Turkey remains one of the more attractive destinations for foreign investors in the region. But setting up shop here means more than filing paperwork and hiring staff. The Turkish tax system in 2025 has grown more layered and demanding, with new rules around corporate taxation, digital compliance, and cross-border payments. To succeed in this environment, a business must gather information and prepare itself.
Everything you need to know about the Turkish tax system
Choosing the right legal structure in Turkey
Before the business issues its first invoice or hires its first employee, it must determine its legal form. In Turkey, the most common structures are the Limited Liability Company (Ltd. Şti.) and the Joint Stock Company (A.Ş.).
A Limited Liability Company requires a minimum capital of TRY 10,000 and is suitable for small to mid-sized enterprises. The Joint Stock Company, designed for larger-scale operations or those planning to go public, requires TRY 250,000 in capital, of which 25% must be paid upfront, with the remainder due over a 24-month period.
Thanks to Turkey’s centralized registration platform (MERSIS), the process is now fully digital. Business owners can reserve names, file articles, and receive a tax number – all without setting foot in the country. This online framework has played no small part in making Turkey more hospitable to foreign capital.
Understanding corporate tax in the Turkish tax system
Once a company registers, it becomes subject to corporate income tax under the Turkish tax system. As of 2025, the standard rate remains at 25%, but with new minimum thresholds that leave little room for avoidance.
In 2025, Turkey implemented a minimum corporate tax of 10%, even for companies with incentives, losses, or limited taxable income. In other words, every registered firm must now contribute something to the Treasury.
Moreover, for multinational entities with global revenues above €750 million, Turkey has adopted the OECD’s global minimum tax standard of 15%. Resident companies pay taxes on their worldwide income. Non-residents, however, pay taxes only on income they earn within Turkey’s borders.
VAT in Turkey: how it functions in 2025
The Turkish tax system includes Value Added Tax (VAT), which remains a significant part of government revenue.
- Standard rate: 20%
- Accommodation services: 10%
- Basic goods (e.g., flour, books): 1%
Companies exceeding the VAT threshold must register and submit monthly returns by the 28th of the following month. Where the firm pays VAT at a higher rate than it collects – for instance, on imported machinery – it may request a refund. As of 2025, the maximum refund under such conditions is capped at TRY 130,700.
Withholding tax under the Turkish tax system
When Turkish companies make cross-border payments, withholding tax (WHT) applies under domestic law or tax treaties.
- Dividends to foreign shareholders: 15%
- Interest payments: 5–10%, depending on terms
- Royalties and services to non-residents: 20%
However, these rates can be reduced through Double Taxation Agreements (DTAs), provided the proper certificates are submitted. Without proper documentation, companies are obligated to apply the full statutory rate.
Tax incentives in the Turkish tax system
Despite its complexity, the Turkish tax system offers a broad array of incentives to attract capital and encourage innovation.
- Machinery imports for investment projects may be exempt from customs duties and VAT.
- Regional incentives provide tax holidays and social security premium support.
- R&D expenditures are 100% deductible, with additional SGK rebates for qualified personnel.
- Stamp duty exemptions apply to R&D-related documentation.
Of particular note is the HIT-30 Program, launched in 2024. With $30 billion in allocated funding, it supports high-tech industries such as electric vehicles, semiconductors, and renewable energy. Businesses in these sectors may qualify for a mix of grants, tax relief, and capital subsidies.
Compliance and reporting obligations
The Turkish tax system imposes strict deadlines for filing, with little tolerance for delay.
- Annual corporate tax return: Due April 25
- Provisional (quarterly) returns: Due by the 17th of the second month after each quarter
- VAT returns: Due monthly by the 28th
- Withholding tax returns: Due by the 26th
In addition, companies exceeding revenue thresholds must adopt e-Fatura (e-Invoice) and e-Defter (e-Ledger) systems. Even firms not yet required to do so are encouraged to transition early to reduce compliance risks and improve audit readiness.
The value of professional support
The Turkish tax system is not just intricate – it’s constantly in motion. New directives are issued frequently, and penalties for late or incorrect filings can be substantial.
For this reason, most successful businesses in Turkey work closely with local tax advisors and certified accountants. These professionals help secure available tax incentives, manage cross-border filings, and keep the business in good standing with the tax authority.
Failing to seek proper counsel, particularly in matters involving foreign shareholders or transfer pricing, often leads to unnecessary audits, fines, or legal complications.
Foreign currency rules and cross-border dealings in Turkey
Foreign currency transactions in Turkey have long been regulated to preserve economic order and prevent misuse. That remains the case in 2025, though the rules have shifted – some tightened, others relaxed – depending on the type and direction of flow.
Businesses engaged in international trade, offshore contracting, or receiving funds from abroad must comply with the rules laid out by the Central Bank of the Republic of Turkey (CBRT) and the Financial Crimes Investigation Board (MASAK). These rules govern not only payment methods but also the paperwork that must accompany certain transactions.
As of this year, the government has loosened some restrictions on foreign currency payments in private contracts, particularly in areas tied to export or overseas services. Still, transactions above a certain threshold must be documented. Banks and regulators expect proof of legitimacy – contracts, invoices, declarations – and they’re not in the habit of asking twice.
There’s also the matter of anti-money laundering (AML). That’s not optional. Companies are required to verify counterparties, retain records, and file reports for any dealings that raise concerns. Failing to do so invites penalties – not just fines, but in some cases, limits on foreign currency access or operational activity.
In short, if you plan to move money across borders – whether for goods, services, capital, or dividends – you’d better have your books in order. Those who do enjoy smoother banking, faster clearance, and fewer red flags. Those who don’t may find themselves explaining a great deal to the authorities.
Labor costs and payroll taxation in Turkey (2025)
Hiring in Turkey carries more weight than a paycheck. Labor costs, on paper and in practice, stretch far beyond salary. Employers who don’t factor in the full picture are often in for a surprise.
Also, since 2025, the gross minimum monthly wage sits at TRY 26,005.50, delivering a net take-home pay of TRY 22,104.67. But that’s only part of the story. Once social contributions are accounted for, the total cost to the employer rises to roughly TRY 30,881.53 – and that’s for a single worker at the legal minimum.
The standard breakdown looks like this:
- Employer pays:
- 22.75% to Social Security (SGK)
- 2% to Unemployment Insurance
- Employee pays:
- 15% in total, withheld at source
These percentages are calculated off the gross wage, subject to monthly ceilings set by the government. Caps move each year, so payroll planning without updated figures is a gamble.
To ease the load, the state provides several reliefs. Chief among them is the 5% SGK premium discount for compliant employers under Law No. 5510. Many also rely on non-taxable benefits – meal cards, transit allowances, family support – to structure compensation more efficiently.
Used properly, these tools can trim payroll costs without cutting corners. But they must be applied carefully. Payroll in Turkey is not forgiving. A missed deadline, a misapplied code, a late declaration – any of these can trigger an audit or administrative fine. Worse still, they can raise questions you’d rather not answer.
Finally, grasping labor costs is good bookkeeping. It’s the difference between running lean and running blind. For more insights into Payroll in Turkey, visit our comprehensive guide.
Doing business in Turkey in 2025 is an opportunity – but only for those who understand the rules of the road.
From choosing the proper structure to filing corporate tax returns on time, each decision must be made with care.
The Turkish tax system may be demanding, but it rewards preparation. With good advice and a clear plan, businesses can reduce risk, maximize incentives, and focus on long-term growth.
Looking to hire or expand in Turkey?
At Gini Talent, we provide end-to-end support: from recruitment and EOR services to payroll and tax compliance. Get in touch – and let’s build your story in Turkey, the right way.
