Under Corporate Tax Law No. 5520, Income Tax Law No. 193 and the double taxation treaties to which Turkey is a party, we advise foreign-owned companies, Turkish companies trading abroad and individuals with income abroad.
Double taxation treaties
To benefit from treaty provisions, a tax residence certificate is required showing that the foreign person or entity receiving the payment is resident in the treaty country. We build obtaining the certificate correctly and on time into the payment process.
- Analysing whether activities abroad, or a foreign company's activities in Turkey, create a permanent establishment
- Taxation in Turkey and in the shareholder's country of dividends distributed to foreign shareholders
- Taxation of intangible rights fees such as licences, know-how and royalties
- Withholding tax and reverse-charge VAT on payments for services received from foreign companies
- Credit for taxes paid abroad against Turkish tax and exemption methods
Withholding tax refunds
Where tax was withheld at a higher rate than the treaty provides because the residence certificate could not be submitted on time, a refund can be requested under the procedures set by the legislation. We support you in preparing the application and following it up with the tax office. We also help prepare the documents needed for refund or credit in the other country of tax withheld abroad on Turkish-source income.
Transfer pricing and thin capitalisation
Purchases and sales of goods and services with related parties must be priced in accordance with the arm's length principle. Otherwise, the difference may be treated as a disguised profit distribution. We analyse your related-party transactions, determine the appropriate method and prepare the price comparisons.
- Preparing the transfer pricing form attached to the corporate income tax return
- Preparing the annual transfer pricing report where required
- Thin capitalisation analysis for borrowing from shareholders and group companies
- Reviewing intra-group service and cost-sharing agreements from a tax perspective
Other international matters
For investors new to Turkey, you can find the general framework on our services for foreign investors page and domestic tax planning on our tax advisory page.
- The tax side of international financial leasing transactions
- Assessing capital and profit transfers in terms of foreign exchange and foreign trade legislation
- The tax position of companies operating in free zones
- Restructuring work in foreign-owned companies
Who is it for?
- Companies paying service, licence or dividend payments to their parent abroad
- Businesses receiving services from abroad or providing services abroad
- Companies trading goods and services with group companies
- Turkish residents with income abroad
Frequently asked questions
What is a double taxation treaty for?
To prevent the same income from being fully taxed in two countries, these treaties determine which country has the right to tax and the maximum tax rates that can be applied in the source country. A tax residence certificate is generally required to benefit from the treaty provisions.
Is withholding tax applied to services received from abroad?
Depending on the type of service received from a foreign company, withholding tax may have to be applied in Turkey; in most cases VAT is also declared under the reverse-charge mechanism. If there is a double taxation treaty with the other country, the withholding rate may be reduced or not apply at all. An assessment before making the payment avoids the burden of later corrections.
Who is required to prepare a transfer pricing report?
Corporate taxpayers transacting with related parties, as a rule, complete the transfer pricing form attached to the corporate income tax return. The annual transfer pricing report is prepared for the groups of taxpayers and transactions specified in the legislation. We determine your obligation according to your company's situation.
What is a tax residence certificate and where is it obtained?
A tax residence certificate shows that a person or entity is tax resident in a particular country and is issued by the competent tax administration of that country. Turkish residents obtain it from the Turkish tax administration, and foreign residents from the tax administration of their own country. For your questions, you can reach us via our contact page.