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How are taxpayers’ liaison offices opened in Turkey taxed?

Liaison offices are established and operated in accordance with the regulations in the Foreign Capital Framework Decree and the regulations in Communiqué on Foreign Capital Framework Decree issued on the basis of this Decree. According to current legislation, liaison offices cannot carry out activities in Turkey and cannot earn or transfer profits and must cover all costs in foreign currencies.

The place of liaison offices in the context of the above definitions is accepted as its workplace and the authorized person carrying out the works are accepted as permanent representatives, since trading is prohibited by law for the liaison offices in Turkey.

Within the framework of these explanations, if the liaison office operates within the framework of the relevant legislation, in other words, it does not engage in commercial and other income-generating activities, the followings are not required;

– Constituting corporate tax liability,

– Notification for starting to work,

– Submitting a corporate tax return,

– Bookkeeping in accordance with the provisions of the Tax Procedure Law.

In the event that the office carries out a commercial activity, it is clear that all these obligations will be fulfilled accordingly.

On the other hand, since the liaison offices are responsible for stoppage over the workers’ wages and workplace rental payments, these offices are obliged in terms of withholding.


Source: GİB
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.


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Are the interests paid to foreign companies and the amounts paid to the group company subject to a tax deduction in return for credit guarantee?

Interest payments made to foreign companies and commission expenses paid in return for guarantor service are considered as interest on receivables within the framework of financing service and 10%of tax is deducted in accordance with the decision of the Council of Ministers numbered 2009/14593 according to the paragraph (1), subparagraph (ç) of Article 30 of the Corporate Tax Law No.5520.

Moreover, financing services among group companies can be subject to criticism in terms of disguised income or can be the subject of hidden capital.

In accordance with the decision of Council of Ministers No. 2009/14593, 0% of tax deduction is applied to the interest paid against loans used from banks and financial institutions abroad.


Source: GİB
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.


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Culture spending in Turkey increased by 23.4% in 2018

Cultural Economy, 2018 in Turkey


Source: TUIK
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.


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What is the status of the payments made for the purchase of services such as finding customers and marketing from limited taxpayer corporations in relation to goods and services exported abroad?

If the activity of the company serving abroad in relation to the goods and services exported abroad consists of finding customers and receiving commissions on the price of goods sold, this business will be evaluated as a commercial activity and no tax deduction will be made in accordance with Article 30 of the Corporate Tax Law No. 5520.

However, in the event of overseas market research, advertising of products, marketing and management services and exceeding brokerage service,  these services will be considered as self-employment services and 20% of corporate tax deduction will be required, in accordance with Article 30/1-b of the Corporate Tax Law, pursuant to the Decision of the Council of Ministers No. 2009/14593.

On the other hand, the provisions of the double taxation agreements concerning self-employment activities will be taken into consideration first.


Source: GİB
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.


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Are the incomes earning from the congress organized in Turkey by the limited taxpayer organizations extrinsically subjected to the tax?

It is required that limited taxpayer organizations, which do not have any workplace or permanent representative in Turkey and do not earn from this workplace or permanent representative, must be taxed by considering as occasional business income earned in Turkey, not as business income earned from an international congress held in Turkey.

Accordingly, in the event that the taxable income of foreign organizations subject to limited liability consists of occasional business incomes, these incomes must be notified by these organizations with a special declaration within fifteen days from the date of earning income.


Source: GİB
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.


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Will tax deduction be made for the payments rendered to purchase “domain name” from a foreign company?

The “domain name” purchased from foreign companies on the internet is considered as intangible rights and a 20% corporate tax deduction is required in accordance with the second paragraph of Article 30 of the Corporate Tax Law No.5520, pursuant to the Decree No. 2009/14593 of the Council of Ministers.

However, if there is an agreement to prevent double taxation between Turkey and the country where the firm is located abroad and a lower rate is set forth in these agreements, this rate will be taken into consideration.


Source: GİB
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.


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How will the payments made to the taxpayers due to oil exploration activities be taxed, in Turkey?

The services to be provided by the foreign taxpayer institution regarding oil exploration activities are within the scope of self-employment activity and the payments made in return for the expenses shall be accepted as self-employment payment to the limited taxpayer.

Within this framework, followings are realized;

– If the activities are carrying out within the scope of commercial activities by having a permanent workplace or permanent representative in Turkey, corporation tax will not be deducted from payments and the income will be taxed under the commercial income provisions according to our internal legislation.

– 5% corporate tax must be deducted from all payments made if the activities are carried out without having a workplace or permanent representative in Turkey or without the connection with commercial activity carried out in those workplaces even if they have a workplace or permanent representative in Turkey, pursuant to Article 30/1-b of the Corporate Tax Law and in accordance with the Decisions of the Council of Ministers numbered 2009/14593.

On the other hand, if there is an agreement on prevention of double taxation between the country where the limited taxpayer served as self-employed is located and Turkey, the provisions of this agreement will be considered for the tax deduction.


Source: GİB
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.


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How are the real estate sale incomes of foreign companies earning in Turkey taxed?

The sale income of real estate properties bought in Turkey by foreign companies having relevant workplace or permanent representative in Turkey in accordance with the provisions of Tax Procedure Law, is required to be taxed as “commercial earning”.

The sale income of real estate properties bought in Turkey by foreign companies which do not have any relevant workplace or permanent representative in Turkey in accordance with the provisions of Tax Procedure Law, as of the day of acquisition within 5 years, is required to be taxed as “other income and earnings”.

On the other hand,  foreign company or the person acting in Turkey must submit the income with declaration to tax offices specified in Article 101 of Income Tax Law within 15 days as of the day of acquisition pursuant to Article 22 of Corporate Tax Law, if the taxable income of a limited taxpayer foreign company consists of this income. Moreover, the exception for income under Article 80 of the Income Tax Law must not be applied to the aforementioned incomes of the limited taxpayer institutions.


Source: GİB
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.


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What is the status of the payments made for placing an advertisement on websites created abroad by foreign companies? (In Turkey)

Payments made for the purchase of advertising publishing services for the purpose of introducing companies over the internet and marketing purposes, are the payments for trade and foreign companies do not have a workplace or permanent representative in Turkey, these are not taxed in Turkey. Consequently, corporate tax will not be deducted as well.


Source: GİB
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.


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If a company is promoted abroad through foreign advertising companies, will tax be deducted on the payments to be made to the advertising company? (In Turkey)

In the event that advertising services are within the scope of self-employed activities such as advertisement design, implementation, strategic planning, media planning and media strategy, corporate tax must be deducted from the payments made to organizations abroad in return for these services, rather than publishing the advertisement and advertising services taken for the purpose of promoting a company abroad directly with announcement and advertising.

If there is an agreement on the prevention of double taxation between the Republic of Turkey and country to which payment made (if any), the issues must be evaluated in terms of the provisions of the agreement.

Moreover, if the company has commercial film prepared to foreign company to be used in Turkey, tax will be deducted from the payments in the same scope.


Source: GİB
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.


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