TAXATION LAW

• Income tax law in Turkey

• Inheritance law in Turkey

• Gift tax law in Turkey

• Property transfer tax law in Turkey

• Land tax law in Turkey

• Value added tax law in Turkey

• Corporation tax law in Turkey
  
  

Everyone according to his or her financial capacity is required to pay taxes to meet public expenditures. Taxes and other finacial obligations are regulated by law (art 73) of the constitution.

Incomes of persons are subject to income tax. Foreigners whose residence is in Turkey or who live in Turkey for more than six consecutive months of the calendar year are also subject to income tax. However, businessmen, scholars, scientists, experts, officials, journalists, and other such persons who come to Turkey for a specific and temporary job are not considered to have settled in Turkey even if they stay longer than six months.Incomes which are subject to income tax are as follows; commercial incomes, agricultural incomes, incomes earned from self-employment, wages, incomes earned from real estate, and incomes derived from bank interest or bonds. Income earned from interest on bank deposits by persons who are not regarded as having settled in Turkey, however, is not subject to tax.The following point should he noted with regard to income tax: The Ministry of Finance annually sets a limit known as the minimum standard of living, and taxpayers may not declare an income that is below this limit. In other words, every taxpayer is assumed to have earned at least this minimum. An employer is responsible for preparing tax declarations concerning personnel who work on a monthly salary and for making tax deduction each month. Diplomatic missions, however, are not required to do this. Instead, Turkish employees of diplomatic missions who receive their salaries directly from their employers are required, according to article 95 of the Income Tax Law no. 193 of 31 December 1960, to make a declaration of income to the tax office and to pay their taxes themselves.


Inheritance law in Turkey

Goods and valuables which are transferred to Turkish citizens as gifts (donations) or inheritance either in Turkey or abroad are subject to the inheritance and Property Transfer Tax. According to Law no. 7338 of 8 June 1959, nonresident aliens who acquire as inheritance or gifts property owned abroad by a Turkish citizen are not subject to this law. A resident foreigner, however, is subject to the law if he inherits property in Turkey.

A gift is money, goods, real estate, or a privilege, or any combination of these which a person or legal entity presents to another person or legal entity without any payment in return. Realization of a gift is contingent upon the receiver's accepting it. Legal competence to make a gift depends upon the donor's possessing the power of discernment. A gift may also he contingent upon the donor's death. A gift of movable property is realized by means of delivery in person of the object to be given. The gift of a piece of real estate or of a privilege connected with an immovable property is made only by being recorded in the title deed register. Promise of a gift must be made in writing. If the promise concerns a piece of real estate or rights over an immovable property, it must be executed according to official form. Persons residing abroad may make gifts of the real estate they own in Turkey only to their next of kin who are residents of Turkey. Charitable donations to nonprofit organizations fall outside these provisions. Gifts made to charitable foundations, associations and similar non-profit organizations must he accepted by the authorized bodies of these organizations. Gifts made to such organizations may he either conditional or unconditional. If a gift of movable property is made to such an organization from abroad, exemption of the goods from Turkish customs is contingent on permission of the Ministry of Finance. Gifts presented to organizations and individuals other than non-profit organizations are subject to tax under the provisions of the Inheritance and Property Transfer Tax.

Goods and valuables which are transferred to Turkish citizens as gifts (donations) or inheritance either in Turkey or abroad are subject to the inheritance and Property Transfer Tax. According to Law no. 7338 of 8 June 1959, nonresident aliens who acquire as inheritance or gifts property owned abroad by a Turkish citizen are not subject to this law. A resident foreigner, however, is subject to the law if he inherits property in Turkey.

Owners of land and lots within the borders of Turkey will pay an annual tax on the value of such property. Land outside the limits of municipalities is called arazi and lots inside municipal limits are called arsa. Owners of either land or lots will be required to make a declaration to the tax office generally every five years. Tax declarations for land within municipal boundaries are made to the municipality and those for land outside such boundaries to the appropriate village headman. Lots owned by foreign states for the purpose of construction of consulates, embassies, or ambassadors' residences, and lots owned by international organizations are exempt from this tax. Exemption is contingent upon the existence of a reciprocal agreement between Turkey and the foreign country in question. Even under such circumstances, diplomatic missions are required to make a tax declaration to the tax department in the related agency. This issue is governed by Law no.1319 of 29 July 1970.

All deliveries of goods and services carried out within the framework of commercial industrial and agricultural activities or self-employment in Turkey are subject to value added tax. Under article 15 of Law no. 3065 of 25 October 1984, deliveries of goods and services to diplomatic missions and their members in Turkey are exempt from this tax according to the principles of reciprocity. In actual practice, however, the principles governing such exemptions are determined by the Ministry of Finance

Corporation tax law in Turkey

Finacial activities of capital corporations, associations and charitable foundations are subject to Corporation Tax Law No. 5422 of 3 June 1949. Fiscal activities of foreign states and foriegn public agencies or opeartions connected them are also subject to Corporation Tax. From the legal standpoint, whether these organizations are non-profit or not is irrelevant. Furthermore, if the central office of a foreign commercial enterprise is not located in Turkey, then only that income which the enterprise earns in Turkey is subject to the tax.