Turkey have two types of income tax. These are ‘income tax’ and ‘corporation tax’.

The main differences between these two taxes are
For  income tax, a liable person is an individual while in corporation tax, liability lies with the corporation itself.

1. Income Tax:

Currently income tax is calculated based on the amount of the income. The tax percentage varies between the rate of 15% up to 30%. You may see the detailed chart below:

Are you liable for paying the income tax?

      You might be earning in Turkey but living abroad, or not earning anything in Turkey but live there; these do not necessarily mean that you are supposed to be a taxpayer in Turkey.

In Turkish Tax Law, taxpayers are divided into two types:

1. a) Full Taxpayer b) Limited Taxpayer
2. a) Full Taxpayers: Full taxpayers are responsible for paying the tax for every income they earn in one calendar year.
3. The people who are resident in Turkey for 6 months or more, in a calendar year, must pay taxes for all the income they earn in a year.
4. The people who work in a firm or company which is based in Turkey and had to go overseas for work necessities are also liable to pay taxes for every income they get. But if a person pays taxes in a foreign country as well, these payments are going to be reduced from the amount of tax which is supposed to be paid in Turkey.
5. b) Limited Taxpayers:
6. If someone is resident in Turkey due to being treated, imprisoned or conviction, they are not obligated to pay taxes for the income which is earned in Turkey.
   II. The scholars, scientists, experts, officials, media and press correspondents who come to Turkey for a limited time and specified tasks are only responsible for paying the tax if they are earning in Turkey.
7. Corporate Tax: The subject of corporate tax is basically taxes on corporate earnings. In other words, they are taxes on the net profits that legal entities earn in a calendar year.
   The Corporate Tax Law includes some exceptions when it comes to identifying which corporates are liable for this tax. Current rate is announced as 22% for the year of 2018.Corporate taxpayers are also divided to two, which are again named as:
   a) Full Taxpayers b) Limited Taxpayer

   a. Full Corporate Taxpayers: Institutions whose legal or work centres are based in Turkey are liable for all the income they receive, even if they receive most of their income from foreign countries.
        b. Limited Corporate Taxpayers: Institutions whose legal or work centres are not based in Turkey are liable for only the income they receive from Turkey.

For more information and questions please email b.orhan@londonlegalint.co.uk Mrs Burcu Orhan Holmgren is the senior partner in London Legal International and is in charge of our Turkish Civil Law division.

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The new regulation also indicates the following issues:

Health institutions and intermediary institutions must establish an International Tourism Health Unit in order to accept, register, diagnose, treat, bill, discharge, translate and coordinate related operations.

A doctor should meet certain criteria to be appointed as manager of each International Tourism Health Unit.

Each of the International Tourism Health Unit should have at least two employees who are able to speak English.

Only authorized health or intermediary institutions can advertise and offer information about these mentioned services.

The Regulation on International Health Tourism and Tourist’s Health was entered into force on 13 July 2017.

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The Minister says that if a foreign person or entity (company etc.) purchases a property from Turkish contraction companies VAT exemption will be applied hence foreigners will not be required to pay VAT. The Minister further stated that the VAT exemption will be applicable to Turkish citizens who are resident in foreign countries as well.

With the change of relevant legislation, the Minister expects the exemption to provide growth in construction sector and economy.

If you are going to purchase a property in Turkey, please contact our team to find out how you could benefit from VAT exemption.

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Based on the above, in the context of protection of consumer and effective as of 1 January 2017, the relevant legislation “Protection of the Consumer Act” is imposing higher fines for certain violations.

Particularly, companies which use unfair terms in consumer agreements; fail to comply with laws of direct sales agreements and make misleading representation and/or advertising will be subject to a higher fine per violation/per agreement.

In this regard, companies are recommended to comply with current legislation in order to avoid facing financial sanctions. If you require assistance in Turkish company law to determine whether your company is in compliance with Turkish laws, please contact our team.

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It should be noted that the Law only refers to the courts of a foreign jurisdiction and does not require any reference to specific courts in such jurisdiction.

However, recent rulings of the Turkish Supreme Court provide that when choosing foreign courts to have jurisdiction to settle disputes arising out of an agreement, the specific court in the relevant jurisdiction must be precisely referred to, rather than a general reference to the courts of such jurisdiction (e.g., “English courts”) as such a reference would be regarded as null and void. In this regard, Turkish Supreme Court states that the jurisdiction clause should not be considered by the Turkish courts unless the reference is made to a specific foreign court.

Please be informed that Turkish Supreme Court’s rulings are not binding for the courts of first instance in Turkey however the Courts tend to comply with the Supreme Court’s rulings therefore should the parties fail to specify the foreign Court he Turkish Court may decide that they have jurisdiction to hear the dispute.

If you need any assistance with Turkish law and disputes that might arise from contracts, please contact our team.

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As per the Circular, Turkish public institutions and organisations are encouraged to consider arbitration under the ISTAC Arbitration and Mediation Rules which have been drafted by taking into consideration all the modern and frequently used international arbitration and mediation rules and as a possible dispute resolution mechanism in their domestic and cross border transactions.

It should be noted that the Prime Minister’s recommendation is not binding however it is expected for the public bodies to comply and use ISTAC for arbitral matters. Hence we are in the opinion that non-governmental bodies and private organisations will be using ISTAC more in their contracts as well, as opposed to domestic litigation.

ISTAC is an independent arbitration institution and is competent to hear disputes in both foreign and domestic nature providing investors, businesses and companies especially from the Gulf, Middle East, Near East and North Africa a cost and time effective way to settle their disputes in an impartial, flexible and confidential manner in international standards.

To view ISTAC’s website please click here.

https://istac.org.tr/

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