Understanding the Differences Between Income Tax and Corporate Tax in Türkiye (2024-2025)

For international entrepreneurs looking to do business in Türkiye, understanding the differences between income tax (gelir vergisi) and corporate tax (kurumlar vergisi) is essential. This knowledge will help businesses ensure compliance with tax regulations and optimize their financial planning. Below are key differences and updates for the 2024-2025 period.

Tax Subject and Taxpayer

• Income Tax: Income tax is levied on individuals’ earnings. Taxpayers are usually individuals or self-employed professionals.
• Corporate Tax: Corporate tax applies to legal entities such as companies, cooperatives, and associations. Taxpayers in this category are entities that have legal corporate status. Sole proprietorships are not subject to corporate tax.

Tax Rates

• Income Tax: The income tax rate varies based on a progressive scale and is generally applicable to individual earnings.
• Corporate Tax: For 2024 and 2025, the corporate tax rate has been set at 25%. In some cases, especially in specific sectors, this rate may increase to 30%. Additionally, strategic sectors or incentivized investments may be subject to different tax rates.

Minimum Tax Regulations

New minimum tax regulations will take effect from 2025, impacting domestic and global corporate taxation.

Domestic Minimum Corporate Tax

• Ensures that companies pay tax on at least 10% of their commercial profits.
• If the calculated corporate tax amount remains below the 10% threshold, the difference will be paid as additional tax.
• Newly established companies will be exempt from this tax for the first three fiscal periods.

Global Minimum Corporate Tax

• Developed under G20 and OECD’s BEPS Project, Türkiye applies this regulation at a 15% rate.
• Multinational enterprises with annual revenues of €750 million or more will be subject to this tax.
• Companies with an effective tax rate below 15% will face additional taxation in the country where their parent company is located.

Filing and Payment

• Corporate Tax: The corporate tax return must be submitted between the beginning and end of the fourth month following the closing of the fiscal year (typically in April). Payments must also be completed within the same month.
• E-filing is available, and payments can be made through authorized banks.

International Practices

The global minimum corporate tax aims to ensure that multinational companies pay at least 15% tax in each country where they operate. Governments will calculate the effective tax rates and, if necessary, require additional payments to meet the 15% threshold. The purpose is to prevent companies from shifting profits to low-tax jurisdictions.

These regulations will help international entrepreneurs understand the differences between corporate and income tax in Türkiye and comply with their tax obligations efficiently in 2024-2025.