Withholding Tax
"What withholding taxes apply to payments made from Turkey?"
Quick Answer
Withholding tax commonly applies to dividends (generally 15% for non-residents), royalties (generally 20%), and certain interest payments (often 10% for non-residents, but rates may vary by instrument). Whether service payments trigger withholding depends on the type of service, where it is performed, recipient status, and treaty position. Double tax treaties may reduce rates subject to conditions (e.g., certificate of residence).
Turkish Tax Framework
Withholding Tax in Turkey is governed by various tax laws including Corporate Tax Law, VAT Law, and special legislation. Understanding tax obligations is crucial for business planning and compliance.
Key Points to Remember
- Corporate income tax rate is generally 25% (30% for financial sector companies)
- Standard VAT rate is 20%, with reduced rates for certain goods
- 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. Transfer pricing rules follow OECD guidelines and require proper documentation.
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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