PKF Turkey Tax Guide 2011

7/31/2019 PKF Turkey Tax Guide 2011

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TurkeyTax Guide

2011


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PKF Worldwide Tax Guide 2011 I

Foreword

foreword

For any business moving into new markets, a key deciding actor will be the targetcountrys tax regime. What is the corporate tax rate? Are there any incentives or

overseas businesses? Are there double tax treaties in place? How will oreign sourceincome be taxed?

Since 1994, the PKF network o independent member rms, administered by PKFInternational Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provideinternational businesses with the answers to these key tax questions. This handyreerence guide provides clients and proessional practitioners with comprehensivetax and business inormation or 100 countries throughout the world.

As you will appreciate, the production o the WWTG is a huge team eort and I would

like to thank all the member rms o the PKF network who gave up their time tocontribute the vital inormation on their countrys taxes that orms the heart o thispublication. I would also like thank Richard Jones, PKF (UK) LLP, Kevin Reilly, PKF WittMares, and Rachel Yeo, PKF Melbourne or co-ordinating and checking the entriesrom within their regions.

The WWTG continues to expand refecting both the growth o the PKF network andthe strength o the tax capability oered by member rms throughout the world.

I hope that you nd that the combination o reerence to the WWTG plus assistancerom your local PKF member rm will provide you with the advice you need to makethe right decisions or your international business.

Jon HillsPKF (UK) LLPChairman, International Tax Committee o the PKF International network


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PKF Worldwide Tax Guide 2011II

important disclaimer

This publication should not be regarded as oering a complete explanation o thetaxation matters that are contained within this publication.

This publication has been sold or distributed on the express terms and understandingthat the publishers and the authors are not responsible or the results o any actionswhich are undertaken on the basis o the inormation which is contained within thispublication, nor or any error in, or omission rom, this publication.

The publishers and the authors expressly disclaim all and any liability and responsibilityto any person, entity or corporation who acts or ails to act as a consequence o anyreliance upon the whole or any part o the contents o this publication.

Accordingly no person, entity or corporation should act or rely upon any matter orinormation as contained or implied within this publication without rst obtainingadvice rom an appropriately qualied proessional person or rm o advisors, andensuring that such advice specically relates to their particular circumstances.

PKF International is a network o legally independent member rms administered byPKF International Limited (PKFI). Neither PKFI nor the member rms o the networkgenerally accept any responsibility or liability or the actions or inactions on the parto any individual member rm or rms.

Disclaimer


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PKF Worldwide Tax Guide 2011 III

Preface

preface

The PKF Worldwide Tax Guide 2011 (WWTG) has been prepared to provide anoverview o the taxation and business regulation regimes o 100 o the worlds most

signicant trading countries. In compiling this publication, member rms o thePKF network have sought to base their summaries on inormation current as o 30September 2010, while also noting imminent changes where necessary.

On a country-by-country basis, each summary addresses the major taxes applicableto business; how taxable income is determined; sundry other related taxationand business issues; and the countrys personal tax regime. The nal section oeach country summary sets out the Double Tax Treaty and Non-Treaty rates o taxwithholding relating to the payment o dividends, interest, royalties and other relatedpayments.

While the WWTG should not to be regarded as oering a complete explanation othe taxation issues in each country, we hope readers will use the publication as theirrst point o reerence and then use the services o their local PKF member rm toprovide specic inormation and advice.

In addition to the printed version o the WWTG, individual country taxation guides areavailable in PDF ormat which can be downloaded rom the PKF website at www.pk.com

Finally, PKF International Limited gladly welcomes any comments or thoughts readersmay wish to make in order to improve this publication or their needs. Please contactKevin F Reilly, PKF Witt Mares, 10304 Eaton Place, Suite 440, Fairax, Virginia 22030,USA by email to [email protected]

PKF INTERNATIONAL LIMITEDMARCH 2011

PKF INTERNATIONAL LIMITEDALL RIGHTS RESERVEDUSE APPROVED WITH ATTRIBUTION


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PKF Worldwide Tax Guide 2011IV

about pKf international limited

PKF International Limited (PKFI) administers a network o legally independent rms.The PKF network is the 10th largest global accountancy network with over 245

legally independent member and correspondent rms which have a combinedannual turnover o $2.4 billion. Located in 125 countries, the member rms o thePKF network share a commitment to providing clients with high quality, partner-ledservices tailored to meet each clients own specic requirements.

The membership base o the PKF network has grown steadily since it was ormedin 1969. Added to the sustained growth in the number o PKF member rms, thissolidity has provided the oundations or the global sharing o expertise, experienceand skills and the development o services that meet the evolving needs o all typeso client, rom the individual to the multi-national corporation.

Services provided by member rms include:

Assurance & AdvisoryInsolvency Corporate & PersonalFinancial PlanningTaxationCorporate FinanceForensic Accounting

Management ConsultancyHotel ConsultancyIT Consultancy

PKF member rms are organised into ve geographical regions covering Arica; LatinAmerica; Asia Pacic; Europe, the Middle East & India (EMEI); and North America &the Caribbean. Each region elects representatives to the board o PKF InternationalLimited, which administers the network. While the member rms remain separate andindependent, international tax, corporate nance, proessional standards, audit, hotelconsultancy and business development committees also work together to improvequality standards, develop initiatives and share knowledge across the network.

Please visit .pkf.com or more inormation.

Introduction


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PKF Worldwide Tax Guide 2011 V

S

tructure

structure of country descriptions

a. taXes payable

FEDERAL TAXES AND LEVIESCOMPANY TAXCAPITAL GAINS TAXBRANCH PROFITS TAXSALES TAX/VALUE ADDED TAXFRINGE BENEFITS TAXLOCAL TAXESOTHER TAXES

b. determination of taXable income

CAPITAL ALLOWANCESDEPRECIATIONSTOCK/INVENTORYCAPITAL GAINS AND LOSSESDIVIDENDSINTEREST DEDUCTIONSLOSSESFOREIGN SOURCED INCOME

INCENTIVES

c. foreiGn taX relief

d. corporate Groups

e. related party transactions

f. witHHoldinG taX

G. eXcHanGe control

H. personal taX

i. treaty and non-treaty witHHoldinG taX rates


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PKF Worldwide Tax Guide 2011VI

AAlgeria . . . . . . . . . . . . . . . . . 12 noonAngola . . . . . . . . . . . . . . . . . . . .1 pmArgentina . . . . . . . . . . . . . . . . . .9 amAustralia -

Melbourne . . . . . . . . . . . . . 10 pmSydney . . . . . . . . . . . . . . .10 pmAdelaide . . . . . . . . . . . . 9.30 pmPerth . . . . . . . . . . . . . . . . . .8 pm

Austria . . . . . . . . . . . . . . . . . . . .1 pm

BBahamas . . . . . . . . . . . . . . . . . . .7 amBahrain . . . . . . . . . . . . . . . . . . . .3 pmBelgium. . . . . . . . . . . . . . . . . . . .1 pmBelize . . . . . . . . . . . . . . . . . . . . .6 amBermuda . . . . . . . . . . . . . . . . . . .8 amBrazil. . . . . . . . . . . . . . . . . . . . . .7 am

British Virgin Islands . . . . . . . . . . .7 am

CCanada -

Toronto . . . . . . . . . . . . . . . .7 amWinnipeg . . . . . . . . . . . . . . . 6 amCalgary . . . . . . . . . . . . . . . .5 amVancouver . . . . . . . . . . . . . . 4 am

Cayman Islands . . . . . . . . . . . . . .7 amChile . . . . . . . . . . . . . . . . . . . . . .8 amChina - Beijing . . . . . . . . . . . . . .10 pmColombia . . . . . . . . . . . . . . . . . . .7 amCroatia . . . . . . . . . . . . . . . . . . . .1 pmCyprus . . . . . . . . . . . . . . . . . . . .2 pmCzech Republic . . . . . . . . . . . . . . 1 pm

DDenmark . . . . . . . . . . . . . . . . . . .1 pmDominican Republic . . . . . . . . . . .7 am

EEcuador . . . . . . . . . . . . . . . . . . . .7 amEgypt . . . . . . . . . . . . . . . . . . . . .2 pmEl Salvador . . . . . . . . . . . . . . . . . 6 amEstonia . . . . . . . . . . . . . . . . . . . .2 pm

FFiji . . . . . . . . . . . . . . . . .12 midnightFinland . . . . . . . . . . . . . . . . . . . .2 pmFrance. . . . . . . . . . . . . . . . . . . . .1 pm

GGambia (The) . . . . . . . . . . . . . 12 noonGermany . . . . . . . . . . . . . . . . . . .1 pmGhana . . . . . . . . . . . . . . . . . . 12 noonGreece . . . . . . . . . . . . . . . . . . . .2 pmGrenada . . . . . . . . . . . . . . . . . . .8 amGuatemala . . . . . . . . . . . . . . . . . . 6 am

Guernsey . . . . . . . . . . . . . . . . 12 noonGuyana . . . . . . . . . . . . . . . . . . . .8 am

HHong Kong . . . . . . . . . . . . . . . . .8 pmHungary . . . . . . . . . . . . . . . . . . .1 pm

IIndia . . . . . . . . . . . . . . . . . . . 5.30 pm

Indonesia. . . . . . . . . . . . . . . . . . .7 pmIreland . . . . . . . . . . . . . . . . . . 12 noon

Isle o Man . . . . . . . . . . . . . . 12 noonItaly . . . . . . . . . . . . . . . . . . . . . .1 pm

JJamaica . . . . . . . . . . . . . . . . . . .7 amJapan . . . . . . . . . . . . . . . . . . . . .9 pmJersey . . . . . . . . . . . . . . . . . . 12 noonJordan . . . . . . . . . . . . . . . . . . . .2 pm

KKazakhstan . . . . . . . . . . . . . . . . .5 pmKenya . . . . . . . . . . . . . . . . . . . . .3 pmKorea . . . . . . . . . . . . . . . . . . . . .9 pmKuwait . . . . . . . . . . . . . . . . . . . . .3 pm

LLatvia . . . . . . . . . . . . . . . . . . . . .2 pmLebanon . . . . . . . . . . . . . . . . . . .2 pm

Liberia . . . . . . . . . . . . . . . . . . 12 noonLibya . . . . . . . . . . . . . . . . . . . . . .2 pmLuxembourg . . . . . . . . . . . . . . . .1 pm

MMalaysia . . . . . . . . . . . . . . . . . . .8 pmMalta . . . . . . . . . . . . . . . . . . . . .1 pmMauritius . . . . . . . . . . . . . . . . . . .4 pmMexico . . . . . . . . . . . . . . . . . . . .6 amMorocco . . . . . . . . . . . . . . . . 12 noon

NNamibia. . . . . . . . . . . . . . . . . . . .2 pmNetherlands (The). . . . . . . . . . . . .1 pmNew Zealand . . . . . . . . . . .12 midnightNigeria . . . . . . . . . . . . . . . . . . . .1 pmNorway . . . . . . . . . . . . . . . . . . . .1 pm

O

Oman . . . . . . . . . . . . . . . . . . . . .4 pm

PPanama. . . . . . . . . . . . . . . . . . . .7 amPapua New Guinea. . . . . . . . . . .10 pmPhilippines . . . . . . . . . . . . . . . . . .8 pmPoland. . . . . . . . . . . . . . . . . . . . .1 pmPortugal . . . . . . . . . . . . . . . . . . .1 pmPuerto Rico . . . . . . . . . . . . . . . . . 8 am

QQatar. . . . . . . . . . . . . . . . . . . . . .8 am

RRomania . . . . . . . . . . . . . . . . . . .2 pmRussia -

Moscow/St Petersburg . . . . .3 pm

S

Serbia . . . . . . . . . . . . . . . . . . . . .1 pmSierra Leone . . . . . . . . . . . . . 12 noonSingapore . . . . . . . . . . . . . . . . . .7 pmSlovak Republic . . . . . . . . . . . . . .1 pmSlovenia . . . . . . . . . . . . . . . . . . .1 pmSouth Arica . . . . . . . . . . . . . . . . .2 pmSpain . . . . . . . . . . . . . . . . . . . . .1 pmSweden . . . . . . . . . . . . . . . . . . . .1 pmSwitzerland . . . . . . . . . . . . . . . . .1 pm

international time Zones

AT 12 NOON, GREENwICH MEAN TIME, THE STANDARD TIMEELSEwHERE IS:

TimeZones


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PKF Worldwide Tax Guide 2011 VII

TimeZones

TTaiwan . . . . . . . . . . . . . . . . . . . .8 pmThailand . . . . . . . . . . . . . . . . . . .7 pmTunisia . . . . . . . . . . . . . . . . . 12 noon

Turkey . . . . . . . . . . . . . . . . . . . . .2 pmTurks and Caicos Islands . . . . . . .7 am

UUganda . . . . . . . . . . . . . . . . . . . .2 pmUnited Arab Emirates . . . . . . . . . .4 pmUnited Kingdom . . . . . . .(GMT) 12 noonUnited States o America -

New York City . . . . . . . . . . . .7 amWashington, D.C. . . . . . . . . .7 am

Chicago . . . . . . . . . . . . . . . . 6 amHouston . . . . . . . . . . . . . . . . 6 amDenver . . . . . . . . . . . . . . . .5 amLos Angeles . . . . . . . . . . . . . 4 amSan Francisco . . . . . . . . . . .4 am

Uruguay . . . . . . . . . . . . . . . . . . .9 am

VVenezuela . . . . . . . . . . . . . . . . . . 8 am

Vietnam . . . . . . . . . . . . . . . . . . . .7 pm


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PKF Worldwide Tax Guide 2011 1

turKey

Currency: Turkey New Lira Dial Code To: 90 Dial Code Out: 00 (TRY)

Correspondent Firm:City: Name: Contact Inormation:Ankara Enver Gney 312 468 81 50

[email protected]

Izmir M Saim Uysal 232 466 01 [email protected]

a. taXes payable

FEDERAL TAxES AND LEVIESCOMPANy TAxCorporations in Turkey can be regarded as either limited or ull taxpayers. Fulltaxpayers are liable or tax on their worldwide income. Limited taxpayers are subjectto tax on income derived in Turkey.

Corporations are regarded as ull taxpayers i their statutory head oce or actualbusiness centre is located in Turkey as stated in the articles o association. Thus,

oreign-owned subsidiaries wholly established in Turkey are regarded as unlimitedtaxpayers whereas oreign branches are treated as limited taxpayers.

A oreign corporation is regarded as a limited taxpayer in Turkey and is taxable on itsTurkish-sourced income only.

The basic rate o corporation tax or resident and non-resident companies is 20%.In addition to the basic rate, there is a corporate withholding tax which varies rom0% to 20%.

The tax year is the calendar year although a special permit can be obtained rom theMinistry o Finance or a dierent scal period. Returns are due during the ourthmonth (until April 25) ater the scal year end. Corporation tax is normally payable inApril. The taxpayer also has to pay an advance tax throughout the accounting periodwhich is credited against the tax liability o the same period to be calculated in thereturn or that tax year.

CAPITAL GAINS TAxCapital gains are normally regarded as part o ordinary corporate income. Capital

gains derived rom the sale o shares in a local company by either a oreign companyor a local company are, in principle, taxable.

Taxation o capital gains derived rom the sale o shares between non-residents(individuals or corporations) diers according to the legal status o the company whoseshares are held. The existence o a bilateral tax treaty between the country o residenceo the non-resident shareholder and Turkey may generally result in capital gains taxbeing avoided in Turkey on the condition that the holding period exceeds one year.

In general, this is also true or the capital gains arising rom the sale o shareholdingin a limited company.

Tax resident companies are eligible or the participation exemption scheme in respecto certain shareholdings. Under this scheme, 75% o the gains derived rom the saleo shares in subsidiaries are exempt. Two conditions must be met: thesharesmusthavebeenheldfortwoyearspriortothedisposal theamountofthegainmustbekeptinaspecialreserveaccountforatleast

ve years.

The sale revenue must be collected by the end o the second calendar year ollowingthe year o sale.

BRANCH PROFITS TAxThere is no branch prots tax in Turkey. Permanent establishments o oreigncompanies are taxed on the prots earned in Turkey.

SALES TAx/VALUE ADDED TAx (VAT)VAT is levied on all goods and services supplied within the scope o commercial, industrial,

agricultural and independent proessional activities and on the importation o goods andservices. The supply o all goods and services is subject to VAT unless exempt. The standardrate is 18%. Currently, there are also various dierent rates ranging rom 1% to 18%.

Turkey


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PKF Worldwide Tax Guide 20112

VAT is levied monthly. Returns have to be led on or beore the 24th day o the nextmonth and the tax has to be paid by the 26th.

SPECIAL CONSUMPTION TAxSpecial consumption tax was introduced on 12 June 2002 in order to simpliy the

Turkish tax system. When special consumption tax came into orce, the high level VATtaxes were decreased to a maximum o 18%.

Special consumption tax is realised during importation or at the end o productionand at rates rom 0.5% to 87%. There are our dierent types o main productgroups that are listed under the special consumption tax law. The lists and the relatedproduct groups are classied as ollows:

List No. Product groups

1. Petroleum and solvent products

2.Vehicles (Transportation vehicles are included, tractors areexcluded).

3. Tobacco products and alcoholic/non alcoholic beverages

4. White goods, electrical home products, luxury goods

LOCAL TAxESThere are general municipal taxes and real estate taxes on building and land.

b. determination of taXable income

Basically, corporate income is calculated as the dierence in the value o the netassets on the last day and the rst day o the calendar year. Assets which areadded or withdrawn during this period should either be subtracted rom or added tothe resulting dierence. Deductible and non-deductible expenses and tax-exemptcorporate income also aects the calculation o taxable income.

DEPRECIATION

The taxpayer may choose either the straight-line or the declining-balance method. Ataxpayer who initially chooses the declining balance method or an asset may switch tothe straight line method but the tax payer who begins with the straight line method isnot permitted to switch to the declining balance method. Depreciation rates to be appliedor xed assets are determined and announced by the Ministry o Finance throughcommuniqus based on the assets useul lie. The maximum depreciation rate is 50%.

STOCK/INVENTORyInventory is valued at cost using the FIFO or weighted average method.

CAPITAL GAINS AND LOSSESCapital gains and losses o resident companies constitute regular business income.

DIVIDENDSDividends received rom Turkish resident companies and paid to residents or non-residents are subject to 15% withholding tax.

INTEREST DEDUCTIONSInterest paid or business purposes in an operational period may be deducted butit must be capitalised i it relates to the acquisition o a xed asset. Interest paid or

calculated on the basis o equity capital is disallowable.

LOSSESNet operating losses can be carried orward or ve years. The loss must be coveredby the rst available years income. Losses cannot be carried back.

FOREIGN SOURCED INCOMEControlled oreign company (CFC) rules exist in Turkey. They apply where a resident companyhas at least a 50% interest in a non-resident company and the ollowing conditions apply: 25%ormoreofthegrossrevenueoftheforeignsubsidiarymustbecomposed

o passive income theCFCmustbesubjecttoaneffectiveincometaxratelowerthan10%onits

commercial prot in its home country grossrevenueoftheCFCmustexceedtheequivalentofTRY100,000ina

oreign currency in the related period.

INCENTIVESWith eect rom 28 February 2009, up to a 75% reduction in the corporate incometax rate is available or earnings derived rom production o plants in specic sectorslocated in cities specied by the Council Ministers (usually in regions having priority

or development) This incentive applies until 31 December 2010 or ve yearsollowing the date o the relocation provided the plant has at least 50 employees.

Turkey


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c. foreiGn taX relief

Taxes paid to oreign authorities by resident companies on their oreign sourcedincome may be credited against the corporation tax calculated in Turkey on the

companys total income. The total tax credited is the lower o: theoverseastaxincurredand theTurkishtaxontheincomeconcerned.

d. corporate Groups

Group consolidation or tax purposes is not available.

e. related party transactions

The thin capitalisation issue is re-arranged in the new law article 12. According to thearticle, i the ratio o the borrowings rom shareholders or rom persons related to theshareholders exceeds three times the shareholders equity o the borrower companyat any time within the relevant year, the exceeding portion o the borrowing will beconsidered as thin capital.

From 1 January 2006, transer pricing rules apply to resident companies with transactionswith related parties, whether resident or not in Turkey. However, transer pricing rules arenot applied to domestic transactions between related companies unless a loss to the

Treasury has occurred. The Act applies retroactively as o 1 January 2008.

Prescribed arms length pricing methods in the law are those described in the OECDtranser pricing guidelines, including: comparableuncontrolledpricemethod cost-plusmethod resalepricemethod.

Alternatively, companies can also use alternative methods i these are consideredmore appropriate.

f. witHHoldinG taXes

The ollowing are liable to withholding taxes when paid to a non-resident entity:

Tpe of Income Rate

Wages and services ees 20%

Proessional services in general 20%

Petroleum exploration services 5%

Rentals 20%

Deposit interest 15%

Bills and bonds 0 10%

Income rom sales o securities 15%

Sum derived rom sale or transer o copyrights patents andtrademarks

20%

Royalties 20%

Withholding taxes on dividends, interest and royalties may be reduced under theterms o the various double tax treaties with Turkey.

G. eXcHanGe control

The fow o capital in and out o Turkey is regulated by Decrees to protect the value othe Turkish currency.

H. personal taX

Individuals resident in Turkey are liable or income tax on their worldwide incomebut non-resident individuals are liable or income tax only on income earned inTurkey. Turkish nationals are deemed to be tax resident unless they have evidenceo residence abroad. Foreigners are regarded as resident i they stay in Turkeywithout interruption or more than six months in a calendar year, other than orreasons o imprisonment or assignments or specic and temporary projects.

Income tax is charged on a trade or business, employment, proessional services,dividends and interest, agriculture and rentals.

Turkey


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Dividends(%)

Interest(%)

Roalties(%)

(1)

Kuwait 10 10 10

Kyrgyzstan 10 10 10Latvia 10 10 510

Lebanon 1015 10 10

Lithuania 10 10 510

Luxembourg 1020 1015 10

Macedonia 510 10 10

Malaysia 1015 15 10

Moldova 1015 10 10

Mongolia 10 10 10

Morocco 710 10 10

Netherlands 1520 (2) 1015 10

Norway 2530 15 10

Oman 10-15 10 10

Pakistan 1015 10 10Poland 1015 10 10

Portugal 515 1015 10

Qatar 1015 10 10

Romania 15 10 10

Russia 10 10 10

Saudi Arabia 510 10 10

Serbia 515 10 10

Singapore 1015 7.510 10

Slovak Republic 510 10 10

Slovenia 10 10 10

South Arica 1015 10 10

Spain 515 1015 10

Sudan 10 10 10Sweden 1520 15 10

Syria 10 10 1015

Tajikistan 10 10 10

Thailand 1015 1015 15

Tunisia 1215 10 10

Turkmenistan 10 10 10

Ukraine 1015 10 10

United Arab Emirates 1012 (3) 10 10

United Kingdom 1520 15 10

United States 1520 1015 510

Uzbekistan 10 10 10

Yemen 10 10 10

1 In accordance with the protocol decrees, i a dividend is received by a Belgiancompany rom a Turkish company the rate will be 5% in Belgium and the ratewill be 10% in Turkey

2 In accordance with the protocol decrees, i a dividend is received by aNetherlands company rom a Turkish company the rate will be 5% in theNetherlands and the rate will be 10% in Turkey.

3 I the dividends are received rom the government o that country or rom apublic institution wholly publicly owned, the maximum rate is 5%.

Turkey


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PKF Turkey Tax Guide 2011

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