For foreign investors, Türkiye has always been a desirable country, ripe for lucrative investments in its industry, agriculture, real – estate and technology and textile markets. These bountiful markets to invest, combined with the competitive currency exchange rates allow more investors to invest in Türkiye, especially in energy, petrochemicals, banking and real – estate markets.
In this article, we will explain the applicable tax regime in Türkiye, and indicate the possible exemptions for the foreign investors where applicable.
Taxpayers and their status.
In Türkiye, there are two types of taxpayers. First type is broadly translated to “fully burdened” whereas the second type is “partially burdened.”
a.Fully Burdened Taxpayers
In accordance with the Income Tax Law, fully burdened taxpayers are (i) Turkish Citizens and Companies, and (ii) those who act on behalf of the Turkish state in other countries. These taxpayers are taxed on all their income, gained in Türkiye and abroad.
However, as per the terms of the relevant bilateral treaties between Türkiye and other countries regarding prevention out double – taxation, it is possible to deduce the already paid taxes to another country, from the tax that should be paid to Türkiye. The term of such regime is subject to the specific regulations within the bilateral treaty.
b. Partially Burdened Taxpayers
Partially burdened taxpayers are foreign individuals who gain their income within the borders of Türkiye, or whose services end up creating a value in Türkiye. These taxpayers are only taxed for the amount they gain in or from Türkiye.
Authors: Gokmen Baspinar, Senior Partner; Ahmet Furkan Öztürk, Associate; Gülendam Tüylüoğlu, Associate at GRATA International Turkey.