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Taxes and Compulsory Insurance

Foreign nationals and Turkish citizens are no different in terms of the taxes or levies charged.

Tax rates are updated periodically. The rates as of January 1st 2005 are shown below. Updates and other relevant information can be found at at www.maliye.gov.tr  .

i) Real Estate Tax: Annual Real Estate Tax rates for cultivated land, uncultivated (for building) land, non-residential buildings, and residential buildings are 0.1%, 0.3%, 0.2%, and 0.1%, respectively. Tax is calculated on the basis of the declared value of the asset, which cannot be less than the threshold determined by the tax authorities. Tax payments are made in two equal instalments during the periods of March-May and November each year and are collected by local government authorities (municipality). The tax base is updated annually by a coefficient determined by the Ministry of Finance, taking into account the inflation rate.

However, Real Estate Tax rates for properties in the following provinces (metropolitan areas) are twice the normal rates stated above.:

• Adana
• Ankara
• Antalya
• Bursa
• Diyarbakir
• Erzurum
• Eskisehir
• G.Antep
• Icel
• Istanbul
• Izmir
• Kayseri
• Kocaeli
• Konya
• Samsun

ii) Real Estate Sale-and-Acquisition Levy: Both buyer and seller have to pay a Real Estate Sale-and-Acquisition Levy of 1.5%, based on the declared value of the asset. This is collected by the Local Title Deeds Registry Office at the time of the selling/buying transaction.

For the registration of a new building constructed on land, a levy of 1.5% based on the reference value of the asset must be paid.

In the case of the acquisition of sea-side, river-side and lake-side properties which are subject to special permission, an acquisition levy of 126% must be paid.

iii) Inheritance and Succession Tax: The tax base is updated annually. There are some discounts for legacies to daughters, sons and spouses. In the case of spouse and children, YTL 75,719 is deducted from the tax base of each person. In the case of a spouse with no children, the deduction from the tax base is YTL 151,526. In  the case of succession without reciprocity the amount deducted is YTL 1,748.

As of 1st January 2005 the applicable tax base and rates are as follows:

iv) Environmental Services Tax (EST): Local water suppliers charge an EST of  0.12  YTL per one m3 of water used to residences. It varies between 12 YTL and 1,400 YTL per year for other building classifications. The rates for metropolitan cities, however, are 25% higher than the normal rates. These figures are updated annually. The rate of EST will be reflected in your water bill.

v) Motor Vehicle Tax: Depending on the cylindrical volume of the engine and date of production of the vehicle, vehicle owners have to pay an annual tax ranging between YTL 22.00 and YTL 22,240.00 (For Automobiles, it is from YTL 22 to 667 but for aircraft, it is from YTL 2,668 to YTL 22,240)

vi) Corporate Tax: Corporate entities have to pay a tax of 30% of their previous year's profits.

vii) VAT: The general VAT rate is 18%. However, some specific goods and services are taxed at either 1% or 8%.

VAT as the main turnover tax is part of the fundamental criteria for full EU membership and Turkey replaced the existing production tax with VAT (KDV) in 1985. The rise in the rates and changes in the structures of Turkish VAT as a result of fiscal approximation clearly have major economic effects on the Turkish economy. The percent of VAT charged is different on every subject. A Tax refund is applicable for short-term visits.

Check whether the price announced on the goods contains VAT. It is better if you see the label Fiyatlarımıza KDV Dahildir which means, "VAT is included in our prices".

Your employer deducts Turkish income tax (Gelir Vergisi) from your salary. With regard to your home country's income tax laws, consult your Consulate for rules and regulations.

If you have your own business it is strongly recommended to have advice from a financial auditor.

viii) Special Consumption Tax (SCT): Levied on luxury goods and those goods which have an effect on the environment, security or health,  including:

• Fuels, industrial oils, petroleum products and petro-chemicals,
• Motor vehicles and sea vehicles,
• Beverages and products with tobacco
• A number of goods including caviar, perfumes, some make-up/cosmetic products, printed materials, some electrical and electronic devices
 

ix) Stamp Tax: There is a wide range of transactions on which a Stamp Tax is charged. Some important items and the corresponding rates are depicted below:

x) Personal Income Tax: The Personal Income Tax rate is updated by a Council of Ministers' Decree every year. The main taxable personal income items are commercial income, agricultural income, wages, self-employment revenues, rent, interest and other incomes. Personal income tax rates on wages for the year 2005 are shown in the table below.

However, Personal Income Tax on wages for each slice of the above tax base is 5 percentage points lower than the percentages shown in the above table.

xi) Minimum wage: In the year 2005,  the minimum gross wage for 30 days is  488.7 YTL for employees aged 16 or more (The cost to the employer is YTL 593.77).The minimum wage is applied nation-wide and reviewed periodically.

xii) Social insurance: In accordance with Turkish social security laws, the self-employed and farmers, employees and civil servants have to register to Bag-Kur, SSK, and Emekli Sandigi, respectively. These are compulsory schemes.

Contribution rates for these schemes range between 35% and 40% of the contribution base. The main risks covered by these schemes are old-age, disability/invalidity, health, maternity, mortality, being orphaned or widowed, unemployment (for the employed). 

The minimum retirement age for new entrants is 58/60 (F/M).

xiii) Earthquake Insurance: Property must be insured by the owner against  earthquake risks. It is compulsory and a national uniform tariff is implemented.

xiv) Motorists Insurance: If you possess a car, you are obliged to obtain Motorists (traffic) Insurance. The cost of the policy depends on the cylindrical volume of the engine and the production date of the vehicle.
 

Whilst permanent residents pay tax on any income earned in Turkey and overseas, foreign residents pay tax only on income earned in Turkey. (To be considered as a Turkish resident, you must establish that you have been living in the country for more than 6 months during any calendar tax year.)

Social Security payments
The employer's contribution is 19.5% of the salary, whilst the employee's contribution is 14% of salary.

 

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