There are many tax types in Turkey, which are separated from each other by laws. Different taxpayers are responsible for each tax types. In particular, some of these are tax types that everyone should know and obliged to pay. So what are these tax types. In this article, we will mention about Turkey Tax system and tax types in Turkey.
Indirect Tax
Our first tax type is indirect tax. These are the taxes paid to the government by citizens living in Turkey without intermediaries. The tax can be taken on income or expenditures. Taxes on expenditures are defined as “indirect tax” and taxes on income are defined as “direct taxes”.
In Turkey, the person who pays the tax and the people who are responsible to the tax office are separated from each other. Value-added tax (VAT), special consumption tax (SCT), customs taxes, bank and insurance taxes are included in indirect taxes. They are taken on expenditures rather than earnings or income. It is difficult to personalize the tax. In other words, income level, marital status and similar personal characteristics of the taxpayer cannot be taken into account in indirect taxes.
Direct Tax
These are taxes deducted from the income or earnings of individuals. Income tax is the best example of direct taxes. The calculation of these taxes is more systematic and fair than indirect taxes.
Why is the distribution of taxes between direct and indirect taxes important? The most important benefit of this classification is that it allows it to be evaluated collectively in terms of tax justice. It is generally accepted that direct taxes are more equitable than indirect taxes.
The reason for this is; direct taxes are more likely to be taxed than the economic power of the taxpayer. However, since the taxpayer of indirect taxes is anonymous, it is not possible to personalize these taxes.
On the other hand, it should not be forgotten that direct and indirect tax weights are only a leading indicator in terms of tax justice. In direct taxation, the fact that working incomes are under a lower tax burden than capital incomes is very important in ensuring tax justice.
Tax Types in Turkey
According to the laws, the money that the state collects from the citizens by adding directly to the prices of the services is called tax. Although there are quite a number of tax types in the tax list of the Revenue Administration, when the main tax type is mentioned, you will see 7 taxes. These are;
- Income tax
- Corporation tax
- Value Added Tax (VAT)
- Special Consumption Tax (SCT)
- Motor Vehicles Tax (MTV)
- Stamp duty
- Property tax
What is the Income Tax?
People who are processed to income tax are natural persons. They are non-institutionalized persons who can legally acquire rights and exercise authority. The definition of this tax type has been defined as: “Income is the net amount of earnings earned by a natural person in a calendar year.”
Elements of Income
You can see the income that may be subject to Income Tax as listed in the law below:
- Commercial gains,
- Agricultural earnings,
- Fees,
- Self-employment earnings,
- Real estate capital gains,
- Other earnings and revenues.
Who are the income taxpayers in Turkey?
Full Taxpayers
- Those residing in Turkey
- Turkish citizens who are affiliated with official offices and establishments in Turkey and reside in foreign countries due to the works of the aforementioned departments, institutions, organizations, and undertakings
- Those who reside in Turkey for more than 6 months without any interruption during the calendar year.
Taxpayers who have these characteristics are subject to tax on all of their earnings in Turkey or outside of Turkey.
Limited Taxpayers
Real persons who do not reside in Turkey are considered limited taxpayers. These persons are subjected to tax only on their earnings in Turkey.
Corporate Tax in Turkey
Corporation tax is a type of tax levied on corporate earnings. It is calculated over the net corporate income obtained within a calendar year and paid to the government. Institutions subject to this tax type are as follows:
- Capital companies
- Cooperatives
- Financial Public institutions
- Economic enterprises belonging to associations or foundations
- Business partnerships
Corporate tax is paid to the government according to 20% rate of corporate income.
Value Added Tax in Turkey
Value added tax (VAT), is the tax paid by the person who buys the goods or services. Value added tax is an indirect tax type. The person who buys the good or service pays a certain fee to the person who sells it. Certain deductions are made from this fee. This deduction is called VAT. VAT rates determined by the state in Turkey are of three types: 1%, 8%, and 18%.
Who are the Value Added Taxpayers?
According to Article 8 of the Value Added Tax Law, VAT taxpayers:
- Those who perform these works in case of delivery of goods and performance of services
- Those who import goods and services
- Those who are subject to customs or transit procedures in transit transportation
- PTT General Directorate of Operations and radio and television institutions
- Those who organize all kinds of luck and fortune games
- Those who rent the goods and rights specified in article 70 of the Income Tax Law
Special Consumption Tax in Turkey
Special consumption tax is a type of tax that is proportionally charged on certain goods or products. SCT is applied for luxury consumption. It also applied some consumption that has negative effects on health or the environment. In this respect, it is a type of tax that aims to provide social benefits.
On Which Products is the SCT Applied in Turkey?
- Luxury products such as fur, luxury cars or Jewellery
- Products that may threaten human health
- It is applied in products that are harmful to the environment such as gasoline, coal or fossil waste.
What does SCT exemption mean?
The excise duty taken from goods or services that are considered as luxury brings some exceptions in the law. According to the Turkish Tax Law, companies that carry commercial cargo by minibus, taxi, bus, minibus, tow truck, pickup, truck and companies and individuals that carry passengers for the city benefit from this exception. Apart from these, there are military, diplomatic, import, export and Turkish Aeronautical Association exceptions.
Stamp Duty in Turkey
It is a type of tax taken from papers that document all kinds of legal and official transactions between individuals, institutions or between individuals and institutions. In order for the stamp tax to be collected, the document must be presentable or be signed, or it must contain phrases that replace the signature.
Who are the Stamp Tax Payers?
Persons who sign papers that are within the scope of the stamp tax law and which have an official character are liable to stamp tax. If one of the signatories is an official organization or in an exempt situation, the taxpayer becomes the other party.
Motor Vehicles Tax in Turkey
Motor vehicle tax is a type of tax that must be paid twice a year in Turkey. This tax is collected from motor vehicles registered in traffic branches in accordance with the conditions of the Highway Traffic Law. In addition to land vehicles, this type of tax is valid for helicopters, airplanes, and motor sea vehicles. The payments are determined as two terms per year, in January and July. Motor vehicle tax begins to be paid with the start of the registration of the vehicles. This tax type continues to be paid until the registry is deleted.
Property Tax in Turkey
Our last tax type is property tax. The type of tax levied on immovable such as land, building, or workplace is called property tax. It is a permanent type of tax. It is divided into two as land and building. Taxpayers can pay the property tax in one transaction, or they can pay in two installments.
The real estate taxpayer is the person who owns the title deed of the real estate. Therefore, property tax is a direct tax type. Unemployed, disabled, housewives, and retirees depending on some conditions are exempt from property tax.
