Turkey Limited Şirketi Tax Explained: Corporate Tax, KDV, and Filing for 2025

Turkey is increasingly on the radar for founders setting up international structures. The country sits at the intersection of Europe, Asia, and the Middle East, operates in a time zone that overlaps both London and Dubai, and offers a growing technology ecosystem centred on Istanbul, Ankara, and Izmir. The Turkish Revenue Administration (Gelir İdaresi Başkanlığı, or GIB) has invested substantially in digital tax infrastructure, including mandatory e-invoicing and e-ledger systems that, once set up correctly, make compliance considerably more automated than in many comparable jurisdictions.

For foreign founders, the most common structure is the Limited Şirketi (Ltd Şti), the Turkish equivalent of a limited liability company. It requires relatively modest capital, permits a single foreign shareholder, and carries no requirement for a Turkish national on the board. Anonim Şirketi (A.Ş.) is less common for small operations but mandatory for certain licensed activities.

This guide covers the complete Turkish tax picture for corporate entities in 2025: corporate income tax, provisional tax, VAT, withholding tax, social security, deductible expenses, entity comparisons, filing deadlines, e-invoicing obligations, and transfer pricing. All rates reflect the rules in force for the 2025 fiscal year.

Kurumlar Vergisi: Turkish Corporate Income Tax

The 25% Standard Rate

Kurumlar Vergisi (corporate income tax) is charged at 25% on the net taxable profits of Turkish-resident companies for the 2025 fiscal year. This rate applies to both Limited Şirketi and Anonim Şirketi structures.

Turkish-resident companies are subject to tax on worldwide income. A company is considered resident in Turkey if it is incorporated under Turkish law or has its place of effective management in Turkey. Non-resident companies with a permanent establishment in Turkey are taxed only on the income attributable to that establishment.

The 25% rate represents a significant step up from the historical norm. The rate was 20% for many years, temporarily raised to 23% in 2021, then further increased to 25% for 2023 and beyond. Founders building financial models for Turkish operations should use 25% as the base case.

A reduced rate of 20% applies to companies that list at least 20% of their shares on the Istanbul Stock Exchange (Borsa Istanbul) for the first time. This reduced rate applies for five years from the year of listing. For most privately held foreign-owned subsidiaries, the 20% rate is not accessible.

How Taxable Profit Is Calculated

Taxable profit starts with the accounting profit shown in the statutory financial statements, which must be prepared in accordance with Turkish Accounting Standards (TAS). From that accounting profit, certain adjustments are made to arrive at the taxable base.

Additions to accounting profit (items that increase taxable income):

• Disallowable expenses that have been deducted in the accounts but are not deductible for tax purposes
• Penalties and fines (administrative, tax, and criminal)
• Taxes paid on behalf of third parties that have not been grossed up
• Provisions that do not meet Turkish tax requirements (general bad debt provisions, for example, are not deductible until the debt is actually written off)
• Entertainment expenses exceeding the 0.5% statutory limit
• Vehicle expenses exceeding the 70% statutory limit (see Deductible Expenses below)

Deductions from accounting profit (items that reduce taxable income):

• Investment allowances (for qualifying investments under incentive certificates)
• R&D deductions and technology zone super-deductions (150% of qualifying spend)
• Dividends received from other Turkish-resident companies (to avoid double taxation at the company level)
• Exempted income (income from foreign subsidiaries meeting certain conditions, maritime income under certain conditions)
• Prior-year losses carried forward (up to five years)

Loss carry-back is not permitted in Turkey. Losses can be carried forward for five years only, and only against profits from the same corporate entity.

Filing the Annual Return

The Kurumlar Vergisi annual return (Kurumlar Vergisi Beyannamesi) covers the fiscal year, which for most companies is the calendar year 1 January to 31 December. The deadline for filing is 30 April of the following year, and payment of any balance of tax is due at the same time.

The return is filed electronically through the GIB's e-Beyan system. Companies must have an authorised representative (usually their tax accountant, known as a Mali Müşavir) registered with GIB to submit returns electronically.

If the company has made quarterly provisional tax payments during the year (see below), these are credited against the annual tax liability. If quarterly payments exceed the annual liability, the excess is refundable or can be offset against other tax debts.

Geçici Vergi: Quarterly Provisional Corporate Tax

Turkish companies are required to make quarterly provisional tax payments (Geçici Vergi) during the year based on cumulative taxable profit. This prevents large lump-sum payments at year-end and helps the tax authority maintain cash flow from corporate taxpayers.

How Geçici Vergi Works

Provisional tax is calculated at the full corporate rate (25%) on the cumulative taxable profit earned from the start of the fiscal year to the end of each quarter. Each quarterly payment equals the cumulative tax to date minus provisional tax already paid in earlier quarters.

For a company with ₺400,000 cumulative taxable profit at the end of Q1, the Q1 provisional payment is ₺100,000 (25%). If cumulative profit reaches ₺1,000,000 by end of Q2, the Q2 payment is ₺250,000 minus the ₺100,000 already paid, so ₺150,000. And so on.

Companies declare their provisional tax on a quarterly basis using the Geçici Vergi Beyannamesi, which covers both declaration and payment.

Quarterly Provisional Tax Deadlines

Note that Q4 provisional tax is declared and paid in February, but the annual Kurumlar Vergisi return reconciling the full year is filed by 30 April. The Q4 provisional payment is essentially a fourth instalment on account.

If the provisional tax paid across all four quarters exceeds the final annual tax liability (because the Q4 estimate was too high, or because of year-end adjustments such as incentive claims), the excess is refunded or offset on filing the annual return.

KDV: Turkish VAT

The Three KDV Rates

KDV (Katma Değer Vergisi, meaning Value Added Tax) is Turkey's VAT system. There are three rates:

20% standard rate: Applies to most goods and services, including professional services, technology services, consulting, marketing, software licences, general retail, most manufactured goods, and construction services. This is the rate that applies to the majority of B2B transactions between companies.

10% reduced rate: Applies to a defined list of goods and services including food products that are not zero-rated, restaurant and catering services, pharmaceutical products, certain agricultural inputs, textile goods, certain books and magazines, medical devices, passenger transport, cinema and theatre tickets.

1% super-reduced rate: Applies to basic foodstuffs defined by Presidential Decree (bread, flour, fresh fruit and vegetables, eggs, milk, butter, olive oil), certain agricultural products sold at cooperatives, and residential property sales where the flat size is 150 square metres or under.

KDV Registration

All companies incorporated in Turkey are automatically liable to register for KDV from the date of incorporation. There is no registration threshold for corporate entities — registration is mandatory as soon as the company is formed, regardless of revenue level. This differs from the UK, where a turnover threshold triggers VAT registration.

Foreign companies without a fixed establishment in Turkey that supply electronic services (software, streaming, digital content) to Turkish consumers must register for KDV under a simplified non-resident registration regime introduced in 2018.

Monthly KDV Returns

KDV returns are filed monthly. The return covers the previous calendar month and must be filed and any net KDV liability paid by the 26th of the following month. For example, the KDV return for January is due by 26 February.

The monthly return (KDV Beyannamesi) is filed electronically through the GIB e-Beyan portal. Companies in the e-Fatura (e-invoice) system have their sales figures pre-populated from their issued invoices, which speeds up reconciliation.

If input KDV (KDV paid on purchases) exceeds output KDV (KDV collected on sales) in a given month, the excess becomes a KDV credit carried forward. Turkey does not routinely refund KDV credits to most businesses. Credits accumulate and are offset against future output KDV. Refunds are available in limited circumstances, principally where the excess arises from exports or from supplies at a rate below the standard rate.

KDV on Imports

Goods imported into Turkey are subject to KDV at the point of import, payable to customs at the time of importation. This import KDV is then recoverable as input tax on the monthly KDV return, subject to proper customs documentation.

Stopaj Vergisi: Turkish Withholding Tax

Stopaj Vergisi (withholding tax) is a mechanism by which certain categories of payment are taxed at source before reaching the recipient. The paying company deducts the tax and remits it to the tax authority on behalf of the recipient.

Key Withholding Tax Rates

Dividends: 15%

When a Turkish company distributes profits to its shareholders, it must withhold 15% from the dividend payment. This applies to payments to both resident and non-resident shareholders. The withholding tax is the final tax on dividends for individual shareholders. For corporate shareholders (where the recipient is another company), dividends received from Turkish-resident companies are fully exempt from corporate tax, and the withholding tax may be refunded or offset, depending on the recipient's status.

Where Turkey has a double taxation agreement (DTA) with the shareholder's country of residence, the treaty rate may be lower. Turkey has DTAs with over 90 countries. Many treaty rates reduce the dividend withholding to 5% or 10% for substantial corporate shareholders, so the applicable rate depends on the specific treaty.

Rent: 20%

Payments for the rental of immovable property (offices, warehouses, retail space) to individual landlords are subject to 20% withholding tax. The tenant company deducts and remits this on behalf of the landlord. Payments to corporate landlords do not attract this withholding (the landlord company accounts for the income in its own returns). This is a common point of confusion for new market entrants signing office leases.

Professional services fees: 20%

Payments to individuals providing professional services independently (architects, engineers, lawyers, accountants, consultants working in a personal capacity rather than through a company) are subject to 20% withholding. If the service provider operates through a limited company, the withholding does not apply.

Freelancer payments to individuals: 20%

Payments to self-employed individuals for work falling within defined professional categories attract 20% withholding. For payments to foreign freelancers without a Turkish permanent establishment, the treaty position needs to be checked, but the default rate where no treaty applies is 20%.

Interest payments: 10-15%

Interest paid to non-residents is generally subject to withholding at rates ranging from 10% to 15% depending on the type of debt instrument and the treaty position.

Muhtasar Return

Withholding taxes are declared and paid via the Muhtasar ve Prim Hizmet Beyannamesi (commonly abbreviated as Muhtasar Beyanname). This monthly return consolidates both withholding tax and social security (SGK) premium declarations. It is due by the 26th of the following month, alongside the SGK payment.

SGK: Social Security Obligations

The Sosyal Güvenlik Kurumu (SGK) administers Turkey's social security system, which covers pension, health insurance, short-term insurance (work accidents, maternity), and unemployment insurance contributions.

Premium Rates

The blended total for a standard office employee works out at approximately employer 20.5% + employee 14% = 34.5% of gross salary, though the short-term insurance rate varies by industry risk classification (lower for office-based roles, higher for construction).

A common simplification used in financial modelling is employer 15.5% + employee 14%, which reflects the base rates without the variable short-term insurance element. Use 20.5% + 14% for more accurate projections.

The SGK contributions are calculated on gross monthly salary, up to the upper limit (tavan ücret), which is adjusted periodically. Earnings above the ceiling are not subject to SGK contributions (though they remain subject to income tax).

Monthly Payroll Obligations

Turkish employers must submit the Muhtasar ve Prim Hizmet Beyannamesi monthly, declaring both income tax withholding on salaries (stopaj on wages) and SGK premiums. This consolidated return must be filed and paid by the 26th of the following month.

Payroll in Turkey is typically processed monthly. The employer must:

1. Calculate gross salary for each employee
2. Deduct employee SGK contributions (14% approx.) to arrive at the SGK-adjusted gross
3. Calculate income tax withholding on the SGK-adjusted gross using the progressive personal income tax scale
4. Deduct any other withholdings (stamp duty on the payslip, unemployment insurance employee share)
5. Pay the net salary to the employee
6. Remit employer SGK contributions, employee SGK contributions, income tax withholding, and stamp duty to the relevant authorities by the 26th

Turkish payroll is administratively intensive. Most companies engage a payroll bureau or their Mali Müşavir to handle the monthly cycle.

Deductible Expenses for Turkish Companies

Understanding which expenses are deductible when calculating Kurumlar Vergisi taxable profit is central to managing the tax liability. Turkey follows a broadly commercial approach to deductibility, but with some important restrictions.

Fully Deductible Expenses

Staff costs: All salaries, employer SGK contributions, and reasonable employment-related benefits paid to employees are deductible. This includes social aid payments within statutory limits and employer contributions to private pension schemes (BES).

Office rent: Rent paid under formal lease agreements is deductible. For payments to individual landlords, the company deducts 20% withholding tax, and the gross rent (before withholding) is still the deductible amount.

Utilities: Gas, electricity, water, and telephone costs incurred for business purposes are fully deductible.

Professional and advisory fees: Payments to accountants, lawyers, consultants, and other advisers for business purposes are deductible, whether paid to individuals (with 20% withholding applied) or to companies.

Interest on business borrowings: Interest paid on loans used for business purposes is deductible, subject to thin capitalisation rules. Where debt from related parties exceeds three times the equity of the company, interest on the excess is disallowed.

Bad debts: Specific provisions for debts that are demonstrably uncollectable are deductible. General provisions (reserves against future expected losses) are not deductible until the debt is individually written off.

Insurance premiums: Business insurance (fire, liability, professional indemnity) is deductible.

Equipment: Amortisman (Depreciation)

Capital expenditure on fixed assets is not immediately deductible but is spread over the asset's useful life through Amortisman (depreciation). Turkish tax depreciation rates are set by the Ministry of Treasury and Finance and published in communiqués.

Common depreciation rates:

Companies can use either straight-line or declining-balance methods, with declining-balance capped at twice the straight-line rate. The method chosen must be applied consistently and cannot be changed for the same asset.

R&D: 150% Super-Deduction

This is one of Turkey's most significant tax incentives for technology companies. Qualifying R&D expenditure incurred within a licensed R&D centre (Ar-Ge Merkezi) or in designated Technology Development Zones (Teknoloji Geliştirme Bölgeleri, or Technoparks) attracts a 150% deduction against taxable profit. This means that for every ₺100 of qualifying R&D spend, ₺150 is deductible.

Technology Development Zones offer additional benefits: income generated from software and intellectual property developed within the zone is exempt from corporate income tax until 31 December 2028, and researchers' salaries are exempt from income tax withholding and SGK contributions under certain conditions.

For founders building technology products in Turkey, operating within a licensed Technopark can dramatically reduce the effective tax rate on qualifying activities.

Vehicles: 70% Expense Cap

Company vehicles present a specific restriction. Only 70% of fuel, maintenance, motor tax, and insurance costs relating to company cars are deductible. The remaining 30% is permanently disallowed. Depreciation on purchased vehicles is similarly capped at 70%.

This restriction applies to passenger cars. Commercial vehicles (vans, trucks, vehicles with more than eight passenger seats) are not subject to the 70% cap.

Entertainment: 0.5% Limit

Entertainment and hospitality expenses are deductible only up to 0.5% of the company's annual net sales revenue for the year. Expenditure exceeding this limit is added back in the tax computation.

Qualifying entertainment expenses must be business-related, incurred in the course of business activities, and supported by proper documentation (e-Fatura or e-Arşiv invoices from the venue).

Foreign Exchange Losses

Foreign currency-denominated transactions generate exchange differences as the TRY/foreign currency rate moves. Unrealised foreign exchange losses (arising from period-end translation of outstanding balances) are deductible in the period they arise. Realised exchange losses on settlement are likewise deductible. Given Turkey's historic inflation and currency volatility, FX management is a material consideration for Turkish operations with foreign-currency revenues or obligations.

Non-Deductible Items

The following are specifically disallowed and must be added back to accounting profit:

• Administrative and tax penalties (vergi ziyaı cezası, usulsüzlük cezaları)
• Donations above the statutory limits (most charitable donations are capped; certain approved foundations have higher limits)
• Provisions not meeting Turkish tax requirements
• Entertainment exceeding the 0.5% cap
• 30% of vehicle expenses
• Payments to related parties exceeding arm's-length prices (transfer pricing adjustment)
• Income tax itself (Kurumlar Vergisi is not deductible against itself)

Limited Şirketi vs Anonim Şirketi: Choosing the Right Structure

Most foreign founders choose the Limited Şirketi for Turkish subsidiaries or operating entities. The Anonim Şirketi is required for certain regulated industries and for companies that intend to raise capital from multiple investors, list on Borsa Istanbul, or operate in banking, insurance, or financial services.

Comparison Table

Audit Thresholds

An independent statutory audit is mandatory for both entity types where two of the following three conditions are exceeded in two consecutive years:

• Total assets: 75,000,000 TRY
• Annual net sales revenue: 150,000,000 TRY
• Number of employees: 150

Below these thresholds, audit is optional for a Limited Şirketi and not required. A.Ş. companies are subject to additional CMB (Capital Markets Board) rules if their securities are publicly held.

Capital Requirements in Practice

The 50,000 TRY minimum for a Limited Şirketi is relatively low in absolute terms (roughly USD 1,500 at mid-2025 rates), but note that at least 25% must be paid in at the time of incorporation, with the remainder payable within two years. The TRY amounts are fixed in nominal terms; they do not adjust for inflation automatically, which means the real cost of the minimum capital requirement has fallen significantly over the years of high Turkish inflation.

Annual Corporate Tax Filing: What Is Required

The 30 April Deadline

The Kurumlar Vergisi Beyannamesi for the prior fiscal year must be filed electronically by 30 April. For the 2025 fiscal year (1 January to 31 December 2025), the filing deadline is 30 April 2026.

Payment of any remaining tax (after offsetting quarterly provisional payments) is due simultaneously with the filing. There is no separate payment deadline; tax due is payable on the filing date.

Documents and Records Required

To prepare the annual return, companies must have:

• Statutory financial statements (balance sheet and income statement) prepared under Turkish Accounting Standards
• General ledger (Yevmiye defteri, the day-book) and ledger (Büyük defter) — or their e-Defter equivalents if mandated
• Bank statements reconciling to the cash and bank balances
• Fixed asset register with depreciation calculations (Amortisman cetveli)
• Detailed reconciliation of accounting profit to taxable profit
• Documentation of any exemptions, deductions, or incentives claimed (including R&D documentation, investment incentive certificates)
• Payroll records for the year
• All original invoices (e-Fatura invoices are retained electronically)

Penalties for Late Filing or Non-Payment

GIB imposes the following penalties:

Late filing penalty (Usulsüzlük cezası): A fixed penalty applies for each month or part month of delay. Rates are revised annually. For 2025, the first-class irregularity penalty for a company failing to file on time is approximately 10,000 TRY per month, though rates change with inflation adjustments.

Late payment interest (Gecikme faizi): Interest is charged on unpaid tax from the due date. The monthly rate is set by Presidential Decree and adjusted periodically. At times of high inflation it has been as high as 3-4% per month, making late payment extremely expensive. As of 2025, the rate was approximately 3.5% per month.

Tax penalty for underpayment (Vergi Ziyaı Cezası): If tax has been underreported (rather than merely paid late), a penalty equal to 100% of the unpaid tax applies. In cases involving fraudulent intent, this rises to 300%.

Voluntary disclosure (pişmanlık) before GIB has commenced an audit reduces penalties. Companies are well-advised to file on time even if unable to pay, as the late filing and underpayment penalties compound the tax debt severely.

e-Fatura and e-Defter: Electronic Invoicing and Books

Turkey has been a global leader in mandatory electronic invoicing, having introduced the e-Fatura (e-invoice) system in 2010 and progressively expanding the scope of who must use it.

e-Fatura (Electronic Invoice)

Companies must use e-Fatura for all B2B transactions once they meet the revenue threshold or fall within a mandated sector.

Who must use e-Fatura:

• Companies with annual gross revenues exceeding 3,000,000 TRY (approximately USD 90,000 at 2025 rates) in the prior fiscal year
• Companies in certain sectors regardless of revenue: energy, mining, steel, fertilisers, tobacco, alcohol, sugar, certain textile and retail activities
• All companies registered for e-Fatura must issue and receive e-Fatura for transactions with other registered parties

e-Arşiv Fatura is a related system for issuing invoices to consumers (B2C) or to companies not registered in the e-Fatura system. e-Arşiv invoices are issued electronically and stored in GIB's central archive.

Once a company is registered for e-Fatura, all invoices issued to other e-Fatura registered parties must go through the GIB infrastructure. Paper invoices between two registered parties are invalid. The practical benefit is that the GIB pre-populates the KDV return with issued invoice data, reducing the scope for error.

e-Defter (Electronic Ledger)

Companies using e-Fatura must also maintain their statutory books electronically using the e-Defter system. The e-Defter system requires companies to:

• Maintain the Yevmiye defteri (day book / journal) and Büyük defter (general ledger) in XBRL-based electronic format
• Submit monthly packages to GIB and to the notary for electronic certification
• Retain the certified packages for statutory periods (minimum ten years for accounting records)

e-Defter has effectively replaced the physical stamping and notarisation of paper accounting books for companies within scope. The monthly submission cycle (packages due by the end of the month following the period) adds a recurring administrative task but eliminates the risk of losing physical books.

Companies not yet within the e-Fatura threshold maintain physical books (stamped by a notary at opening) and issue paper invoices or e-Arşiv invoices. Once they cross the threshold in a given year, they must register for e-Fatura from 1 July of the following year.

Transfer Pricing for Related-Party Transactions

Turkish transfer pricing rules (Örtülü Kazanç ve Örtülü Sermaye, meaning Disguised Profits and Thin Capitalisation) align broadly with the OECD Transfer Pricing Guidelines. The primary concern is ensuring that transactions between related parties are conducted on arm's-length terms.

Who Is Affected

Transfer pricing rules apply to transactions between:

• A Turkish company and its shareholders
• A Turkish company and companies it controls or is controlled by
• A Turkish company and the shareholders of its parent or subsidiary
• Any individuals or entities in a position to influence the pricing of the transaction

Related parties for transfer pricing purposes include direct shareholders holding more than 10% of shares or voting rights, but also individuals and entities with indirect influence.

Accepted Methods

Turkish law accepts the OECD methods for determining arm's-length prices:

1. Comparable Uncontrolled Price (CUP)
2. Resale Price Method
3. Cost Plus Method
4. Profit Split Method
5. Transactional Net Margin Method (TNMM)
6. Any other method justified by the taxpayer

The most appropriate method for the transaction type should be selected. GIB increasingly scrutinises intra-group service fees, management charges, and royalty payments, which are common areas for transfer pricing adjustments.

Documentation Requirements

Companies with related-party transactions above certain thresholds must prepare and retain:

• Annual transfer pricing form (included in the Kurumlar Vergisi return)
• Country-by-country reporting (for multinational groups with consolidated revenues above EUR 750 million)
• Master file and local file documentation (for transactions above defined thresholds)

GIB has audit powers to demand documentation and to substitute arm's-length prices if it determines that transactions are not priced correctly. The penalty for underreporting taxable income due to non-arm's-length pricing is 100% of the additional tax assessed.

Full Turkish Tax Compliance Calendar

Monthly Obligations

Quarterly Obligations

Annual Obligations

Key GIB Reference

All filings are submitted through the GIB's electronic portal (ebeyanname.gib.gov.tr). A tax representative (Mali Müşavir) with an active GIB authorisation is required to submit corporate returns. Companies cannot submit corporate returns directly without a registered representative.

Frequently Asked Questions

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