Can I Claim Banka Faizleri ve Finansman Giderleri (Bank Interest and Financing Costs) as a Business Expense in Turkey?
Partially deductible. Interest on business loans from banks is generally deductible, but Turkey's thin capitalisation rules (Ortü Sermaye) restrict deductibility of interest on related-party loans where debt exceeds equity 3:1. A 10% additional restriction applies to total financial costs (including exchange losses) where they exceed 10% of pre-financing taxable profit under the Finansman Gider Kisitlamasi rule.
What GIB (Gelir Idaresi Baskanligi) says
Kurumlar Vergisi Kanunu Article 11/1-i (Ortü Sermaye — thin capitalisation, 3:1 debt/equity ratio for related-party loans). KVK Article 11/1-j (Finansman Gider Kısıtlaması — financial expense restriction, 10% disallowance where total financing costs > 10% of pre-tax, pre-financing profit). Bank loans from unrelated lenders at arm's length are not subject to thin-cap.
When you can claim
- Interest on bank loans (Kredi Faizi) from Turkish or foreign banks at arm's length — fully deductible unless the FGK restriction applies
- Bank charges (Banka Masrafları), wire transfer fees, account maintenance fees
- Interest on leasing (Finansal Kiralama Faizi) — deductible over the lease term
- Letters of credit and guarantee fees for commercial transactions
- Foreign currency loan interest, net of exchange gains/losses on the principal
When you cannot claim
- Interest on related-party loans where total related-party debt exceeds 3x the company's equity (Ortü Sermaye) — the excess interest is disallowed and reclassified as a deemed dividend
- Under the FGK rule: 10% of total financial expenses (interest + exchange losses + leasing finance charges) is non-deductible where those total costs exceed 10% of EBITDA-equivalent profit
- Interest on non-business borrowings (personal loans taken out by the owner-director and on-lent to the company without proper documentation)
Good to know
Pro tip: The Finansman Gider Kısıtlaması (FGK) rule introduced in 2021 catches many companies by surprise, particularly in Turkey's high-inflation, high-interest-rate environment where bank loan rates often run at 30-50%. Model the FGK impact before year-end and consider early repayment if the disallowance is material. Related-party loans must always be documented at arm's length with a formal loan agreement and at market interest rates to avoid the Ortü Sermaye reclassification.
Stop guessing what you can claim in Turkey
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