The rates, the 15% dividend and branch-remittance withholding, the filing calendar and the treaty layer.
A foreign company’s Turkish tax position is decided by a single distinction drawn in Corporate Tax Law No. 5520. A company whose legal seat (kanunî merkez) or place of effective management (iş merkezi) is in Türkiye is a full taxpayer (tam mükellef) and is taxed on its worldwide income under art. 3(1); a company with both of those outside Türkiye is a limited taxpayer (dar mükellef) and is taxed only on its Türkiye-source income under art. 3(2)-(3). On top of that base sits a general corporate income tax rate of 25% as at July 2026, a domestic minimum corporate tax of 10% of pre-incentive corporate income from the 2025 tax period, and 15% withholding on dividends paid to non-resident corporate shareholders and on branch profits remitted to head office. A Turkish subsidiary is therefore a full taxpayer; a branch of the foreign parent is a limited taxpayer; and a liaison office, which may not earn income at all, has no corporate tax base.
Full liability or limited liability — which one are you?
The test is not ownership. A company wholly owned by a foreign parent but incorporated in Türkiye has its legal seat here and is a full taxpayer on worldwide income, exactly like a domestically owned company. A foreign company that keeps its seat and management abroad remains a limited taxpayer even if it does substantial business in Türkiye — but art. 3(3) then lists the Türkiye-source categories that are caught: business profits earned through a workplace or permanent representative in Türkiye, agricultural income, income from professional services performed or valued in Türkiye, rental income from property and rights in Türkiye, movable capital income, and other gains. The practical consequence is that a foreign company can be taxed in Türkiye without ever registering a branch, if its activity creates a taxable presence. Choosing the vehicle deliberately — the subject of our guide to the liaison office, branch or subsidiary decision — is therefore also a tax decision.
What are the actual rates in 2026?
The general corporate income tax rate is 25%, confirmed in the Revenue Administration’s guide Kurumlar Vergisinde Oran Uygulamaları (Publication No. 605, March 2026). Three variations matter to foreign investors:
- 30% for banks and financial institutions — banks, leasing, factoring, financing and savings-financing companies under Law No. 6361, electronic payment and e-money institutions, authorised FX bureaux, asset management companies, capital markets institutions, insurers, reinsurers and pension companies; from the 2025 tax period the same rate covers build-operate-transfer projects under Law No. 3996 and PPP projects under Law No. 6428.
- A five-point reduction on export earnings — earnings derived exclusively from exports are taxed five points lower, so 20% instead of 25%. The reduction was one point for 2022 and became five points from the 2023 tax period; since 1 January 2023 it is also available to manufacturers and suppliers exporting through foreign-trade or sectoral foreign-trade companies under an intermediated export contract.
- The 10% domestic minimum corporate tax — under KVK art. 32/C, added by Law No. 7524, the corporate tax computed under arts. 32 and 32/A cannot be less than 10% of corporate income before deductions and exemptions, and the higher figure is payable.
The minimum tax applies to income of the 2025 tax period and later, is computed at each advance tax period, and — per the Revenue Administration’s guide Yurt İçi Asgari Kurumlar Vergisi (Publication No. 607, April 2026) — reaches limited taxpayers that must file, or voluntarily file, a Turkish corporate tax return. Newly established companies are outside it for their first three accounting periods, which is a genuine planning window for a newly incorporated subsidiary.
Subsidiary, branch or liaison office: the tax comparison
| Subsidiary (A.Ş./Ltd.) | Branch (şube) | Liaison office | |
|---|---|---|---|
| Taxpayer status | Full taxpayer (tam mükellef) | Limited taxpayer (dar mükellef) | Not a corporate taxpayer |
| Tax base | Worldwide income | Türkiye-source income only | No income permitted |
| Corporate tax rate | 25% (30% financial institutions) | 25% (30% financial institutions) | — |
| Domestic minimum tax | Yes, from 2025 period | Yes, where a return is filed | — |
| On money to the parent | 15% dividend withholding | 15% branch remittance withholding | — |
| VAT registration | Yes | Yes | No taxable supplies |
How is repatriating profit taxed?
This is where the 25% headline stops being the whole story. Profit distributions by a resident Turkish company to non-resident corporate shareholders are subject to 15% withholding under KVK art. 30(3), the rate set by Presidential Decree No. 9286 of 21 December 2024 and applicable to dividends paid on or after 22 December 2024. The previous rate was 10%, so any bulletin or blog still quoting 10% predates the change. Capitalising profits instead of distributing them is not a distribution and attracts no withholding.
A branch is treated the same way. Under KVK art. 30(6), a limited taxpayer filing an annual or special return withholds on the amount transferred to head office out of corporate income after deducting the calculated corporate tax — economically identical to a dividend, at the same 15%. Other payments to non-resident companies carry their own rates, set out in the Revenue Administration’s withholding rate table and standing as at July 2026: professional service fees 20%, royalties and transfers of intangible rights 20%, immovable property rents 20%, progress payments on multi-year construction and repair work 5%, and internet advertising services 15%. These rates bite on ordinary intra-group invoicing, which is why they belong in the deal model at the outset of any acquisition of a Turkish target.
What is the filing and payment calendar?
The taxation period is the accounting period, normally the calendar year unless a special period has been assigned. The corporate tax return is filed between the 1st and the evening of the 25th day of the fourth month following the close of that period — 1 to 25 April for a calendar-year taxpayer — and the tax is paid by the end of the month in which the return is filed, so 30 April. A limited taxpayer files with the tax office of its Türkiye workplace or permanent representative; if it leaves Türkiye, the return is due within the 15 days before departure.
Advance (provisional) corporate tax runs alongside, at the current corporate tax rate and creditable against the annual liability. Under mükerrer art. 120 of Income Tax Law No. 193, it is declared by the evening of the 14th day and paid by the evening of the 17th day of the second month following each three-month period — dates the Revenue Administration routinely extends by circular, so the circular for the period should always be checked.
The fourth-quarter advance tax period is back. It was abolished from 2022, but Law No. 7566 of 4 December 2025 (Official Gazette, 19 December 2025, No. 33112) reinstated it for tax periods beginning on or after 1 January 2025 — income is once again determined cumulatively for 3, 6, 9 and 12 months, and the 2025 fourth-quarter return fell due on 17 February 2026. Any calendar or internal compliance manual still built on three quarters is wrong.
Where do VAT, transfer pricing and treaties fit?
VAT applies to supplies in Türkiye regardless of who owns the supplier. As at July 2026 the standard rate is 20%, with reduced rates of 10% for goods and services in Annex (II) and 1% for those in Annex (I) of Decree No. 2007/13033, as consolidated in the Revenue Administration’s current VAT rate schedule. A subsidiary or branch that makes taxable supplies registers for VAT; a liaison office, making none, does not.
Transfer pricing is the compliance area foreign groups most often underestimate. Under KVK art. 13, buying or selling goods or services from related parties at prices contrary to the arm’s-length principle means the profit is deemed distributed in a disguised manner — and under art. 13(6) that amount is treated, as at the last day of the accounting period, as a distributed dividend or, for a limited taxpayer, as a head-office remittance, so it attracts the same 15% withholding. A shareholding, voting or profit-share right of at least 10% makes a counterparty a related person. Accepted methods are comparable uncontrolled price, cost plus, resale price and the transactional profit methods, with a self-determined method as a fallback, and an advance pricing agreement may be concluded with the Ministry for up to three years. Where documentation obligations are met fully and on time, the tax loss penalty on any resulting assessment is applied with a 50% reduction. For purely domestic transactions between full taxpayers and Turkish workplaces of foreign companies, a disguised distribution is only accepted where a Treasury loss (Hazine zararı) arises.
Treaties sit over all of this. The Revenue Administration’s official list dated 23 April 2025 shows 93 double taxation treaties in force — see the list of concluded tax treaties. A treaty may cut withholding rates and decide whether a permanent establishment exists at all, but relief depends on the specific convention and on producing a certificate of residence; the rates differ too much between treaties to be assumed. Separately, foreign tax paid on foreign-source income booked in Türkiye may be credited against Turkish corporate tax, capped at the amount produced by applying the art. 32 rate to that foreign income.
Tax is rarely the reason a foreign investor comes to Türkiye, but it is often the reason a structure has to be unwound later. The taxpayer-status question should be settled when the entity is chosen — at the point of incorporating the company — and revisited whenever the group starts employing staff in Türkiye or moving cash across the border. Our tax practice works alongside our foreign investment practice so that the rate, the withholding and the treaty position are modelled before the first invoice, not after the first assessment.
