Corporate & Commercial
Corporate Tax in Turkey 2026: Foreign Investor Guide
How are foreign investors taxed in Turkey? 2026 guide to the 25% corporate rate, the 10% minimum tax, withholding and tax treaties — by Istanbul lawyers.
Corporate tax in Turkey for foreign investors rests on a few statutory rules that interact with each other: a 25% standard corporate income tax (CIT) rate, a 30% rate for financial institutions and certain concession-type projects, a domestic minimum corporate tax that has applied to profits since the 2025 fiscal year, withholding tax on payments leaving the country, and the double taxation treaties (DTTs) that Turkey has put into effect. Most of these rules sit in the Corporate Tax Law No. 5520 (Kurumlar Vergisi Kanunu, "KVK"); individual shareholders fall under the Income Tax Law No. 193 (Gelir Vergisi Kanunu, "GVK").
For foreign investors entering Turkey through a subsidiary, a branch, a joint venture or a cross-border service agreement, the vehicle chosen decides which of these rules applies and how profits can later be moved out of the country. Understanding them is not merely a compliance exercise; it is a foundational element of strategic corporate structuring in Turkey. This guide summarises the statutory position as of September 2026; it does not predict the tax result of any particular structure.
Key Takeaways
Standard CIT rate: 25% under Article 32(1) KVK; 30% for banks and other listed financial institutions, insurance, reinsurance and pension companies, and companies party to build-operate-transfer or health-sector public-private partnership contracts.
Domestic minimum tax: under Article 32/C KVK, corporate tax cannot be lower than 10% of corporate income before deductions and exemptions, for profits of the 2025 fiscal year onwards, with statutory carve-outs.
Withholding tax: Article 30 KVK sets a statutory 15% rate on dividends and most other payments to non-resident companies, but the President may set different rates by decision.
Treaties: ratified treaties have the force of law under Article 90 of the Constitution, and Article 35(3) KVK reserves the provisions of international agreements.
From 2027: Law No. 7582 introduces a 12.5% rate on the manufacturing earnings of companies holding an industrial registry certificate.
Turkey's Corporate Tax Framework in 2026
Turkey's corporate income tax is governed by the Corporate Tax Law No. 5520 and administered by the Revenue Administration (Gelir İdaresi Başkanlığı). Under Article 3, a company whose legal seat (kanuni merkez) or business centre (iş merkezi) is in Turkey is a full taxpayer, taxed on all of its income earned in and outside Turkey; a company with neither in Turkey is a limited taxpayer, taxed only on income earned in Turkey. The legal seat is the one shown in the company's statutes or articles of association; the business centre is where its business operations are actually concentrated and managed. A company incorporated abroad but run in practice from an office in Turkey can therefore fall into full tax liability.
Standard and Sectoral Rates
Article 32(1) KVK sets the headline rate at 25%. It applies 30% to banks, companies within Law No. 6361 (financial leasing, factoring, financing and savings finance), electronic payment and money institutions, authorised foreign exchange institutions, asset management companies, capital market institutions, and insurance, reinsurance and pension companies. Law No. 7524 added companies that are party to project contracts under the build-operate-transfer model of Law No. 3996 or the health-sector public-private partnership model of Law No. 6428, for profits of the 2025 fiscal year and later.
The same article contains reductions. Article 32(7) cuts the rate by 5 points for earnings derived exclusively from exports. Law No. 7582 rewrote Article 32(8) so that, for profits of the 2027 fiscal year onwards, the rate is 12.5% on earnings derived exclusively from manufacturing by companies that hold an industrial registry certificate and actually carry on production (and on agricultural production earnings); those earnings do not also receive the export reduction. During the year, companies pay advance corporate tax (geçici vergi) at the current rate, set off against the annual liability (Article 32(2)).
The Domestic Minimum Corporate Tax
Article 32/C KVK, added by Law No. 7524, provides that corporate tax calculated under Articles 32 and 32/A cannot be less than 10% of corporate income before deductions and exemptions. Article 32/C(6) defines that base as commercial balance-sheet profit plus expenses that are not deductible by law; it is not gross revenue. Under the entry-into-force article of Law No. 7524, the rule applies to profits of the 2025 fiscal year and later, and Article 32/C(4) extends it to advance-tax periods.
The floor does not cancel every incentive. Article 32/C(2) still allows certain items to be deducted when computing it, including dividends from Turkish companies (Article 5(1)(a)), earnings exempt under the Free Zones Law No. 3218, the technology development zone exemption under Law No. 4691 and R&D and design deductions. Under Article 32/C(3), tax not collected because of the reduced rates in Article 32(6)–(8) is then deducted from the minimum tax. Companies starting activity for the first time are outside the rule for three accounting periods (Article 32/C(5)).
Large groups face a second, separate regime. Law No. 7524 also added Additional Articles 1–13, a global and domestic minimum top-up tax at a 15% minimum rate (Additional Article 6) for constituent entities of multinational groups whose consolidated revenue exceeded the Turkish lira equivalent of EUR 750 million in at least two of the four preceding accounting periods (Additional Article 1), applying from the 2024 fiscal year.
Subsidiary, Branch or No Local Presence: How the Vehicle Changes the Tax Position
The first structuring decision is usually whether to incorporate a Turkish company, register a branch of the foreign company, or serve Turkish customers from abroad without a Turkish workplace. The Corporate Tax Law attaches a different status to each option, and the differences show up mostly when profits are taken out of Turkey.
| Point | Turkish subsidiary (A.Ş. or Ltd. Şti.) | Turkish branch of a foreign company | Foreign company with no Turkish workplace or permanent representative |
|---|---|---|---|
| Tax status | Full taxpayer: legal seat in Turkey (Art. 3(1)) | Limited taxpayer, as long as neither the legal seat nor the business centre is in Turkey (Art. 3(2)) | Limited taxpayer (Art. 3(2)) |
| Income taxed in Turkey | All income earned in and outside Turkey | Income earned in Turkey, including commercial earnings through the workplace or representative (Art. 3(3)(a)) | Only the Turkish-source items listed in Art. 3(3), such as professional-service earnings, rent and investment income |
| How the tax is collected | Annual return at 25% or 30% (Art. 32(1)), plus advance tax | Annual return filed with the tax office of the workplace or representative (Art. 25(4)) | Mainly by withholding by the Turkish payer (Art. 30(1)–(2)) |
| Taking profits out | Dividends to a non-resident company: statutory 15% withholding (Art. 30(3)); adding profit to capital is not a distribution | Amount transferred to head office: statutory 15% withholding within the branch (Art. 30(6)) | Tax is withheld when each payment is made |
| Thin capitalisation and transfer pricing | Apply (Arts. 12 and 13); disallowed amounts are treated as distributed dividends | Apply; disallowed amounts are treated as amounts transferred to head office (Arts. 12(7), 13(6)) | The Turkish related party must price the transaction at arm's length (Art. 13) |
Withholding Tax on Payments Leaving Turkey
When a Turkish company pays a foreign company that has no Turkish workplace, Article 30 KVK makes the Turkish payer withhold the tax. The statutory rate is 15% for professional-service earnings, rental income and investment income (Article 30(1)), for consideration on the sale, transfer or assignment of copyrights, patents, trademarks and similar intangible rights (Article 30(2)), for dividends distributed to non-resident companies (Article 30(3)) and for amounts a branch transfers to its head office (Article 30(6)). Payments to entities in countries or regions announced by the President on the basis of their taxation capacity and information exchange attract 30% (Article 30(7)), with exceptions such as payments on borrowings from foreign financial institutions.
These are statutory figures. Article 30(8) lets the President set the rates separately by type of income, reduce them to zero or raise them up to double, and the rates actually applied are fixed by a decision originally adopted by the Council of Ministers and amended several times by Presidential decision. The rate to apply is the one in force on the payment date, before any treaty relief. Article 30(11) matters for contract drafting: if the Turkish payer bears the tax under a gross-up clause, withholding is calculated on the amount paid plus the tax assumed.
Double Taxation Treaties and Domestic Law
A DTT can reduce or remove Turkish withholding and allocates taxing rights over business profits between the two states. Under Article 90 of the Constitution, international agreements duly put into effect have the force of law; the express priority rule added to that paragraph covers only agreements on fundamental rights and freedoms. For corporate tax, the statutory anchor is Article 35 KVK, which confines exemptions and deductions to the tax codes and ends by stating that the provisions of international agreements are reserved (saklıdır). Treaty benefits depend on the conditions written into each treaty, such as the recipient's residence, the category of income and any minimum shareholding or anti-abuse clause, so the text of the relevant treaty is the starting point.
For Turkish companies with income abroad, Article 33 KVK allows corporate tax paid abroad on foreign income included in the Turkish results to be set off against Turkish corporate tax, up to the amount the Article 32 rate would produce on that income; any excess can be carried forward to the end of the third following accounting period.
Anti-Avoidance Rules That Shape Structuring
Thin Capitalisation
Under Article 12, borrowings obtained directly or indirectly from shareholders or persons related to them are thin capital to the extent that, at any time in the accounting period, they exceed three times the company's equity at the beginning of the period. Borrowings from a related bank acting within its main business count at 50%. Interest on thin capital is treated, on the last day of the period, as a distributed dividend or, for a branch, as an amount transferred to head office (Article 12(7)).
Transfer Pricing
Article 13 requires purchases, sales, loans, rentals and similar dealings with related persons to be priced at arm's length (emsallere uygunluk ilkesi), using the method best suited to the transaction, and the supporting calculations must be kept as evidence. Where the link runs through shareholding, a 10% ownership, voting or profit-share threshold applies (Article 13(2)). An advance pricing agreement with the Ministry can fix the method for up to three years (Article 13(5)). If the documentation duties were met fully and on time, the tax loss penalty on an adjustment is reduced by 50%, except where the loss results from the acts described in Article 359 of the Tax Procedure Law (Article 13(8)).
Controlled Foreign Company Rules
Article 7 reaches foreign subsidiaries controlled from Turkey. Where full-taxpayer individuals and companies hold at least 50% of a foreign subsidiary's capital, profit share or voting rights, its profits are taxed in Turkey whether or not distributed if, together, at least 25% of its gross revenue is passive income such as interest, dividends, rent or licence fees, its tax burden on commercial profit is below 10%, and its gross revenue exceeds the threshold stated in the article.
Holding Structures, Exits and Individual Shareholders
Participation Exemptions
Dividends a company receives from another full-taxpayer Turkish company are exempt from corporate tax (Article 5(1)(a)). Dividends from a foreign joint-stock or limited company are exempt under Article 5(1)(b) if the Turkish holder owns at least 10% of its paid-in capital, has held it without interruption for at least one year, the foreign company bears a total tax burden of at least 15% (at least the Turkish rate where its main business is finance, insurance or securities investment), and the dividend is transferred to Turkey by the corporate tax return due date.
On an exit, Article 5(1)(e) exempts 75% of the gain on selling participation shares held for at least two full years. The exempt part must stay in a special reserve until the end of the fifth year after the sale, and the price must be collected by the end of the second calendar year after the sale. Law No. 7456 of 2023 removed real estate gains from this exemption.
Individual Shareholders and the 2026 Foreign-Income Exemption
Under Article 4 GVK, an individual is treated as settled in Turkey if his or her domicile is in Turkey or if he or she stays in Turkey continuously for more than six months in a calendar year. Law No. 7582 added Article 20/D for individuals treated as settled from 1 January 2026: if the individual had neither a domicile nor a tax liability in Turkey in the three preceding calendar years, income earned outside Turkey is exempt from income tax for twenty years. Exempt income is not declared, and foreign tax on it cannot be set off in Turkey. The same law amended Article 16 of the Inheritance and Transfer Tax Law No. 7338 so that, for those individuals, transfers by inheritance within the exemption period are taxed at 1%.
Common questions about this topic
What is the corporate tax rate in Turkey for foreign-owned companies?
A company with its legal seat or business centre in Turkey pays corporate tax at 25% under Article 32(1), whoever its shareholders are; the article sets no separate rate by shareholder nationality. Banks, the other financial institutions listed there, insurance and pension companies and parties to build-operate-transfer or health-sector public-private partnership contracts pay 30%.
How does Turkey's domestic minimum corporate tax affect foreign investors?
From the 2025 fiscal year, Article 32/C requires corporate tax to reach at least 10% of profit before deductions and exemptions. Free zone earnings, the technology development zone exemption and R&D and design deductions can still be deducted when computing that floor, so those incentives are not removed by the rule.
Can double taxation treaties reduce withholding tax on dividends from Turkey?
They can. Article 30(3) sets a statutory 15% withholding on dividends paid to non-resident companies, and the President can change that rate by decision. A treaty may limit the Turkish tax further if its own conditions are satisfied, and Article 35(3) KVK reserves international agreements, so the wording of the applicable treaty decides the outcome.
Does Turkey tax foreign companies on worldwide income?
Only when the company's legal seat or business centre is in Turkey. A company with neither in Turkey pays Turkish corporate tax only on income earned in Turkey (Article 3), usually through withholding or, if it has a Turkish workplace, through an annual return.
What transfer pricing rules apply to foreign investors in Turkey?
Dealings with related persons, including intra-group loans, must follow the arm's length principle under Article 13. Mispriced profit is treated as a dividend or, for a branch, a transfer to head office, and complete, timely documentation halves the tax loss penalty on an adjustment.
Is a newly formed Turkish subsidiary caught by the minimum tax straight away?
No. Article 32/C(5) disapplies the domestic minimum corporate tax for three accounting periods, starting with the period in which a company begins activity for the first time. The global minimum top-up tax for large groups is a separate regime with its own EUR 750 million revenue test.
Is there relief when a Turkish holding company sells shares in a subsidiary?
Article 5(1)(e) exempts three quarters of the gain on participation shares held for at least two full years, subject to the special-reserve and collection conditions in that provision. Companies trading in securities cannot use it for securities held for that purpose.
This guide is general information on Turkish law, not legal advice on your own matter. Rules and practice change; check the position before you act.