TAX PRACTICE GROUP Multi-Jurisdictional Survey TAX … · TAX PRACTICE GROUP Multi-Jurisdictional...

Turkey © Copyright Lex Mundi Ltd. 2010

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TAX PRACTICE GROUP Multi-Jurisdictional Survey

TAX DESK BOOK

CONTACT INFORMATION

Ali Sanver Irmak Dirik Yeliz Yüksel

Batuhan Şahmay PEKİN & PEKİN

Lamartine Caddesi 10 Taksim 34437, Istanbul

+90 (212) 313 35 00 [email protected]

www.pekin-pekin.com

TURKEY Introduction 1. Please give a brief overview of the types of taxes imposed in your jurisdiction

(i.e., direct and indirect taxes and their components.)

The Turkish tax system comprises direct and indirect taxes. Direct taxes include individual income tax and corporate income tax. Indirect taxes include value added tax (VAT), excise taxes which are charged on the sale and importation of certain goods, raw materials, energy, natural gas, oil, etc. and transaction taxes, such as stamp tax, banking and insurance transaction tax, real estate sale and purchase tax, etc.

Corporate income tax is governed by the Corporation Tax Law (Law No. 5520) (published in the Official Gazette dated June 21, 2006, No. 26205) (as amended from time to time) and individual income tax is governed by the Income Tax Law (Law No. 193) (published in the Official Gazette dated January 6, 1961, No. 10700) (as amended from time to time).



VAT is governed by the Value Added Tax Law (Law No. 3065) (published in the Official Gazette dated November 2, 1984, No. 18563) (as amended from time to time).

Excise taxes are governed by the Special Consumption Tax Law (Law No. 4760) (published in the Official Gazette dated June 12, 2002, No. 24783) (as amended from time to time).

In respect of major transaction taxes, stamp tax is governed by the Stamp Tax Law (Law No. 488) (published in the Official Gazette dated July 11, 1964, No. 11751) (as amended from time to time), banking and insurance transaction tax is governed by the Transaction Tax Law (Law No. 6802) (published in the Official Gazette dated July 23, 1956, No. 9362) (as amended from time to time), and real estate sales and purchase tax, court charges and other similar levies are governed by the Charges Law (Law No. 492) (published in the Official Gazette dated July 17, 1964, No. 11756) (as amended from time to time).

INCOME TAXES – AS APPLIED TO BUSINESS ENTITIES AND INDIVIDUALS Calculation of Income/ Profit Taxes 2. How is the taxable base determined?

See below.

3. What revenues are included?

The net income of corporations is subject to corporation tax and the net income of individuals is subject to income tax.

Corporations The net income of corporations as defined in Article 1 of the Corporation Tax Law and which includes the following earnings realized from their commercial and agricultural activities in Türkiye is subject to corporate income tax at a rate of 20%:

• Private and public (i.e. listed) companies (including banks, finance companies, insurance companies, securities, brokerage companies, commercial and industrial companies, investment companies and mutual funds);

• Cooperatives;

• State-owned enterprises;

• Commercial entities of associations and foundations;

• Joint ventures and partnerships; and

• Foreign entities similar to the above and foreign investment companies, mutual funds and trusts



Individuals The net income of individuals realized from their commercial, professional and agricultural activities in Türkiye and the salaries of individuals paid in Türkiye are subject to income tax at the following rates pursuant to Article 103 of the Income Tax Law:

• Up to TL 8,700 15%

• Up to TL 22,000 (for first TL 8,700, TL 1,305 20%

• Up to TL 50,000 (for first TL 22,000, TL 3,965) 27%

• Over TL 50,000 (for first TL 50,000, TL 11,525) 35%

4. What deductions are allowed?

Corporations According to Article 6 of the Corporation Tax Law and Article 37 of the Income Tax Law all income generated from commercial and industrial activities qualifies as corporate income.

From this corporate income the following expenses are deductible:

• All expenses that are directly related to the generation of corporate income;

• Salaries and social benefits (such as food and medical expenses, social security premiums, severance indemnities etc.) of employees;

• Indemnities paid in connection with damages provided that such indemnities are directly related to the taxable business;

• Travel expenses in connection with the taxable business;

• Rental payments of the premises and the cars used for the business;

• Transaction taxes (such as stamp taxes, real estate taxes, municipality taxes, etc.) in connection with the business;

• Depreciation;

• Expenditures related to General Assembly meetings;

• Incorporation expenses to incorporate the taxable business; and

• Securities (including equity and debt offerings) issuance expenses.

Individuals Individuals who render independent professional services or those who are carrying out commercial activities may deduct from their taxable income ordinary business-related expenses, including salaries, rental payments, fees and the cost of utilities. Depreciation on fixed assets is also deductible.



The employee parts of social security contributions and unemployment insurance premiums are deductible from gross employment income.

The premiums paid by the employee for himself, his/her spouse or children related to the personal insurance policies covering life, death, accident, illness, disablement, unemployment, maternity, birth and education, as well as the contributions paid to the Individual Retirement System are in general deductible. However, certain conditions must be fulfilled for such premiums to be deductible, as follows:

• The insurance policy and the retirement contract should be concluded with an insurance company resident in Türkiye and headquartered in Türkiye;

• The amount of the monthly premium, membership fee or contributions that are paid to the Individual Retirement System, should not exceed 10% of the salary earned in that month (the premiums paid for the personal insurance policies other than the Individual Retirement System should not exceed 5% of the wages earned in the month the premium was paid);

• The annual totals of monthly premiums, membership fees and contributions that are deductible may also not exceed the annual total amount of the minimum wage (as determined by law).

Lightening, heating, water, elevator, administration, insurance, interest, taxes, depreciation and maintenance expenses paid by an individual who derives rental income are deductible.

5. What are the major expenses that are not deductible?

Corporations The following expenditures do not qualify as tax-deductible-expense:

• Any interest paid to shareholders against their equity capital;

• Interest and foreign exchange loss related to loans obtained from lenders having an direct or indirect equity interest in the company acting as the borrower to the extent the total amount of such loans exceed three times the net equity of the company;

• Expenditures that are not based on arm’s length pricing;

• Legal reserves of the company;

• Tax penalties, other monetary fines and the interest related to such penalties and fines;

• Losses incurred from the issuance of securities (including stocks) below their nominal values and fees and commissions paid for the issuance of such off-market securities; and



• Indemnities paid in connection with the damages incurred from a crime committed by shareholders, directors, officers and employees.

Individuals Any expenditures that are not directly related to the scope of taxable business may not be deducted.

6. What are the applicable federal rates? Since Türkiye is not a federal state, taxation is on a one-level country wide basis.

7. What are the applicable state and/ or other local rates?

Local municipalities receive a share from national income taxes. In addition, certain ad valorem taxes, such as the real estate tax, are directly collected by local municipalities.

8. What are the applicable capital gains rates and base, if different and

concessional tax treatment in case of business re-organization such as amalgamation, slump sale, demerger, etc? Capital gains derived by all companies, including branches of foreign companies, are included in ordinary income and are subject to corporation tax. Capital gains are generally computed by subtracting the cost of the asset, after deducting expenses related to the sale, from the selling price. Capital gains derived from sales of depreciable fixed assets are not taxable to the extent such gains are reinvested in new fixed assets to replace the sold assets. Capital gains to be used for reinvestment are transferred to a special reserve account. If the special reserve is not used to finance the purchase of similar new assets within the following three years, the balance in the reserve must be included in taxable income. 75% of capital gains derived by resident and non-resident companies from disposals of shares held for at least two years qualify for corporate tax exemption on the condition that the capital gain is reserved in an equity reserve fund and is not distributed for five years. Tax treaty provisions may reduce the holding period for such an exemption to one year.

9. How are operating losses handled? In general, losses may be carried forward for five years. Losses may not be carried back. An order of priority applies for the use of losses and exemptions to offset against taxable income for the year. Past years’ losses must be exhausted after applicable exemptions even if there is a loss. Then the other exemptions (which are only applicable if a taxable profit exists) will be applied (e.g. investment allowances).



Resident companies may deduct the losses incurred in relation to business activities performed abroad provided that the foreign losses are approved by auditors authorized under the laws of the relevant jurisdiction. Foreign losses may not be deducted if related income arising from the foreign activity would have been exempt from corporation tax in Türkiye.

10. How are capital losses handled? See above.

Territorial Rules 11. What are the residence rules?

Corporations Under the Corporation Tax Law companies incorporated in Türkiye and branch offices of foreign companies established in Türkiye are recognized as full tax liability companies. Companies incorporated outside Türkiye and the branch offices of Turkish companies established abroad are recognized as limited tax liability companies. Individuals Under the Income Tax Law individuals resident in Türkiye permanently or who stay more than six months during any calendar year are recognized as full tax liability individuals and individuals resident outside Türkiye or who stay less than six months in Türkiye during any calendar year are recognized as limited tax liability individuals.

12. Is worldwide income taxed? Yes. Resident entities or individuals are subject to tax on their worldwide income, whereas non-resident entities and individuals are taxed solely on their income derived from activities in Türkiye.

13. Tax credits - Are there tax credits relating to legal dispositions other than provisions in Double Taxation Treaties, on the possibility of deducting taxes paid abroad, or any others? Yes, for example, a withholding tax is applied on rent payments from businesses as tenants to individual landlords. The individual landlords are in turn entitled to a tax credit on such withholding when they declare their annual income.



Withholding Taxes

Corporations Income (other than commercial and agricultural income) such as interest, dividends and capital gains generated in Türkiye by limited tax liability corporates are, in general, subject to a withholding tax by the resident counterparty. However, if a limited tax liability corporate is deemed to have a permanent establishment in Türkiye it should file an annual corporate tax return as all resident companies do.

The withholding tax rates (if not provided for otherwise in the Double Taxation Treaties) for certain income derived by a limited tax liability corporate are as follows:

• Income from the sale of listed Turkish equity 0%

• Interest from Turkish debt securities (including Treasury bills/bonds) 0%

• Income from repo transactions 15%

• Dividends 15%

• Loan interest provided that the lender is a bank 0%

• Income from discounting of promissory notes and drafts 10%

• Income from financial leasing 1%

• Rent income 20%

• Income from the sale, transfer and licensing of intellectual

property and royalties 20%

• Withholding tax on dividends paid out to a non-resident corporation 15%

Individuals Income (other than commercial, professional and agricultural income and salaries) such as interest, dividends and capital gains generated in Türkiye by limited tax liability individuals are subject to withholding taxation. Other types of income require annual filings as applicable to resident individuals.

The withholding tax rates (if not provided for otherwise in the Double Taxation Treaties) for certain income of a limited tax liability individual are as follows:

• Income from the sale of listed Turkish equity 0%

• Interest from Turkish debt securities (including Treasury bills/bonds) 0%

• Income from repo transactions 15%

• Dividends 15%

• Rent income 20%



• Income from the sale, transfer and licensing of intellectual

property and royalties 20%

14. What are the rates on dividends for withholding taxes?

See above.

15. What are the rates on royalties for withholding taxes? See above.

16. What are the rates on interest for withholding taxes? See above.

17. What are the rates of withholding tax on profits realized by a foreign corporation? See above.

18. Please list any other rates on withholding taxes that we should be aware of. See above.

Tax Returns and Compliance

Corporations Tax returns for t annual corporate income tax are required to be filed with the Turkish tax office located within the precinct of their company address from the 1st to the 25th day of the fourth month following the end of the fiscal year of the corporation, and the corporate income tax assessed accordingly is required to be paid in full on such day. The fiscal year of a corporation is, by default, the calendar year. However, corporations may, with the prior permission of the Ministry of Finance, designate another term (which must be 12 months) as their fiscal year. Corporations are also required to file interim tax returns by the end of each quarter and pay advance corporate income tax on their quarterly profits at the same rate as the annual corporate rate (20%). These interim corporate income taxes paid are offset against the annual corporate income tax for the fiscal year.



Individuals Individuals who perform basic artisan work (shoe shiners, individual tailors, etc.) and have annual turnovers of less than EUR 45,000 file their returns with the Turkish tax office located within their precinct of residency from the beginning of February till the 25th day of February of the following year, and the income tax assessed is required to be paid in two equal installments, the first by the end of March and the second by the end of July following the end of the fiscal year. The fiscal year for individuals is the calendar year. All other individuals who are subject to income tax are required to file their annual returns from March 1st to March 25th of the following year and pay their assessed tax in two installments by the end of March and July. This group also has to file interim tax returns at the end of each quarter and pay advance income tax on their quarterly profits at the same rate as their income tax bracket. These interim corporate income taxes paid are offset against the annual their income tax for the whole fiscal year.

19. What is the taxable reporting period?

See above.

20. What are the due dates for the filing of tax returns? See above.

21. What are the key compliance requirements? See above.

22. Are there any other requirements that we should be aware of regarding tax returns and compliance? See above.

INDIRECT TAXES 23. Are there any indirect taxes in your jurisdiction?

VAT



The transfer of all goods and the rendering of all services including importation the same into Türkiye are, in general, subject to VAT at a rate of 18%. There are, however, reduced or increased rates depending on the subject matter of taxation. For instance, the rate of VAT on lease payments of financial lease arrangements (including those with non-resident financial lessors) is 1% whereas increased rates of VAT are charged on the sale of some luxury goods and cars.

Excise Tax The sale of certain goods such as cars, cigarettes, oil, energy and natural gas is also subject to additional excise and special consumption taxes that could be as high as 50+% for certain cars for example.

Banking and Insurance Transaction Tax All revenues of resident banks, finance and insurance companies, such as interest, commission, premiums and other fees and charges, are subject to banking and insurance transaction tax (“BITT”) at a general rate of 5%. Revenues derived from inter-bank transactions are subject to BITT at a reduced rate of 1%. Local foreign exchange spot purchase and forward purchase transactions are subject to BITT at a further reduced rate of 0.1%.

Real Estate Sale and Purchase Tax The sale and purchase of real estate is levied at a rate of 3% over the sale and purchase price, half of which is payable by the seller and the other half by the purchaser. It is possible, however, to cap the sale and purchase price at the amount of minimum real estate values declared periodically by the municipalities.

Stamp Tax All documents that contain a monetary amount of undertaking are subject to stamp tax at a general rate of 0.75% over the amount of monetary undertaking. However, exemptions are available in relation to certain transactions, such as cross border financing, issuance and transfer of securities, exportation, etc., provided that such exemptions are explicitly granted by law.

24. How does it operate? Is it a VAT or a sales tax? See above.



25. How is the taxable base determined?

See above.

26. What are the applicable rates? See above.

27. Are there any exemptions? See above.

28. Are there any other taxes such as debit or financial transactions taxes enforced in you jurisdiction?

Yes. More detailed information on the Banking and Insurance Transactions Tax (“BITT”) and Resource Utilization Support Fund (“RUSF”) is provided below:

Banking and Insurance Transactions Tax Under the current Turkish tax system transactions by banks and other financial institutions are exempt from VAT but are subject to Banking and Insurance Transactions Tax (BITT). The gross income (fees minus the cost of the transaction) derived by these in Türkiye (e.g., banking charges, insurance premiums, brokerage fees) are, in general, subject to BITT, regardless of whether they are actually collected or recorded as an income accrual. Nevertheless, purchases of goods and services by financial companies are subject to VAT and, as they may not offset such against BITT they collect, they are allowed to deduct such output VAT as an expense.

Resource Utilization Support Fund In order to direct the investments and to lower the costs incurred in special loans in accordance with development plans and yearly programs, the Resource Utilization Support Fund was established within the Central Bank of Türkiye in 1988.

Resource Utilization Support Fund Levy (“RUSFL”) applies on the following transactions:

• Credits supplied by Turkish Banks and financial institutions,

• Credits obtained by Turkish Banks and financial institutions from abroad,



• Credits obtained by Turkish residents, other than banks and financial institutions, from abroad,

• Imports realized under acceptance credits, term letters of credit and on a cash against goods basis.

RUSFL is applied on the principal amount of the loan amount at a general rate of 3%. Inter-bank lending and funding for terms longer than one year are not subject to RUSFL. The 15% RUSFL on consumer credits has been recently reduced to 10% as part of an Anti Crisis Measures Package.

PARAFISCAL CONTRIBUTIONS 29. Are there any parafiscal contributions (i.e. social security, science and/

or technology)?

Certain parafiscal contributions are payable in Türkiye, which mainly pertain to social security premiums as listed below in a nutshell:

Security Branches Insured’s

Share Employer’s

Share Total Share

Short-term Security Branch Premium - 1-6, 5 1-6, 5

Long-term Security Branch Premium 9 11 20

General Health Security Premium 5 7,5 12,5

Unemployment Security Premium 1 2 3

Total 15 21, 5-27 36,5-42

There are a limited number of other parafiscal duties that do not accumulate significant fiscal funding. A recent example would be the Competition Board Levy that is charged to founders of (new) companies at the rate of one per ten thousandth of the capital of the company under formation.

30. How do they operate? See above.



31. How is the taxable base determined?

See above.

32. What are the applicable rates? See above.

33. Are there any exemptions? See above.

INHERITANCE AND GIFT TAXES 34. Are there inheritance taxes, gift taxes or any other taxes like Wealth Tax, etc.?

Transfers by way of a gift and upon death trigger gift and inheritance tax at the following rates:

Amount Rate of Inheritance Tax Rate of Gift Tax

First TL 160,000 1% 10%

Following TL 350,000 3% 15%

Following TL 760,000 5% 20%

Following TL 1,500,000 7% 25%

Following exceeding TL 2,770,000 10% 30%

35. If you answered yes to the question above, please describe what triggers the requirement for the tax, what the rate of tax is, and what is included in the taxable base. See above.

OTHER MATTERS



36. Are there any tax incentives granted for various matters such as research and

development, investment in certain industries/ areas, etc.? The investment incentive scheme was revised in 2006 to promote investment in manufacturing, services and the energy sector and also to encourage exports. Local and foreign investors have, in principle, equal access to these incentives.

General investment incentive scheme The general incentive scheme is mainly a tax benefit program, though in certain cases there are possibilities for financing and refinancing. Its application varies according to the location, scale and subject of the underlying investment.

The major investment incentive instruments under current regulations are:

• Exemption from customs duties for imported machinery and equipment subject to an investment incentive certificate to be obtained by the investor from the Turkish State;

• VAT exemption for imported or locally delivered machinery and equipment subject to an investment incentive certificate notwithstanding a few exceptions where VAT exemption is granted without a certificate.

Interest rate support on investment loans is provided for:

• Small and Medium Sized Enterprises (“SME”);

• Projects in relation to the Law on Supporting Research and Development Activities (Law No. 5746) (published in the Official Gazette dated March 12, 2008, No. 26814) (as amended from time to time) (“R&D Law”);

• Environmental projects;

• Projects in 50 prioritized development provinces.

[+] 50 Prioritized provinces and 4 provinces are shown on the country map herein below:



Incentives provided are mainly:

• Free land allocation

• Income tax relief

• Social security relief on the employer’s share

• Energy support

Incentives granted to Small and Medium Sized Enterprises (SME incentives) SMEs are defined as companies which operate in the manufacturing, agro-industry, tourism, education and health, mining, and software industries:

• Medium size: employing 50−250 workers and with yearly net sales or a total value of assets less than TL 25,000,000 (approx. USD 20 million)

• Small size: employing 10−49 workers and with yearly net sales or a total value of assets less than TL 5,000,000 (approx. USD 4 million)

• Micro size: employing 1−9 workers and a yearly net sale or a total value of assets less than TL 1,000,000 (approx. USD 800 thousands).

Investment and operational credit support for SMEs covers:

• Manufacturing or agricultural investments

• Tourism investments in selected regions

• Modernization investment in existing tourism facilities

• Healthcare investments in priority regions

• Education investments in primary and secondary schools in developed and normal regions

• Mining investments



• Software development investments

• Investments utilizing capital goods (including building, machinery, equipment and/or raw materials) of not more than TL 950,000

Incentives provided:

• Customs duties exemption

• VAT exemption

• Interest support

• KOSGEB support of SMEs; The Small and Medium Industry Development Organization (KOSGEB) makes significant contributions to strengthen SMEs by means of various support instruments in financing, R&D, common facilities, market research, investment sites, marketing, export and training

Research and development support TUBITAK (Scientific and Technological Research Council of Türkiye) and TTGV (Turkish Technology Development Foundation) both reimburse and/or grant R&D related expenses and capital loans for R&D projects.

Projects eligible for TUBITAK Incentives cover:

• Concept development

• Technological research and technical feasibility research

• Laboratory studies in the transformation of a concept to a design

• Design and sketching studies

• Prototype production

• Construction of pilot facilities

• Test production

• Patent and license studies

• Activities related to post-sale problems stemming from product design

New R&D law Türkiye’s new R&D law provides special incentives for R&D investment projects in Türkiye provided that at least 50 personnel are employed.

The incentives within the new law, which will be available until 2024, are:

• 100% deduction of R&D expenditures from the related tax base

• Income withholding tax exemption for employees



• Exemption of 50% of employer’s social security premium contribution for five years

• Stamp duty exemption for documents drawn up

• Techno-initiative capital grant for new scientists up to TL 100,000

• Deduction of certain funds granted by public bodies and internal organizations from the tax base of the R&D company

Technology development zone support

• Infrastructure facilities are provided.

• Profits derived from software and R&D activities are exempt from income and corporate taxes until 12.31.2013.

• The salaries of researchers and software and R&D personnel employed in the zone are exempt from all taxes until 12.31.2013.

• VAT exemption during the exemption period of income and corporate taxes is provided for IT specific sectors.

• Exemption from customs duties and fund levies.

State incentives for export The principle aim of this scheme is to encourage exports and to increase the competitiveness of firms in international markets. This specific package mainly covers R&D activities, market research, participation in exhibitions and international fairs, and expenditure on patents, trademarks and industrial designs.

37. If so, please indicate if there are any of the following: anti-deferral regimes; transfer pricing provisions; tax avoidance measures like legislated General Anti-Avoidance Rules, etc.; controlled foreign companies regulations; thin capitalization rules

Yes. Please find below information on significant present regulations:

Turkish Transfer Pricing Regulations In dealing with related parties, a Turkish company is required to apply arm’s length transfer prices, i.e. prices that unrelated parties would have used in similar conditions.

Transfer prices are determined in accordance with OECD transfer pricing guidelines. Accordingly, acceptable transfer pricing methods are the Comparable Uncontrolled



Price, Cost Plus or Resale Minus – other methods are subject to pre-approval by the Ministry of Finance.

After major changes to the tax laws were enacted in 2006, the Turkish Revenue drastically increased its reviews in relation to transfer pricing by introducing an extremely wide scope on the definition of related entities and individuals that are subject to non-compliance in this respect.

Therefore, it is highly recommend that all taxpayers who are involved in inter company transfer pricing make use of the advance clearing option that was put in effect starting January 1, 2008.

Turkish Thin Capitalization Rules Thin-Cap rules apply if the amount of loans received from shareholders or other related parties exceeds three-times the amount of equity of a Turkish company;

A ratio of six-times applies in the event the shareholder or the related party is a bank or financing company;

A related party is, in general, a company in which a Turkish shareholder owns at least 10% of the shares but, as explained under the (recently enacted) Transfer Pricing Regulations above, the Turkish Revenue is inclined to widen the scope of the related-party qualification;

In the event the Thin-Cap qualification kicks in, the interest and FX losses on any borrowing that is deemed as Thin-Cap becomes non-deductible. Further, such parts of any borrowing are deemed as profit and are subject to dividend taxation.

38. List the countries in which there are tax treaties. This could impact the withholding taxes on various distributions and to the extent possible, please itemize them below. Please include the impact upon withholding on compensation, interest, dividends or other distributions for each country listed.

Double Taxation Treaties

As of the date hereof, Türkiye has income tax treaties in force with the following countries:

Albania Algeria Austria

Azerbaijan Bahrain Bangladesh

Belarus Belgium Bosnia-Herzegovina

Bulgaria The Republic of China Croatia



Turkish Republic of North Cyprus

Czech Republic Denmark

Egypt Estonia Ethiopia

Finland France Germany

Greece Hungary India

Indonesia Iran Israel

Italy Japan Jordan

Kazakhstan The Republic of Kyrgyzstan Kuwait

Latvia Lebanon Lithuania

Luxembourg Macedonia Malaysia

Moldova Mongolia Morocco

The Netherlands Norway Pakistan

Poland Portugal Qatar

Romania Saudi Arabia Serbia

Russia Singapore Slovakia

Slovenia The Republic of South Africa

South Korea

Spain Sudan Syria

Sweden Tajikistan Thailand

Tunisia Turkmenistan Ukraine

United Arab Emirates United Kingdom United States

Uzbekistan



Dividends Interest Capital Gains Intellectual Property

Netherlands 20% WHT rate applies to dividends distributed by a Turkish Co (if 25% or more owned by Dutch company, then it is reduced to 10% for stand-alone Turkish companies and 7.5% for branches of the Dutch parent).

10% WHT rate applies to interest on loans from non-banks and non-finance companies. 0% WHT rate applies to loans from banks and finance institutions (Turkish internal tax regulation).

The transfers of corporate equity or debt issues of non-public companies are exempt subject to a 1-year holding period.

10% ceiling applies concerning the total tax burden on the outbound payments of royalties and other fees in return for IP by Turkish users of IP.

Spain 20% WHT rate applies to dividends distributed by a Turkish Co (if 25% or more owned by Spanish company, then it is reduced to 5%).

10% WHT rate applies to interest on loans from non-banks and non-finance companies. 0% WHT rate applies to loans from banks and finance institutions (Turkish internal tax regulation).

Transfers of corporate equity or debt issues of non-public companies are exempt subject to a one-year holding period.

10% ceiling applies concerning the total tax burden on the outbound payments of royalties and other fees in return for IP by Turkish users of IP.

Double tax treaty between Türkiye-Netherlands Dividends: 20% WHT rate applies to dividends distributed by a Turkish Co (if 25% or more owned by Dutch company, then it is reduced to 10% for stand-alone Turkish companies and 7.5% for branches of the Dutch parent).



Interest: 10% WHT rate applies to interest on loans from non-banks and non-finance companies. 0% WHT rate applies to loans from banks and finance institutions (Turkish internal tax regulation).

Capital gains: The transfers of corporate equity or debt issues of non-public companies are exempt subject to a 1-year holding period.

Intellectual Property (IP): 10% ceiling applies concerning the total tax burden on the outbound payments of royalties and other fees in return for IP by Turkish users of IP.

Double tax treaty between Türkiye-Spain Dividends: 20% WHT rate applies to dividends distributed by a Turkish Co (if 25% or more owned by Spanish company, then it is reduced to 5%).

Interest: 10% WHT rate applies to interest on loans from non-banks and non-finance companies. 0% WHT rate applies to loans from banks and finance institutions (Turkish internal tax regulation).

Capital gains: The transfers of corporate equity or debt issues of non-public companies are exempt subject to a one-year holding period.

Intellectual Property (IP): 10% ceiling applies concerning the total tax burden on the outbound payments of royalties and other fees in return for IP by Turkish users of IP.

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