Taxation of Companies in Türkiye: 2026 Comprehensive & Strategic Guide

Understanding the taxation of companies in Türkiye is essential for both domestic and foreign investors planning to operate in one of the region’s most dynamic and strategically located economies. Türkiye offers a competitive corporate tax regime aligned with international standards, yet its application requires careful planning, compliance, and ongoing governance.

As Akkas CPA & Turkish Accounting Firm, a leading full-service company formation and corporate governance firm based in Istanbul since 2017, we provide multilingual legal and tax advisory services tailored to international businesses.

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Türkiye’s tax landscape, governed primarily by the Income Tax Law No. 193, Corporate Tax Law No. 5520, and Value Added Tax (VAT) Code No. 3065, favors investor-friendly policies. Recent amendments, including those from the 2025 Tax Procedure Law updates, signal moderate rate adjustments for 2026 amid inflation controls. Expect corporate tax rates to hover around 25-30% for most entities, with incentives for strategic sectors like tech, renewables, and exports.

This article presents a comprehensive 2026 guide to corporate taxation in Türkiye, covering corporate income tax, VAT, withholding taxes, incentives, compliance obligations, and strategic considerations.

Overview of the Turkish Corporate Tax System

Corporate taxation in Türkiye is primarily regulated by the Corporate Income Tax Law No. 5520 and related secondary legislation. Companies that are legally established or managed in Türkiye are considered full taxpayers, meaning they are taxed on their worldwide income. Foreign companies without a legal seat in Türkiye but generating income locally are treated as limited taxpayers, taxed only on their Turkish-sourced income.

The standard corporate income tax rate is 25%, applicable to most companies operating in Türkiye as of 2026. This rate is competitive when compared with other OECD countries and is supported by extensive tax incentives and treaty protections.

Companies are generally subject to taxation following successful company formation in Türkiye, which determines their tax residency, reporting obligations, and eligibility for incentives.

Corporate Income Tax (CIT) Rates in 2026

For the 2026 fiscal year, the standard Corporate Income Tax rate in Türkiye remains at 25%. This rate applies to the net accounting profits of all capital companies. However, the Turkish government utilizes a tiered approach for specific sectors to maintain economic stability:

• Financial Sector: Banks, insurance companies, and financial institutions are subject to a higher rate of 30%.
• Export Incentives: To encourage global trade, a 5-point reduction is applied to income derived exclusively from export activities, effectively lowering the rate to 20%.
• Manufacturing: Companies with an industrial registration certificate engaging in manufacturing enjoy a 1-point reduction (24%).

The New Domestic Minimum Tax Rule

A pivotal change effective from 2025 and continuing through 2026 is the 10% Domestic Minimum Corporate Tax. Under this rule, the tax calculated cannot be less than 10% of the company’s earnings before certain deductions and exemptions. This ensures that even companies with significant incentives contribute a baseline level of tax to the Turkish Treasury.

Common Corporate Structures and Their Tax Treatment

The majority of commercial entities in Türkiye operate as either joint-stock companies or limited liability companies. Each structure has distinct legal and tax implications.

Joint-Stock Companies (A.Ş.)

Joint-stock companies are commonly preferred by large-scale enterprises, foreign investors, and publicly held businesses. From a tax perspective, joint-stock companies are subject to corporate income tax on annual profits and withholding tax on dividend distributions.

Entities established through joint-stock company formation are particularly suitable for complex ownership structures, capital market activities, and long-term investment strategies.

Limited Liability Companies (Ltd. Şti.)

Limited liability companies are widely used by small and medium-sized enterprises. While their corporate tax rate is identical to joint-stock companies, they offer simpler governance and operational flexibility.

Companies formed via limited liability company formation benefit from reduced administrative burdens while remaining fully integrated into the Turkish corporate tax system.

Corporate Income Tax and Advance Payments

Corporate income tax is calculated annually based on net taxable profits. However, companies are also required to make advance corporate tax payments on a quarterly basis. These advance payments are credited against the final annual tax liability.

Taxable profits are determined after deducting allowable expenses, depreciation, and certain exemptions. Improper expense classification or non-compliance often leads to tax assessments and disputes, highlighting the importance of professional legal and tax oversight.

Value Added Tax (VAT) in Türkiye

Value Added Tax (VAT) is one of the most significant indirect taxes affecting companies in Türkiye. The standard VAT rate is 20%, with reduced rates of 10% and 1% applicable to specific goods and services.

VAT applies to:

• Commercial deliveries of goods and services
• Imports
• Certain services provided by foreign entities

VAT-registered companies must file monthly VAT returns and maintain proper documentation. Export activities are generally zero-rated, allowing companies to reclaim input VAT, which is particularly advantageous for international trading companies.

Withholding Taxes on Payments and Dividends

Türkiye applies withholding tax to certain types of payments, including:

• Dividend distributions
• Interest payments
• Royalties
• Service fees paid abroad

When a Turkish company distributes profits, a 15% Withholding Tax (WHT) is generally applied to dividends paid to individual shareholders or non-resident corporate shareholders. Carefully drafted shareholder agreements play a critical role in aligning tax efficiency with ownership rights.

However, Türkiye’s extensive network of Double Taxation Avoidance Treaties (DTTs) can often reduce this rate to 5% or 10%, depending on the recipient’s jurisdiction and the percentage of ownership. Proper corporate governance ensures that these distributions are documented correctly to benefit from treaty protections.

Double Taxation Treaties and International Tax Planning

Türkiye has signed double taxation avoidance agreements with more than 90 countries. These treaties prevent income from being taxed twice and often reduce withholding tax rates on dividends, interest, and royalties.

Effective international tax planning requires careful coordination between Turkish domestic tax law and treaty provisions. Foreign investors should ensure that management structures, profit allocation, and intercompany transactions comply with both Turkish law and OECD transfer pricing guidelines.

Tax Incentives and Exemptions for Companies

The Turkish tax system offers various incentives designed to attract investment, promote exports, and support innovation. Key incentives include:

• Investment incentive certificates
• R&D and technology development zone exemptions
• Export VAT exemptions
• Free zone tax advantages

Eligibility depends on the company’s sector, location, and investment size. Proper planning during establishment and ongoing corporate governance ensures that companies remain compliant while maximizing available benefits.

Tax Compliance, Audits, and Penalties

Companies operating in Türkiye must comply with strict bookkeeping, reporting, and filing obligations. Financial statements must be prepared in accordance with Turkish accounting standards, and tax returns must be filed electronically.

Tax audits are conducted regularly, and non-compliance may result in:

• Tax loss penalties
• Late payment interest
• Administrative fines

In complex cases, unresolved disputes may escalate to court proceedings, requiring professional support in company litigation related to tax assessments and penalties.

Tax Considerations in Company Liquidation and Exit

Tax obligations do not end when business operations cease. During company liquidation, all outstanding tax liabilities must be settled, and final tax returns must be submitted.

Capital gains arising from asset transfers, liquidation profits, and final dividend distributions are subject to taxation. Early tax planning significantly reduces risks and ensures a smooth exit process for shareholders and investors.

Contact us for Taxation of Companies in Türkiye

Corporate taxation in Türkiye is not merely a compliance issue but a strategic component of business planning. From company establishment to daily operations, restructuring, dispute resolution, and liquidation, tax considerations influence every stage of a company’s lifecycle.

Akkas CPA & Turkish Accounting Firm provides integrated legal and tax advisory services, ensuring that corporate structures remain compliant, tax-efficient, and aligned with long-term business objectives.

If you are planning to establish a company, optimize your tax position, or manage ongoing corporate tax obligations in Türkiye, we invite you to contact Akkas CPA & Turkish Accounting Firm. Our experienced multilingual team in Istanbul has been advising international and domestic clients on Turkish company formation, taxation, and governance since 2017.