All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Turkey: Latest developments in the tax landscape






Turkish Finance Minister Naci Ağbal has recently announced radical messages about several topics in the Turkish taxation system that might attract taxpayers and investors. As an overall observation, Turkey is planning to reshape its taxation system, especially decreasing the overall tax burden of corporate income taxpayers. These issues are discussed in detail below.

Corporate income tax

The finance minister has announced that the corporate income tax rate (CIT) may be reduced soon to alleviate the total tax burden of corporate income taxpayers. The main purpose is to increase CIT collection and accelerate domestic and foreign investments in Turkey. In addition, the finance ministry is working on minimising the possible treasury losses due to such a decrease.

The CIT rate last time was reduced from 33% to 20% in 2006. Counter to the reduced rate, it was recorded that the collection rate of CIT was significantly increased. In addition, the finance minister has also announced that the scale of deductible expenses for small-sized enterprises may be expanded within certain conditions to shrink the volume of the grey economy.


The Turkish VAT system has generally been exposed to some concerns about its complexity. The critics claim that the collection of VAT, the VAT refund mechanism and VAT exemption structure are not efficient as much as other taxes because of its complex structure. In principle, Turkish VAT aims to tax consumption. However, VAT may also cause an additional tax burden on the producers, especially exporters.

For instance, they purchase intermediate goods with an 18% VAT, and sell final goods with an 8% VAT. In this sense, the ministry desires to relieve the VAT burden on producers with a reform plan on VAT, which aims to simplify the tax base and rates including VAT exemptions and the refund mechanism.

Excise duties

Excise duties (namely special consumption taxes) have been one of the crucial taxes among others, respectively with a share of 23% in overall tax collection, while OECD countries have a share of 7.5% on average. The finance minister declared that existing excise duty rates on the applied goods such as alcohol, tobacco products and motor vehicles are not intended to be raised anymore.

However, the share of excise duty revenues appears to stay significant in the coming years. Besides, excise duties on new goods such as drones might be imposed, based on the press conference held by the finance minister.

Tax audits

The finance ministry announced that corporate income taxpayers, which have tax debt but did not apply for restructuring of their debt when the tax restructuring programme was in force, will be visited by relevant tax authorities, and be questioned about their tax position.

Electronic monitoring system for traffic

An electronic monitoring system is used in Turkey to detect traffic rule violations and collect administrative fines for those violations. Currently, municipalities administer the system. The finance minister said that this is going to be privatised in the near future. This means that there will be business opportunities for both domestic and international investors.

Our observations

Overall, Turkey is planning to reshape its taxation system to provide the financial integration of Turkey into the global economy. This has been clearly affected by the expected corporate tax reforms in other countries.

Therefore, we believe that Turkey is on the right track by planning its future tax landscape. Otherwise, it will not be possible to catch up with the winds of tax reforms all over the world and Turkey will fall behind the other countries in the corporate tax race.

Tahsin Nalcı ( and Eren Güden (

Centrum Consulting

Tel: +90 216 504 20 66 and +90 216 504 20 66


more across site & bottom lb ros

More from across our site

This week Brazil’s former President Luiz Inacio Lula da Silva came out in support of uniting Brazil’s consumption taxes into one VAT regime, while the US Senate approved a corporate minimum tax rate.
The Dutch TP decree marks a turn in the Netherlands as the country aligns its tax policies with OECD standards over claims it is a tax haven.
Gorka Echevarria talks to reporter Siqalane Taho about how inflation, e-invoicing and technology are affecting the laser printing firm in a post-COVID world.
Tax directors have called on companies to better secure their data as they generate ever-increasing amounts of information due to greater government scrutiny.
Incoming amendments to the treaty could increase costs on non-resident Indian service providers.
Experts say the proposed minimum tax does not align with the OECD’s pillar two regime and risks other countries pulling out.
The Malawian government has targeted US gemstone miner Columbia Gem House, while Amgen has successfully consolidated two separate tax disputes with the Internal Revenue Service.
ITR's latest quarterly PDF is now live, leading on the rise of tax technology.
ITR is delighted to reveal all the shortlisted firms, teams, and practitioners for the 2022 Americas Tax Awards – winners to be announced on September 22
‘Care’ is the operative word as HMRC seeks to clamp down on transfer pricing breaches next year.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree