Double Tax Treaties (DTTs)
"How do Türkiye’s double tax treaties benefit foreign investors?"
Quick Answer
Türkiye has an extensive network of Double Tax Treaties (DTTs), which may limit withholding tax rates for specific types of income, allocate taxing rights between states, and provide mechanisms to eliminate double taxation through exemption or tax credit methods, subject to the relevant treaty.
Turkish Tax Framework
Double Tax Treaties in Türkiye, once duly ratified and published, form part of domestic law and are applied together with Turkish tax legislation to determine taxing rights, treaty relief, and limitations on taxation for cross-border income. Understanding tax obligations is crucial for business planning and compliance.
Key Points to Remember
- Corporate income tax rates may vary by tax year and sector and should be verified for the relevant fiscal period before any tax planning or structuring decisions.
- The standard VAT rate in Türkiye is generally 20%, with reduced rates applicable to certain goods and services, subject to legislative changes and transaction-specific conditions.
- Double tax treaties may reduce withholding tax rates
- Tax incentives are available for qualifying investments
Tax Planning Considerations
Effective tax planning requires understanding both domestic Turkish tax law and applicable international tax treaties. Türkiye’s transfer pricing rules are largely aligned with OECD principles and require contemporaneous documentation and a proper comparability analysis.
Businesses should work with qualified tax advisors to optimize their tax position while ensuring full compliance with Turkish tax authorities' requirements.
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