exemption in Turkey. Non-Turkish residents are eligible for a VAT refund on purchases leaving the country within 3 months of purchase, provided the store participates in the refund program. The total purchase price, including VAT, must be at least TRY 120. To receive a refund, complete a form at the store, keep the original receipt, and present your passport and the goods when you leave Turkey. A customs or airport official will then stamp the form. You can receive your refund at a VAT refund office after this step. A processing fee of 5.5% of the VAT paid is charged for refunds.

Business (Corporate) taxes in Turkey

Legal entities pay a 25% Turkish corporate tax. Companies in the financial sector pay a higher rate of 30%. Resident companies pay business taxes on profits earned worldwide, while non-residents pay taxes on profits earned in Turkey.

Turkey implemented a minimum tax system on January 1, 2025. Under this law, the corporate income tax cannot be less than 10% of the taxable base before deductions and exemptions. Taxpayers must calculate their tax burden under both systems. As a result, the taxable amount is higher.

Example: A company’s annual profit is TRY 1,000,000. After deductions and exemptions, the taxable profit is reduced to TRY 200,000. Applying the standard tax rate of 25% would result in a tax liability of TRY 50,000. Under the minimum tax system, however, profit is taken into account before all deductions. The tax amount would then be TRY 100,000 (1,000,000 x 10%). The company ultimately pays the higher amount.

The company tax rate on dividends is 15%. These taxes are withheld only if the company pays dividends to individuals or non-resident companies. If a resident company pays dividends to another resident company, no tax is levied.

VAT applies to the supply of goods and services. The standard rate is 20%. Reduced rates of 10% and 1% are available for certain categories. Banking and insurance transactions are generally exempt from VAT but subject to a 5% Business Income Tax (BITT).

A special consumption tax (SCT) applies to 4 categories of goods:

• Petroleum products, natural gas, and solvents;
• Vehicles;
• Tobacco and alcohol products;
• Luxury goods.

Unlike the VAT, which is levied on each supply, the SCT is paid only once. Rates depend on the product category and increase each year automatically. For instance, electric vehicles are subject to SCT rates ranging from 25% to 170%, depending on their technical specifications. Meanwhile, SUVs are subject to an SCT rate of 50%.

Taxes for companies organizing gambling are:

• 5% for sports betting;
• 7% for horse racing;
• 10% for other gambling activities.

Employer social security contributions are 20.75%. An additional 2% unemployment contribution is also payable.

Taxes for small businesses

In Turkey, small businesses can be either individuals or legal entities. Those with basic income tax rates are subject to the corporate income tax system. Companies pay corporate tax, VAT, and mandatory social security contributions. There was previously a simplified tax system for entrepreneurs, but it has largely been phased out since 2026.

Freelancing and self-employment

Freelancers and self-employed individuals pay income tax at progressive rates ranging from 15% to 40%. Non-residents pay income tax only on income earned in Turkey. Tax returns must be filed by March 31 of the year following the reporting year.

Double taxation agreements

These are international treaties between Turkey and other countries that prevent the same income from being taxed in 2 countries simultaneously. Turkey has signed such agreements with over 90 countries, including the United States, Canada, Australia, Japan, the United Arab Emirates, and the EU.

The agreements reduce the tax burden for:

• Residents receiving income outside Turkey (for example, this reduces taxes for people who have relocated to work for foreign companies);
• Nonresidents receiving income from Turkish sources.

For instance, if a Turkish resident receives income abroad and has already paid taxes there, those taxes will be credited when filing a tax return with the Turkish tax authorities. In this case, you will be fully exempt from paying tax again, or you will only pay the difference. To avoid double taxation, you must provide a certificate proving that you paid the tax in the other country.

Social contributions and payroll taxes

The general tax rate in Turkey is 34.75%. 14% for the employee and 20.75% for the employer. This covers social, health, and pension insurance. Additionally, unemployment insurance contributions are levied: 1% for the employee and 2% for the employer.

Employers also pay a stamp duty tax for the preparation of legally binding employment and financial documents. The rate ranges from 0.189% to 0.948% of the amount stated in the document. The rate for salary slips is 0.759%.

Other taxes in Turkey

Inheritance and gift taxes in Turkey are determined by the value of the property, with rates ranging from 1% to 30%. They are paid over 3 years, with annual payments in May and November.

Owners of cars, motorcycles, and other vehicles pay an annual transportation tax. The amount is calculated based on the vehicle’s age, market value, and other characteristics.

Import tax, or customs duty, depends on the country of origin. 30% is charged for goods imported directly from the EU and 60% for goods imported from other countries. A 20% discount applies to certain categories of goods.

Tax incentives and optimization

Turkish companies that earn profits from construction and renovation work abroad may be subject to a corporate tax exemption. However, losses incurred during the work cannot be deducted from income.

Turkey has a system of project and investment incentives. Under programs such as “Turkey’s Century of Development” and HIT-30, companies that invest in innovation and research projects may receive tax incentives (exemption from customs duties and VAT and reduced corporate income tax). Furthermore, companies’ R&D expenses can be fully deducted from their taxable income.

Regional programs offer a corporate income tax discount of up to 90% for investment projects carried out in certain provinces.

Turkey has 19 free economic zones located in major port cities and border regions, such as Istanbul, Antalya, Bursa, and Izmir. These zones focus on developing exports, logistics, and technology. These zones offer several advantages, including exemption from customs duties, corporate income tax, VAT, and stamp duty. Operating within them requires a license issued by the free zone administration.

How to pay taxes in Turkey

Individuals and businesses must do the following to pay taxes in Turkey:

1. Obtain a tax identification number (Vergi Numarasi). This is mandatory for anyone with an income in Turkey. You can obtain a number in person at the tax office or apply online.
2. Understand your tax obligations. Find out what taxes you’ll have to pay, research current rates, and learn about possible tax breaks.
3. Maintain bookkeeping and income records. Individuals must record salaries, investment income, and profits earned abroad, while businesses must account for income, expenses, social security contributions, and so on.
4. Submit tax returns. Individuals must submit their returns in March of the year following the reporting year, and companies must submit theirs by April 30 of the following year. The return is submitted to the Turkish Tax Administration. This can be done in person or online.
5. Pay taxes on time. Payments can be made at the tax office, through a bank, or online through the Gelir İdaresi Başkanlığı (GİB) system.

Tax audits in Turkey are usually conducted randomly based on a risk analysis using specialized software. They are primarily conducted in response to complaints, reporting discrepancies, high VAT without corresponding turnover, and inflated VAT refund amounts.

Penalties for failure to pay taxes

Failure to pay taxes can result in fines, late fees, and restrictions on tax benefits for businesses. Fines range from TRY 7,000 to TRY 28,000 (approximately USD 158 to USD 631) for companies and from TRY 3,200 to TRY 5,000 (approximately USD 72 to USD 113) for individuals.

If a tax return is submitted late, but before a tax audit, the fine is 50% of the tax amount. Failure to pay a tax results in a 100% fine. For repeat violations, the fine increases by 50%. Tax authorities typically conduct rigorous audits for errors in filing returns and incorrect calculations in reports.