1Taxable income

Corporate tax is levied on the income and earnings derived by corporations and corporate bodies. The income elements are the same as those in the Personal Income Tax Law — the difference is who earns them.

The Corporate Income Tax (CIT) Law sets the rules applicable to income arising from the activities of corporations and corporate bodies, whereas the Personal Income Tax (PIT) Law deals with income derived by individuals. The taxpayers named by the CIT Law are:

• Capital companies and similar foreign companies — joint stock (A.Ş.), limited (Ltd. Şti.) and partnerships limited by shares
• Cooperatives
• Public enterprises
• Enterprises owned by foundations, societies and associations
• Joint ventures

2Tax liability

A legal entity whose registered head office or business head office is situated in Türkiye is taxed on its worldwide income — full (unlimited) liability. Entities with neither are taxed only on income sourced in Türkiye — limited liability.

Two criteria are specified precisely because either alone would leave gaps. The registered head office is the office stated in the laws governing the entity’s establishment or in its articles of association, so it is rarely difficult to locate. The business head office — defined as the centre where business transactions are actually managed — is a question of fact, and in some cases considerably harder to determine.

3Determination of net taxable income

The PIT Law provisions on determining business profit apply to corporate income as well. Net corporate income is, in essence, the difference between the net worth of assets at the beginning and at the end of the fiscal year. Beyond the expenses listed in Article 40 of the PIT Law, corporations may also deduct the following Art. 8:

• Expenses for the issuance of securities
• Foundation and organisation expenses
• Expenses of the General Assembly, and of merger, transfer, spin-off, dissolution and winding up
• The profit share of a partner in a commendam with issued capital shares who carries unlimited liability
• Profit shares paid by participation banks on participation accounts
• For insurance and reinsurance companies, technical reserves required for insurance contracts still valid at the inventory date

Notional interest on cash capital increases

Capital companies outside banking, finance and insurance may deduct 50% of notional interest computed on cash capital increases registered with the trade registry — 75% where the cash is sourced from abroad — using the weighted average commercial loan interest rate announced by the Central Bank. Since 2022 the deduction is capped at five accounting periods from the year the increase is registered Law 7417.

Disallowed expenses

4Deductions from the return

The following are deducted from corporate earnings in the order shown, provided each is separately indicated on the tax return Art. 10:

• R&D and design deduction — 100% of research and development expenditure incurred within the enterprise in the search for new technology and knowledge, now principally governed by Law No. 5746
• Sponsorship — the full amount for amateur sport branches, 50% for professional branches
• Donations and aid — up to 5% of the year’s corporate earnings, where made against a receipt to public administrations under the central or a special budget, special provincial administrations, municipalities and villages, foundations granted tax exemption, associations working in the public interest, and institutions engaged in scientific research and development
• Social facilities — the full amount of expenditure on constructing schools, medical facilities, student hostels, childcare centres of at least 100 beds, orphanages, retirement homes and rehabilitation centres, together with donations for their construction and for the continuation of their activities
• Culture and heritage — 100% of expenditure and donations made against a receipt for activities carried out by those institutions or supported by the Ministry of Culture and Tourism for the promotion, development and preservation of cultural, artistic and historical values
• Disaster relief — all cash and in-kind donations made against a receipt to aid campaigns launched by decision following a natural disaster
• Red Crescent and Green Crescent — all cash donations made against a receipt, excluding their economic enterprises
• Venture capital fund — the amount set aside as a venture capital investment fund, up to 10% of the declared income and 20% of equity
• Exported services — 100% of the earnings from architecture, engineering, design, software, medical reporting, record keeping, call centre, product testing, certification, data storage, processing and analysis services rendered in Türkiye and used exclusively abroad, and from education and health services provided to non-residents under ministry supervision. Invoices must be issued in the name of the customer abroad, and the earnings must be remitted to Türkiye by the return filing date Decision 11257 — 80% → 100%
• Transit trade — 95% of the earnings from goods bought abroad and sold abroad without entering Türkiye, where both buyer and seller are outside Türkiye and the earnings are remitted by the filing date. 100% for participants of the Istanbul Finance Centre and of industrial zones designated by the President Law 7582 — raised from 50%
• Qualified Service Centres — 95% of foreign-sourced earnings, or 100% in the Istanbul Finance Centre and designated zones, for up to twenty accounting periods from commencement, subject to remittance by the filing date Law 7582 — new
• Protected workplace discount — 100% of the annual gross wages of mentally or psychologically disabled employees in protected workplaces, for a maximum of five years per employee and capped at 150% of the annual gross minimum wage per employee

5Exemptions and exceptions

Exemptions applying to categories of income are set out in Article 5; those applying to particular entities are in Article 4.

Participation income

Exempt entities Art. 4

• Domestic, national and international exhibitions and fairs opened by public administrations and establishments with the permission of local authorities
• Retirement and aid funds and social security institutions established under law
• Schools, workshops, nurseries, orphanages and similar establishments operated by public administrations, together with a range of scientific, cultural and animal-breeding institutions named in the Article

6Deduction of losses

Losses may be deducted in determining the corporate tax base, provided the amount for each year is shown separately on the return Art. 9:

• Losses shown on returns of previous years, carried forward for no more than five years. There is no carry-back.
• Losses from activities abroad, carried forward for no more than five years and excluding those relating to earnings exempt from corporate tax in Türkiye. These are deductible only if the tax base — including the loss — declared under the tax laws of the country where the activity took place has been reported on by a duly authorised audit firm of that country, and the original report together with a translated copy has been submitted to the relevant tax office in Türkiye.

7Minimum taxation

Two minimum tax regimes now sit above the ordinary computation. Both were introduced by Law No. 7524 of July 2024 and both operate as a floor: the corporation calculates its liability twice and pays the higher figure.

Domestic minimum corporate tax

For accounting periods beginning on or after 1 January 2025, corporate tax may not be less than 10% of corporate income before exemptions and deductions Art. 32/C. The floor is computed at each provisional tax period as well as on the annual return.

Corporations are outside the regime for the first three accounting periods from the period in which they commence operations.

Global minimum tax

Multinational groups with consolidated revenue of EUR 750 million or more in at least two of the four preceding periods fall within Türkiye’s Pillar Two rules, at an effective rate of 15% per jurisdiction. The income inclusion rule applies from accounting periods beginning in 2024; the qualified domestic minimum top-up tax and the undertaxed profits rule apply from 2025.

8Returns and deadlines

Corporate tax is assessed on the base declared by the taxpayer. In principle a taxpayer files a single return covering all of its business places and branches, even where those branches keep their own accounts and hold allocated capital. The taxable period is the calendar year, unless a special accounting period has been authorised.

Provisional tax is calculated at the corporate rate on quarterly results and offset against the corporate tax computed on the annual return. Employers with ten or fewer employees may, on notifying their tax office, file the withholding return quarterly rather than monthly.

9Tax rates

The rate is set by Article 32. It stood at 20% from 2006 to 2017, rose to 22% for 2018–2020, and has been 25% since 2021.

The reductions are applied to the portion of the base attributable to the qualifying earnings, not to the whole base, and the export and manufacturing reductions may not be combined on the same earnings.