Turkey Corporate Tax Guide

Turkey

Istanbul GMT +2

EY

Eski Buyukdere Caddesi

Orjin Plaza

Maslak Mahallesi No: 27 Sariyer

Istanbul Turkey

Principal Tax Contact



Erkan Baykuş

Business Tax Services

Feridun Güngör

+90 (212) 315-3000

Fax: +90 (212) 234-1067

+90 (212) 408-5222

Mobile: +90 (533) 955-3770

Email: erkan.baykus@tr.ey.com

+90 (212) 408-5204

Mobile: +90 (530) 342-1203

Email: feridun.gungor@tr.ey.com

International Tax and Transaction Services – International Corporate Tax Advisory

Ateş Konca

+90 (212) 408-5258

Mobile: +90 (532) 466-5608

Email: ates.konca@tr.ey.com

International Tax and Transaction Services – Transaction Tax Advisory

Ersin Erdem

+90 (212) 408-5313

Mobile: +90 (533) 429-7073

Email: ersin.erdem@tr.ey.com

International Tax and Transaction Services – Transfer Pricing

Serdar Sumay

+90 (212) 408-5445

Mobile: +90 (533) 690-4247

Email: serdar.sumay@tr.ey.com

International Tax and Transaction Services – Tax Desk Abroad

Gamze Durgun +1 (212) 466-9542 (resident in New York)

Business Tax Advisory

Feridun Güngör

İhsan Akar,

Financial Services

People Advisory Services

Didem Erdem

Legal Services

Mehmet Küçükkaya

Tax Policy and Controversy

Ahmet Sagli

Email: gamze.durgun1@ey.com

+90 (212) 408-5204

Mobile: +90 (530) 342-1203

Email: feridun.gungor@tr.ey.com

+90 (212) 408-5200

Mobile: +90 (530) 424-4228

Email: ihsan.akar@tr.ey.com

+90 (212) 408-5851

Mobile: +90 (530) 774-4508

Email: didem.erdem@tr.ey.com

+90 (212) 408-5724

Mobile: +90 (533) 396-3238

Email: mehmet.kucukkaya@tr.ey.com

+90 (212) 408-5247

Mobile: +90 (533) 654-8489

Email: ahmet.sagli@tr.ey.com

Global Compliance and Reporting

Dursun Ozcan

Indirect Tax

Sedat Taşdemir

Global Trade

Sercan Bahadır

A. At a glance (a)

+90 (212) 408-5134

Mobile: +90 (532) 464-8798 Email: dursun.ozcan@tr.ey.com

+90 (212) 408-5257

Mobile: +90 (532) 332-9501 Email: sedat.tasdemir@tr.ey.com

+90 (212) 408-5341

Mobile: +90 (530) 490-2613

Email: sercan.bahadir@tr.ey.com

Corporate Income Tax Rate (%) 23

Capital Gains Tax Rate (%) 23 Branch Tax Rate (%) 23

Withholding Tax (%)

Dividends 10

Interest

From Repurchase (REPO) Agreements 15 From Deposit Accounts 0/3/5/10/12/15/18/20 From Loans 0/10 From Turkish Government Bonds and Bills and Private Sector Bonds 0/10 From Private Sector Bonds Issued in Turkey 0/3/5/10/15 Issued Abroad 0/3/7

Royalties from Patents, Know-how, etc. 20 Professional Fees

Petroleum-Exploration Activities 5 Other Activities 0/15/20 (b) Progress Billings on Long-Term Construction and Repair Contracts 5 Payments on Financial Leases 1 Real Estate Rental Payments 20 Branch Remittance Tax 10

Net Operating Losses (Years) Carryback 0 Carryforward 5

(a) The rates in the table are for illustrative purposes only. For detailed informa tion, please contact EY in Turkey. (b) The 15% rate applies to payments made for online advertising services per formed by nonresident entities or individual service providers and to pay ments made to resident and nonresident entities and individuals who intermediate the provision of such services. The 0% rate applies to payments made to resident entity service providers or resident entities that intermediate the provision of such services. The local withholding tax rate of 20% applies to income generated by nonresidents from professional services other than petroleum exploration activities.

B. Taxes on corporate income and gains

Corporate income tax. Companies whose legal or business headquarters (as stated in their articles of association) are located in Turkey or whose operations are centered and managed in Turkey are subject to corporation tax on their worldwide income. In Turkish tax legislation, they are described as full liability taxpay ers; they are also known as resident companies.

Taxable income of limited liability taxpayers (nonresident compa nies or taxpayers other than full liability taxpayers) is comprised of the following:

• Professional fees obtained in Turkey

• Profits from commercial, agricultural and industrial enterprises in Turkey (if they have an establishment or a permanent repre sentative in Turkey)

• Income arising from rental of real estate, rights and movable property in Turkey

• Income obtained in Turkey from various types of securities

• Other income and revenue obtained in Turkey

Rates of corporate tax. The effective corporate tax rate is 23% for the 2022 tax year. However, incentive programs provide for reduced corporate tax rates for income from the investments sup ported (see Tax incentives).

Digital Services Tax. The Digital Services Tax (DST) is levied at a rate of 7.5% as an indirect tax on in-scope revenues generated in Turkey from the provision of certain digital services. It applies only to companies with global in-scope revenues of at least EUR750 million and with revenues of at least TRY20 million in Turkey from in-scope services.

The DST applies to revenues generated from the following cate gories of services in Turkey:

• All types of digital advertising services, including services such as advertisement control and performance measurement services, services relating to data transmission and user man agement (that is, the sale of user data), and technical services relating to the display of advertisements

• The sale of audio, visual or digital content in digital format, as well as services provided in digital format for listening, view ing, playing or recording digital content or using such content in digital format (including computer programs, applications, music, video, games and in-game applications)

• Digital intermediary activities that allow users to interact with other users, including digital intermediary activities that can facilitate the sale of goods and services between users

• Intermediary services provided in a digital environment for the above categories of services

DST applies only to companies with global in-scope revenues exceeding EUR750 million and with revenues exceeding TRY20 million in Turkey from in-scope services. Both conditions must be met for a company to be subject to the tax. If a digital service provider meets both thresholds, it will become liable for the DST as of the fourth month following the month in which the thresholds are met. The law authorizes the president of Turkey to reduce the revenue thresholds to as little as zero or to increase them to up to triple the specified levels.

Taxpayers and those responsible for tax declarations must submit a DST return to the relevant tax office by the end of the month following the tax period and pay the tax by the same deadline.

Tax incentives. Incentive regulations provide for a wide range of incentive and support elements for certain investments with in centive certificates, including reduced corporate tax rates, gov ernment support for interest on loans, government support for

employees’ and employers’ shares of social security premiums, government support for income tax for wages, value-added tax (VAT) and customs duty exemptions, VAT refund support and allocation of treasury-owned lots.

The incentive and support elements vary according to the type, sector, subject, size and place of the investment.

Fifty percent of the following types of income with respect to in ventions resulting from research, development, innovation and software development activities performed in Turkey are exempt from corporate tax under certain conditions:

• Income derived from leasing.

• Income derived from transfers or sales.

• Income derived from marketing through mass production in Turkey. Based on the Communiqué for the incentive, this refers to the sales of an item that is mass produced in Turkey and that has a license or beneficial model certificate. The Turkish Patent Institute grants a license under an examination system. It grants a beneficial model certificate as a result of a research report.

• Income pertaining to a license or beneficial model certificate for an invention that is included in the income obtained from the sale of the products produced in Turkey through the use of this invention in the production process.

In addition, the leasing, transfer and sale of intangible assets per taining to a license or beneficial model certificate for an inven tion is exempt from VAT if the invention is produced as a result of research and development (R&D), innovation and software activities.

For the assessment of the corporate tax base, taxpayers can de duct 50% of the interest amount calculated over the capital in creases in cash in capital companies and the part of the capital covered by cash in newly incorporated companies (this deduction does not apply to entities operating in the finance, banking and insurance industries as well as to state economic enterprises). For the discount application regarding the cash capital increase, the discount rate will be 75% instead of 50% for the portion of the capital increase covered by cash brought from abroad.

The following is the calculation of the deduction: Deduction = Increased capital cash amount x Central Bank of the Republic of Turkey interest rate x Period (Months) x Discount rate

For purposes of the above calculation, the Central Bank of the Republic of Turkey interest rate equals the latest weighted annual average interest rate applicable to commercial loans extended by banks in Turkish lira announced by the Central Bank of the Republic of Turkey for the year of deduction. “Period (Months)” refers to the period from the capital increase to the last day of the financial year.

The incentive amount should be separately stated on the corpo rate tax return. The calculated amount may be deducted from the tax base if certain conditions are fulfilled. The incentive amount that cannot be utilized because of insufficient taxable income can be carried forward to following tax years without any time limita tion.

Participation exemption

Dividend income derived from Turkish (resident) participations. Turkish tax law provides a participation exemption for dividends derived by companies from Turkish (resident) participations. Dividends qualifying for the participation exemption are fully exempt from corporate tax.

To qualify for the participation exemption, a Turkish resident company need only hold a participation in another Turkish resident company.

Dividend income derived from foreign (nonresident) participations. The Turkish tax law also provides a participation exemption for dividends derived by companies from foreign participations. Dividends qualifying for the participation exemption are fully exempt from corporate tax.

To qualify for the participation exemption for dividends derived from foreign participations, all of the following conditions must be satisfied:

• The Turkish company must have owned at least 10% of the paid-in capital of the foreign company for an uninterrupted period of at least one year as of the date of receiving the dividend.

• The foreign company must be a limited or joint stock company.

• The foreign company must be subject to corporate tax at an effective rate of at least 15% (for corporations whose principal activity is the procurement of finance, including financial leas ing, insurance or investment in marketable securities, the rate must be at least the rate of corporation tax in Turkey, which is 23%).

• The dividends must be transferred to Turkey by the due date of filing of the annual corporate tax return (30 April).

The effective corporate tax is determined in accordance with the following formula:

Effective corporate tax rate = Corporate tax Distributable corporate income + corporate tax

Special participation exemption rules apply to companies estab lished in foreign countries whose principal purpose is construc tion, repair, assembly and technical services. If, under the laws of a foreign country, the establishment of a corporation is necessary to undertake these activities, dividends repatriated by the foreign subsidiary to the Turkish parent company qualify for the partici pation exemption, regardless of whether the conditions described above for the participation exemption are satisfied.

The participation exemption also applies to income derived from permanent establishments (PEs) and permanent representatives resident abroad if the following conditions are met:

• The PE or permanent representative is subject to corporate tax at an effective rate of at least 15% in the country where the PE or permanent representative is located. For PEs whose principal activities are the procurement of finance, including financial leasing, or investment in marketable securities and insurance, the rate must be at least the rate of corporation tax in Turkey, which is 23%.

• Income derived from foreign PEs must be transferred to Turkey by the due date of filing of the annual corporate tax return (30 April).

A participation exemption also applies to capital gains. For details, see General in Section C.

Exchange gain and interest income exemption. Under Law No. 7352 regarding the corporate tax exemption for the foreigncurrency accounts of companies that are converted to Turkish lira time deposit accounts, the following income is exempt from corporate tax if foreign currency (US dollar, euro or British pound) is included on the balance sheet, dated 31 December 2021, of companies and translated into Turkish lira before the submission date of the fourth advance tax return and such amounts are utilized in the Turkish lira deposit and participation account for at least three months:

• Portion of foreign-exchange gains, arising from year-end valu ation of such foreign currencies corresponding to the period between 1 October 2021 and 31 December 2021

• Foreign-exchange gains that emerge between the translation date of such foreign currencies to Turkish lira until the submis sion date of the fourth advance tax return of 2021 and interest and dividends and other income, including income from yearend valuation of Turkish lira deposit and participation accounts that will be earned at the end of maturity

The law mentioned above also covers regulations regarding exemption implementation in scope of foreign currency and gold accounts translated into Turkish lira in 2022.

International holding companies. A special regime applies to inter national holding companies.

International holding companies may benefit from the participa tion exemption with respect to dividends derived from foreign participations if they satisfy the conditions applicable to other entities (see Participation exemption). They also may benefit from the participation exemption with respect to capital gains, but dif ferent conditions apply. Turkish international holding companies benefit from the participation exemption with respect to capital gains if foreign participations account for at least 75% of the noncash assets of the international holding company and if the international holding company has held a shareholding of 10% or more in the foreign limited or joint stock company for at least two years.

Dividends distributed by international holding companies to nonresident companies out of profits derived from their foreign participations are subject to a withholding tax rate equal to onehalf of the general withholding tax rate on dividends. As a result, the withholding tax rate is 0.5%.

Capital gains. Capital gains derived by all companies, including branches of foreign companies, are included in ordinary income and are subject to corporation tax. Capital gains are generally computed by subtracting the cost of the asset, including the related expenses paid by the seller, from the selling price.

Capital gains derived from sales of depreciable fixed assets are not taxable to the extent the gains are reinvested in new fixed assets. However, the amount of gains used to acquire new assets is subtracted from the depreciable cost of the new asset. Capital gains that will be used for reinvestment are transferred to a special reserve account. If the special reserve is not used to finance the purchase of similar new assets in the following three years, the balance in the reserve is included in taxable income.

Capital gains derived from sales of resident companies’ shares by nonresident companies without a permanent establishment in Turkey are subject to corporation tax. In computing these gains, changes in exchange rates are not taken into account.

Seventy-five percent of capital gains derived by corporate taxpay ers from the disposal of shares owned for at least two years qualify for corporate tax exemption if the gains for which exemp tion is claimed are recorded as a special fund under the share holder’s equity account in the balance sheet until the end of the fifth year following the year of sale.

Administration. Companies file tax returns based on their finan cial accounting year.

Tax returns must be submitted to the relevant tax office by the last day of the 4th month after the end of the accounting period. The return must be accompanied by the balance sheet, income statement and other required documents.

Corporation tax due must be paid by the end of the fourth month following the end of the accounting period.

Companies must make quarterly payments of advance corporation tax during the tax year. As of 1 January 2022, the advance corpo ration tax period is reduced to nine months, so companies will not declare advance corporation tax return for the fourth quarter. These payments are each equal to 23% of the taxable income for the quarter. Companies could be subject to a reduced rate of cor poration tax in accordance with their investments’ incentive cer tificates. The advance tax may be offset against the tax shown on the annual corporation tax return.

If advance corporation tax exceeds the final tax payable, the excess amount can be offset against the company’s other tax lia bilities or it can be refunded.

Dividends. Dividends received by resident companies from other resident companies are not subject to corporation tax.

Dividends received from foreign companies are included in taxable income. However, certain dividends received from foreign com panies may qualify for exemption from corporation tax under the participation exemption or the international holding regime (see Participation exemption and International holding companies).

Withholding tax at a rate of 10% is imposed on dividends paid by resident corporations to the following recipients:

• Resident individuals

• Resident recipients who are not subject to corporation tax and income tax, or are exempt from such taxes

• Nonresident individuals

• Nonresident corporations (excluding those receiving dividends through a PE or permanent representative in Turkey)

• Nonresident recipients who are exempt from corporation tax and income tax

A branch remittance tax is imposed at a rate of 10% on profits remitted by nonresident corporations that have a PE or permanent representative in Turkey to their headquarters.

Foreign tax relief. Corporation tax and similar taxes paid abroad on income that is derived abroad and that is included in the Turkish accounts may be offset against the corporation tax that is assessed on such income in Turkey.

In cases in which the controlled foreign company (CFC) rules are applied, the taxes similar to income and corporation taxes that the foreign affiliate has paid can be set off against the corporation tax that is calculated on the basis of the earnings of the foreign com pany.

Resident companies that have a direct or indirect participation in shares or voting rights of 25% or more in foreign subsidiaries can claim a tax credit for the corporate or income tax paid by foreign subsidiaries in their jurisdictions on profits out of which dividend distributions were paid to the resident companies. The credit is limited to the tax in Turkey that is attributable to the dividend distributions. As a result, the credit applies only to dividends that do not qualify for the participation exemption.

Amounts that are set off against the taxes that are assessed in Turkey on the income derived from the foreign countries may not exceed the tax amount that would be calculated by applying the local corporation tax rate (23%) to such earnings.

Foreign taxes that cannot be offset against the corporate tax in Turkey because of insufficient corporate income may be carried forward for a period of three years. The tax credit can also be offset against advance tax payments.

C. Determination of trading income

General. The corporate tax base is determined by deducting expenses from the revenue of an enterprise. However, the follow ing items are not subject to corporation tax:

• Revenue derived by corporations, including nonresident com panies, from participations in the capital of other corporations that are subject to full corporate taxation, excluding shares of profits from participation certificates of investment funds and stocks in investment partnerships

• Proceeds derived by corporations from the sale of their pre ferred shares, and profits derived by joint stock companies from the sale of their shares at the time of the establishment of the company and from the sale of their shares at a price exceeding the par value of the shares when they are increasing their capital

• Seventy-five percent of profits derived from disposals of shares, preferred shares, preemptive rights and bonus shares, and 50% of the profits derived from sales of real estate owned for at least two years, if the profits are placed in a reserve account and not distributed for five years

Corporation tax exemptions are available under the participation exemption and the international holding regime (see Section B).

In addition, the following corporate tax exemptions apply to Turkish and foreign investment funds and companies:

• Profits derived by mutual funds (excluding foreign-exchange funds) and trusts from transactions involving their operating portfolio

• Profits derived by risk capital investment funds or companies from transactions involving their operating portfolio

• Profits derived by real estate investment funds or companies from transactions involving their operating portfolio

• Profits derived by designated private pension investment funds

All business-related expenses are deductible, with the following exceptions:

• Interest on shareholders’ equity or on advances from shareholders.

• Reserves set aside from profits (except technical reserves of insurance companies and doubtful debts from debtors against whom legal proceedings have been instituted).

• Corporation tax and all monetary and tax penalties and interest imposed on such tax.

• Discounts or other losses arising from selling the corporation’s own securities for less than par value.

• For nonresident companies, commissions, interest and other charges paid to headquarters or other offices outside Turkey on purchases or sales made on their behalf, as well as allocated charges to contribute to losses or expenses of headquarters or branches outside Turkey. However, charges are deductible if they are made in accordance with allocations keys that are in compliance with the arm’s-length principle and if they are related to the generation and maintenance of business income in Turkey.

• Interest, foreign-exchange differences or comparable expenses that are calculated or paid on disguised capital (see Debt-toequity rules in Section E).

• Disguised profit distribution through improper transfer pricing (see Transfer pricing in Section E).

For enterprises (except loan institutions, financial organizations, financial leasing, factoring and financing companies) whose cur rent liabilities exceed their equities, the portion determined by the Council of Ministers that does not exceed 10% of the total ex penses and costs incurred as interest, commissions, maturity dif ferences, delay interest, dividends, exchange-rate differences and similar items relating to liabilities (except financing expenses added to investment costs) used within the enterprise may not be deducted from corporate profit. However, the amount exceeding this percentage is deductible.

Restrictions on company car expenses. Under amendments to Article 40 of the Income Tax Law, the following restrictions apply to company car expenses:

• Leasing payments up to TRY8,000 for a company car can be deducted from the income or corporate tax base.

• Sums up to TRY200,000 of special consumption tax and VAT paid for the acquisition of company cars can be deducted from the income or corporate tax base.

• Seventy percent of the repair, maintenance and other expenses related to company cars can be deducted from the income or corporate tax base.

• Amortization expense with respect to the purchase price of each company car (excluding special consumption tax and VAT) up to TRY230,000 can be deducted from the tax base. If the company car is acquired second-hand (special consumption tax and VAT is included into the acquisition price), the acquisi tion value up to TRY430,000 is subject to tax-deductible amortization expense.

Amounts exceeding these limits are considered as “nondeductible expenses” in determining the corporate income tax base.

Restriction on the deduction of financing expenses. For tax peri ods beginning on or after 1 January 2021, a restriction applies to companies with external liabilities exceeding their equity. For these companies, 10% of the total of expenses and cost of items, including interest, commissions, late charges, dividends, ex change differences and similar items related to external liabilities of the enterprise, excluding those added to the cost of the invest ment, are considered as a nondeductible expense in determining the commercial and corporate income. The restriction applies exclusively to deductions relating to the exceeding portion.

This restriction does not apply to credit institutions, financial institutions, and financial leasing, factoring and financing com panies.

Provisions. Tax-deductible provisions include provisions for bad debts, for abandoned claims and for insurance technical reserves.

Tax depreciation. Assets that are used in a company for more than one year and that are subject to wear and tear are depreciated.

The useful life concept is used for the depreciation of fixed assets. The Ministry of Finance has issued Communiqués, which set forth the useful lives of different types of fixed assets. The following are examples of the useful lives for various fixed assets.

Useful life Asset (years)

Buildings 50 Office furniture, office equipment and automobiles 5

Computers 4

Computer software and cellular phones 3

Also, it is possible for the taxpayers to extend the depreciation periods, provided that the extended useful life period does not exceed twice the useful life period determined by the Ministry of Treasury and Finance or 50 years, through the application of the constant flat depreciation rate calculated by the following formula (flat rate = 1 / extended useful life).

The taxpayers may select the straight-line method or the decliningbalance method to calculate depreciation. A company may change from the declining-balance method to the straight-line method (but the reverse change is not permitted) at any time during the useful

life of a fixed asset. A company may exercise this option on an asset-by-asset basis.

Fixed assets can be depreciated beginning in the year of capital ization (the year in which an asset becomes ready to use). For fixed assets that are purchased as ready to use, the depreciation begins in the year of the acquisition of the fixed asset. For fixed assets that need to be constructed or assembled, the depreciation begins in the year in which the construction or assembly is com pleted and the assets become ready to use.

In general, an asset qualifies for full-year depreciation in the year of capitalization, regardless of the date of capitalization. However, except for passenger cars subject to pro-rata depreciation, taxpay ers are given the opportunity to depreciate on a daily basis from the date the assets are ready for use, for depreciable economic assets that are purchased after 26 October 2021. Depreciation for passenger cars begins in the month in which the cars are pur chased. For example, if a passenger car that was purchased for TRY1,000 is depreciated using a straight-line depreciation rate of 20%, the regular depreciation for a full year is TRY200. Under the applicable rules, if such an automobile is acquired in November, tax-deductible depreciation for the year of acquisition is calculated as follows:

2 months 12 months x TRY200 = TRY33.33

The balance of the regular depreciation for the year of acquisition is deductible in the last year of depreciation of the asset, together with the regular depreciation for the last year.

Investment allowance. Effective from 1 January 2006, the invest ment allowance was abolished. However, companies can carry forward investment allowance amounts due on or before 31 December 2005.

Research and development and design expenditures. One hundred percent of R&D and design expenditures may be deducted from the tax base if certain conditions are fulfilled. This is an incentive that is granted in addition to the ordinary depreciation expense recognition of capitalized R&D and design expenditures. The in centive covers the following expenses:

• Raw materials and supplies’ expenses

• Personnel expenses

• General expenses

• Payments for benefits and services provided by outsourcing companies

• Taxes, duties and fees

• Depreciation and depletion

• Financial expenses

Companies that are not able to deduct R&D and design expendi tures because of insufficient taxable income may deduct the un used amount in the following years.

In addition, to support R&D and design activities, the Turkish Scientific and Technological Research Institution (TUBITAK) may provide monetary aid to companies with respect to their R&D and design activities under certain conditions. The related law also provides various types of incentives such as R&D and

design deductions, wage income withholding exemptions, social security premium support, stamp duty exemption and capital aid for technological enterprises.

Relief for losses. In general, losses may be carried forward for five years. Losses cannot be carried back. An order of priority applies for the use of losses and exemptions to offset taxable income for the year. Past years’ losses are used after exemptions that apply even in the event of a loss. After the losses are used, the other exemptions that apply in profitable years are administered (in vestment allowance, R&D and design deduction, tax-deductible donations and others).

Resident companies may deduct the losses incurred in business activities performed abroad if the foreign losses are approved by auditors authorized under the laws of the relevant jurisdiction. Foreign losses from foreign activities cannot be deducted if in come arising from such activities is exempt from corporation tax in Turkey.

D. Other significant taxes

The following table summarizes other significant taxes.

Nature of tax Rate (%)

Value-added tax; imposed on goods delivered and services rendered, including imported goods and services, communications, conveyances by pipeline and certain leases; exports are exempt

General rate 18

Rates on other items 1/8

Local withholding taxes, on amounts paid to nonresident corporations Various Banking and insurance transactions tax; imposed on all types of payments received by banking and insurance companies with respect to all types of transactions, except financial leasing transactions

Interbank deposit accounts 1

REPO transactions 1

Sale of government bonds and treasury bills 1 Cambio transactions 0.2

Other payments 5

Special consumption tax; imposed on the delivery, importation or the initial acquisition of certain goods

Petroleum products, solvents and similar goods (fixed amount per measurement unit depending on the type of goods) Various Cars 10 to 220

Buses 1

Midibuses and minibuses 4/9

Planes 0.5

Sailboats 0/8

Beverages (minimum fixed amount per measurement unit depending on the kind of goods) 0 to 63

Nature of tax Rate (%)

Tobacco products; tax equals fixed amount plus variable amount; variable amount cannot be less than minimum fixed amount per measurement unit, which depends on the kind of goods 63/80 Luxury goods 3/6.7/20/25/40

Social security contributions; imposed on salaries of Turkish citizens; premiums are paid within monthly upper and lower limits and are calculated as a percentage of gross salary; from 1 January 2022 through 31 December 2022, the monthly lower limit is TRY5,004 and the upper limit is TRY37,530

Employer 20.5 Employee 14

Unemployment insurance contributions; paid on same base as social security contributions

Employer 2 Employee 1

E. Miscellaneous matters

Foreign-exchange controls. Turkey has a liberal foreign-exchange regime, which allows local foreign-exchange accounts.

Law No. 4875 guarantees the remittance of profits. The company’s bank may transfer profits, provided the company subsequently submits to the bank its approved tax statement and its tax accrual and payment slips. This law also guarantees the remittance of the proceeds from the liquidation of an investment.

Fees and royalties from management agreements, technical ser vices agreements and license contracts may be remitted abroad, and applicable withholding tax must be paid.

Foreign investment partnerships and funds may invest in Turkish securities and freely remit dividends, interest, profits and capital.

Turkish resident companies may grant loans to related parties re siding abroad in some circumstances.

Transactions related to the foreign-exchange legislation should be checked to determine whether they are in compliance with the Communiqué regarding capital movements published on 2 May 2018.

Transfer pricing. The Turkish Corporate Tax Code contains transferpricing regulations, which include the arm’s-length principle and the requirement for documentation of all related-party transactions. The arm’s-length principle applies to all transactions carried out by taxpayers with related parties. Under Turkish transfer-pricing rules, the traditional and transactional transferpricing methods recommended in the Organisation for Economic Co-operation and Development (OECD) model guidelines are acceptable. The main methods that can be applied by the taxpayers in the determination of the arm’s-length price are the following:

• Comparable uncontrolled price method

• Cost-plus method

• Resale price method

• Profit-split method

• Transactional net margin method

Taxpayers are required to prepare an annual transfer pricing report in compliance with the local documentation format and requirements for their related-party transactions. Under the local transfer-pricing regulations, the three-tiered transfer pricing documentation requirement (Country-by-Country Report, Master File and Local File) apply for tax periods beginning on or after 1 January 2019.

It is possible to enter into advance-pricing agreements with the tax authorities. Unilateral advance pricing agreements are concluded within 9 months and bilateral/multilateral advancepricing agreements are concluded within 18 months after formal application to Turkish Revenue Administration. The duration of advance-pricing agreements is five years and renewal is possible at the end of this period.

Transfer-pricing rules apply to both domestic and foreign relatedparty transactions. Commercial transactions conducted by companies resident in low-tax jurisdictions (tax havens) are considered to be related-party transactions.

The Ministry of Finance has issued Communiqués clarifying the transfer-pricing rules and documentation requirements. Under these Communiqués, taxpayers must prepare annual transferpricing forms, reports and other documentation. If the documen tation requirements relating to transfer pricing are completely fulfilled on time, the tax-loss penalty is applied with a 50% dis count for taxes not accrued at all or accrued deficiently in the past with respect to the profits distributed in a disguised manner.

Cases in which the relationship is established through direct or indirect shareholding are deemed to be within the scope of dis guised profit distributions if the percentage of the shareholding, voting rights or dividend rights is at least 10%. Parties that do not have a shareholding relationship are also deemed to be re lated parties if the percentage of voting or dividend rights is 10%, directly or indirectly. These percentage are taken into ac count collectively for related parties.

Debt-to-equity rules. Under the new thin-capitalization rules, a “related party” is a person holding, directly or indirectly, at least 10% of the shares or voting rights of the other party.

Borrowings from related parties that exceed a debt-to-equity ratio of 3:1 are considered to be disguised capital. For borrowings from related parties that are banks or financial institutions, half of the borrowings are taken into consideration in performing the calcu lation for disguised capital. Total borrowings from all related par ties are treated collectively.

The equity at the beginning of the taxpayer’s fiscal year applies for thin-capitalization purposes. Interest paid or accounted for and foreign-exchange differences related to disguised capital are regarded as nondeductible expenses in determining the corporate tax base. Interest related to disguised capital is treated as a divi dend distribution and is subject to dividend withholding tax.

Controlled foreign companies. The controlled foreign company (CFC) rules apply if resident individuals and corporate taxpayers jointly or severally have a direct or indirect participation of 50% or more in the shares, dividend rights or voting rights in a foreign company that meets all of the following conditions:

• Twenty-five percent or more of the foreign company’s gross income is of a passive nature (portfolio investment income). If the business activities of the company are not commensurate with the capital, organization or the work force of the company, income derived from commercial, agricultural or independent personal services may be regarded to be of a passive nature.

• The foreign company is subject to effective corporate taxation at a rate of less than 10%.

• The gross revenue of the foreign company exceeds TRY100,000 (approximately USD19,000).

If the foreign company falls within the scope of the Turkish CFC measures, Turkish resident taxpayers declare corporate income of the foreign company attributable to them. In the event of a divi dend distribution by the foreign company, the recipient of the dividend is taxed only to the extent that the amount has not been taxed in accordance with the CFC rules.

Ultimate Beneficial Owner declaration. It is compulsory to declare the individual(s) who ultimately control or have ultimate influ ence over the legal entities or the entities without legal status. This is known as the Ultimate Beneficial Owner (UBO) declara tion.

As of 1 August 2021, corporation taxpayers and other types of companies (commandite companies (a type of partnership), trusts and similar institutions established in a foreign jurisdiction that have their headquarters in Turkey with resident managers in Turkey or with management centers in Turkey) are required to declare UBO information.

In addition to those listed above, certain parties such as banks, payment agencies, financing and factoring companies, financial leasing companies, asset management companies, notary publics, lawyers, sworn-in financial advisors and certified public accoun tants, among others, are also required to declare UBO informa tion, related to the transactions that are performed by their clients, when requested by the Revenue Administration.

Entities considered to be UBOs and subject to declaration are described below.

The following are UBOs for legal entities:

• Individual shareholders with shares exceeding 25% of the legal entity

• If the individual shareholders holding more than 25% of the legal entity are suspected of not being the UBO or if there is no individual shareholder holding such shares, the individuals who have ultimate control of the legal entity

• If the UBO cannot be determined, the individuals with the high est managerial authority

The following are UBOs for entities that do not have legal status, such as business partnerships:

• Individual/s who have ultimate control

• If the UBO cannot be determined, the individual/s with the highest level of executive power

• For trust and similar institutions, those who have the title of founders, trustees, managers, auditors or beneficiaries, or those who have influence over these organizations

Corporation taxpayers must declare UBO information in their advance tax returns and annual corporation tax returns. Parties other than corporation taxpayers must declare their UBO infor mation to the Turkish Revenue Administration via electronic forms by the end of August of every respective year. In cases in which the taxpayers have a new tax registration or if there is a change in the information previously reported, those changes must be declared within one month following the date of their occurrence.

All of the UBO documents and records must be kept for five years by the parties. The relevant penalties under the Turkish Tax Procedural Code are also applicable for parties who do not report the requisite information, or who make incomplete or misleading declarations.

Anti-avoidance measures. Turkish resident taxpayers are subject to a 30% withholding tax on all payments made in cash or on account that relate to transactions with companies resident in countries that the president considers to be in harmful tax com petition. The president has not yet identified these countries. The principal, interest or profit contributions corresponding to debts to financial institutions established outside Turkey and payments to insurance and reinsurance companies established outside Turkey are not subject to the 30% withholding tax. The president has the authority to reduce the withholding tax rate to 0% for transactions that are considered to be performed at arm’s length.

The payments taxed in accordance with the rules described in the preceding paragraph are not subject to further corporate tax or income tax.

The Turkish tax law includes anti-abuse rules. The principal rule is the substance-over-form rule, which is contained in Article 3 of the Tax Procedural Law.

Mergers and acquisitions. Mergers, acquisitions and demergers may be tax-free if the transaction involves two resident companies and if the assets are transferred at book value.

F. Treaty withholding tax rates

The table below shows the maximum withholding rates for divi dends, interest and royalties provided under Turkey’s double tax treaties.

To benefit from the advantageous rates under the double tax treaties, additional conditions may be required (for example, the re cipient is required to be the beneficial owner of the related gain). Readers should obtain detailed information regarding the treaties before engaging in transactions.

Dividends Interest Royalties

%

Albania

% %

5/15 (a) 10 (oo) 10

Algeria 12 10 (oo) 10

Australia 5/15 (mm) 10 (oo) 10

Austria 5/15 (a) 5/10/15 (oo) 10

Azerbaijan 12 10 (oo) 10

Bahrain 10/15 (ww) 10 10

Bangladesh 10 10 (oo) 10

Belarus 10/15 (ww) 10 10

Belgium 5/10 (d) 15 (oo) 10

Bosnia and

Herzegovina

5/15 (a) 10 (oo) 10

Brazil 10/15 (ww) 15 (gg) 10/15 (hh)

Bulgaria 10/15 (c) 10 (oo) 10

Canada 15/20 (g) 15 (oo) 10

Chad 10/15 (uu) 10 (oo) 10

China Mainland 10 10 (oo) 10

Croatia 10 10 10

Czech Republic 10 10 (oo) 10

Denmark 15/20 (e) 15 (oo) 10

Egypt 5/15 (a) 10 (oo) 10

Estonia 10 10 (oo) 5/10 (f)

Ethiopia 10 10 (oo) 10

Finland (ee) 5/15 (a) 5/10/15 (ii)(oo) 10

France 15/20 (g) 15 (oo) 10

Gambia 5/15 (tt) 10 10

Georgia 10 10 10

Germany (ff) 5/15 (a) 10 (oo) 10

Greece 15 12 (oo) 10

Hungary 10/15 (c) 10 (oo) 10 India 15 10/15 (h)(oo) 15

Indonesia 10/15 (ww) 10 (oo) 10 Iran 15/20 (e) 10 (oo) 10

Ireland 5/10/15 (aa) 10/15 (bb) 10

Israel 10 10 (oo) 10 Italy 15 15 10

Japan 10/15 (c) 10/15 (i)(oo) 10

Jordan 10/15 (c) 10 (oo) 12

Kazakhstan 10 10 (oo) 10

Korea (South) (nn) 15/20 (e) 10/15 (j)(oo) 10

Kosovo 5/15 (a) 10 (oo) 10

Kuwait 10 10 10

Kyrgyzstan 10 10 (oo) 10

Latvia 10 10 (oo) 5/10 (f)

Lebanon 10/15 (o) 10 (oo) 10

Lithuania 10 10 (oo) 5/10 (f)

Luxembourg 10/20 (l) 10/15 (m) 10

Malaysia 10/15 (ww) 15 (oo) 10

Malta 10/15 (ww) 10 (oo) 10

Mexico 5/15 (a) 10/15 (oo) 10

Moldova 10/15 (ww) 10 (oo) 10

Mongolia 10 10 (oo) 10

Morocco 7/10 (k) 10 (oo) 10

Netherlands 5/10 (p) 10/15 (m)(oo) 10

New Zealand

Dividends Interest Royalties

% % %

5/15 (a) 10/15 (t)(oo) 10

North Macedonia 5/10 (n) 10 (oo) 10

Northern Cyprus 15/20 (e) 10 (oo) 10

Norway 5/15 (q) 5/10/15 (jj) 10

Oman 10/15 (o) 10 (cc) 10

Pakistan 10/15 (c) 10 (oo) 10

Philippines 10/15 (ww) 10 (oo) 10/15 (qq)

Poland 10/15 (c) 10 (oo) 10

Portugal 5/15 (z) 10/15 (m) 10

Qatar 10/15 (xx) 10 (oo) 10

Romania 15 10 (oo) 10

Russian Federation 10 10 (oo) 10

Rwanda 10 10 10

Saudi Arabia 5/10 (b) 10 10

Serbia and Montenegro 5/15 (a) 10 (oo) 10 Singapore 10/15 (c) 7.5/10 (r) 10

Slovak Republic 5/10 (n) 10 (oo) 10

Slovenia 10 10 (oo) 10

South Africa 10/15 (ww) 10 10

Spain 5/15 (s) 10/15 (t) 10

Sudan 10 10 (oo) 10

Sweden 15/20 (e) 15 (oo) 10

Switzerland 5/15 (kk) 5/10 (ll) 10

Syria 10 10 (oo) 10/15 (u)

Tajikistan 10 10 (oo) 10 Thailand 10/15 (ww) 10/15 (v) 15

Tunisia 12/15 (w) 10 (oo) 10

Turkmenistan 10 10 (oo) 10 Ukraine 10/15 (ww) 10 (oo) 10

United Arab Emirates

5/10/12 (x) 10 (oo) 10

United Kingdom 15/20 (e) 15 10 United States 15/20 (g) 10/15 (y) 5/10 (f)

Uzbekistan 10 10 (oo) 10

Venezuela

5/10 (vv) 10 (oo) 10

Vietnam 5/10/15 (rr) 10 (ss) 10

Yemen 10 10 (cc) 10

Non-treaty jurisdictions 15 (pp) 20

(a) The 5% rate applies if the recipient owns more than 25% of the payer of the dividends. The 15% rate applies to other dividends.

(b) The 5% rate applies if the recipient owns more than 20% of the payer of the dividends or if the recipient is the central bank or an entity that is wholly owned by the government. The 10% rate applies to other dividends.

(c) The 10% rate applies if the recipient is a company (other than a partnership) that owns more than 25% of the payer of the dividends. The 15% rate applies to other dividends. With reference to Subparagraphs (a) and (b) of Paragraph 2 of Article 10 of the Japan treaty, in the case of Turkey, the tax rates referred to therein (10% and 15%) are 15% for Subparagraph (a) and 20% for Subparagraph (b), respectively, if the amount of the Turkish tax imposed on the income of the company paying the dividends is less than 40% of such income that is derived in the accounting period ending immediately before the date when such dividends become payable.

(d) The 5% rate applies to dividends distributed by Belgian companies. The 10% rate applies to dividends distributed by Turkish companies.

(e) The 15% rate applies if the recipient owns more than 25% of the payer of the dividends. The 20% rate applies to other dividends.

(f) The 5% rate applies to royalties paid for the use of industrial, commercial or scientific equipment. The 10% rate applies to other royalties.

(g) The 15% rate applies if the recipient owns more than 10% of the payer of the dividends. The 20% rate applies to other dividends.

(h) The 10% rate applies to interest on loans granted by banks and financial institutions. The 15% rate applies to other interest payments.

(i) The 10% rate applies to interest on loans granted by financial institutions.

The 15% rate applies to other interest payments.

(j) The 10% rate applies to interest paid with respect to a loan or other debt claim with a term exceeding two years. The 15% rate applies to other interest payments.

(k) The 7% rate applies if the recipient owns more than 25% of the payer of the dividends. The 10% rate applies to other dividends.

(l) For Luxembourg recipients, the 10% rate applies if the recipient owns more than 25% of the payer of the dividends and the 20% rate applies to other dividends. For Turkish recipients, these rates are applied as 5% and 20%, respectively.

(m) The 10% rate applies to interest on loans with a term exceeding two years. The 15% rate applies to other interest payments.

(n) The 5% rate applies if the recipient owns more than 25% of the payer of the dividends. The 10% rate applies to other dividends.

(o) The 10% rate applies if the recipient owns more than 15% of the payer of the dividends. The 15% rate applies to other dividends.

(p) The 5% rate applies to dividends distributed by Dutch companies. The 10% rate applies to dividends distributed by Turkish companies if dividends received by Dutch resident companies from Turkish resident companies are not subject to tax in the Netherlands.

(q) The rate is 5% of the gross amount of the dividends if either of the following circumstances exists:

• The beneficial owner of the dividends is a company (other than a partner ship) that holds directly at least 20% of the capital of the company paying the dividends and the dividends are exempt from tax in the other state.

• The dividends are derived by the government pension fund in the case of Norway or by the government social security fund in the case of Turkey. The 15% rate applies to other dividends.

(r) The 7.5% rate applies to interest on loans paid by financial institutions. The 10% rate applies to other interest payments.

(s) The 5% rate applies to dividends to the extent they are paid out of profits that have been subject to tax as specified in the tax treaty and if the recipient owns more than 25% of the payer of the dividends. The 15% rate applies to other dividends.

(t) The 10% rate applies to interest on loans granted by banks. The 15% rate applies to other interest payments.

(u) The 10% rate applies to royalties paid for the use of, or the right to use, copy rights of literary, artistic or scientific works, including cinematographic films and recordings for radio and television. The 15% rate applies to royalties paid for patents, trademarks, designs or models, plans, secret formulas or processes, or for information concerning industrial, commercial or scientific experience.

(v) The 10% rate applies to interest on loans granted by banks, financial institutions and insurance companies. The 15% rate applies to other interest payments.

(w) The 12% rate applies if the recipient owns more than 25% of the payer of the dividends. The 15% rate applies to other dividends.

(x) The 5% rate applies if the recipient of the dividends is the government, a public institution wholly owned by the government or a political subdivision or local authority of the other contracting state. The 10% rate applies if the recipient owns more than 25% of the payer of the dividends. The 12% rate applies to other dividends.

(y) The 10% rate applies to interest derived from loans granted by financial institutions, such as banks, savings institutions or insurance companies. The 15% rate applies to other interest payments.

(z) The 5% rate applies if the recipient owns more than 25% of the payer of the dividends for an uninterrupted period of at least two years. The 15% rate applies to other dividends.

(aa) For Irish recipients, the 5% rate applies if the dividends are paid out of the profits that have been subject to tax in Turkey and if the recipient owns more than 25% of the voting rights of the payer of the dividends. The 10% rate applies if the recipient owns more than 25% of the voting rights of the payer of the dividends, and the 15% rate applies to other dividends. For Turkish recipients, these rates are applied as 5%, 5% and 15%, respec tively.

(bb) The 10% rate applies to interest received by financial institutions or paid with respect to loans or other debt claims with a term exceeding two years.

The 15% rate applies to other interest payments.

EY

(cc) Interest paid to the government and central bank is exempt.

(dd) A new treaty between Turkey and Norway was signed on 15 January 2010. This new treaty is effective from 1 January 2012. Under the new treaty, the dividend withholding tax rate may be reduced to 5%. The withholding tax rate for interest ranges from 5% to 10%. The withholding tax on royalties is 10% if certain conditions are satisfied.

(ee) A new treaty between Turkey and Finland, which was signed on 6 October 2009, is effective from 1 January 2013.

(ff) A treaty between Turkey and Germany, which was re-signed by the coun tries on 19 September 2011, is effective retroactively from 1 January 2011.

(gg) Interest paid from Turkey to the government of Brazil, the Central Bank of Brazil or the National Bank for Economic and Social Development (BNDES) is exempt from Turkish tax. Interest paid from Brazil to the government of Turkey, the Central Bank of Turkey (Turkiye Cumhuriyet Merkez Bankasi) or the Turkish Export/Import Bank (Eximbank) is exempt from tax.

(hh) The tax rate is 15% of the gross amount of the royalties arising from the use of, or the right to use, trademarks. The rate is 10% of the gross amount of royalties in all other cases.

(ii) The rate is 5% of the gross amount of interest with respect to a loan or credit made, guaranteed or insured for the purpose of promoting exports by the Finnish Export Credit (FINNVERA) or similar Turkish public entities that have the objective of promoting exports. The rate is 10% of the gross amount of interest derived by banks. The rate is 15% of the gross amount of interest in all other cases.

(jj) The rate is 5% of the gross amount of the following types of interest:

• Interest paid to the government pension fund or the Norwegian Guarantee Institute for Export Credits (Eksportfinans ASA) if the inter est is wholly or mainly passed on to the government of Norway under the 108 Agreement between Eksportfinans ASA and the government of Norway

• Interest paid to the Turkish social security fund or the Turkish Eximbank The rate is 10 % for interest paid to banks. The rate is 15% in all other cases.

(kk) For Swiss recipients, the rate is 5% if the beneficial owner of the dividends is a company (other than a partnership) that holds directly at least 20% of the capital of the company paying the dividends and if relief from Swiss tax is granted for such dividends through an abatement of the profits tax in a proportion corresponding to the ratio between the earnings from participa tions and total profits or through equivalent relief. The rate is 15% in all other cases for Swiss recipients. For Turkish recipients, the rate is 5% if the beneficial owner of the dividends is a company (other than a partnership) that holds directly at least 20% of the capital of the company paying the dividends. The rate is 15% in all other cases for Turkish recipients.

(ll) The rate is 5% for interest paid with respect to a loan or credit made, guar anteed or insured for the purpose of promoting exports by an Eximbank or a similar institution that has the objective of promoting exports. The rate is 10% in all other cases.

(mm) For Australian recipients, the 5% rate applies if the beneficial owner of the dividends is a company that owns directly more than 25% of the capital of the company and if the dividends are paid out of profits that have been subject to corporation tax in Turkey. The 15% rate applies to other dividends paid to Australian recipients. For Turkish recipients, the 5% rate applies if the beneficial owner of the dividends is a company that owns directly more than 10% of the voting power of the company. The 15% rate applies to other dividends paid to Turkish recipients.

(nn) A new treaty between Turkey and Korea (South) is under negotiation.

(oo) Please consult the treaty for further details because exemptions may be pro vided for interest on loans obtained from certain institutions, such as cen tral banks and governments of the contracting states or their subdivisions.

(pp) Various rates apply.

(qq) The 10% rate applies to royalties paid for the use of, or the right to use, copyrights of literary, artistic or scientific works, patents, trademarks, designs or models, plans, secret formulas or processes, or from the use of, or the right to use, industrial, commercial, or scientific equipment, or for information concerning industrial, commercial or scientific experience.

The 15% rate applies to royalties paid for the use of or the right to use, cinematographic films and films or tapes for television or radio broadcasting.

(rr) The rate is 5% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) that holds directly at least 50% of the capital of the company paying the dividends or has invested more than

USD10 million, or the equivalent in Turkish or Vietnamese currency, in the capital of the company paying the dividends. The rate is 10% of the gross amount of the dividends if the beneficial owner is a company that holds directly or indirectly at least 25% but less than 50% of the capital of the company paying the dividends. The rate is 15% of the gross amount of the dividends in all other cases.

(ss) Interest paid to the government of Turkey or to the Central Bank of Turkey is exempt from Vietnamese taxes and interest paid to the government of Vietnam or to the State Bank of Vietnam is exempt from Turkish taxes.

(tt) The 5% rate applies if the recipient owns more than 10% of the payer of the dividends. The 15% rate applies to other dividends.

(uu) The 10% rate applies if the beneficial owner of the dividends is a company that owns directly more than 10% of the capital of the company paying the dividends. The 15% rate applies to other dividends.

(vv) The 5% rate applies if the beneficial owner of the dividends is a company that owns directly more than 25% of the capital of the company paying the dividends. The 10% rate applies to other dividends.

(ww) The 10% rate applies if the beneficial owner of the dividends is a company that owns directly more than 25% of the capital of the company paying the dividends. The 15% rate applies to other dividends.

(xx) The rate is 5% of the gross amount of the dividends if either of the follow ing circumstances exists:

• The beneficial owner is the government or a public institution that is wholly owned by the government or its political subdivisions or local authorities of the other contracting state.

• The beneficial owner of the dividends is a company (excluding a partner ship) that holds directly at least 20% of the capital of the company paying the dividends.

The 10% rate applies to other dividends.

The amending protocol, signed on 14 September 2017, to the Kuwait-Turkey income and capital tax treaty (1997) entered into force on 10 November 2021. The protocol applies from the date of its entry into force.

A double tax treaty between Turkey and Burundi was signed on 11 March 2022. A double tax treaty between Turkey and Cambodia was signed on 27 February 2022. A double tax treaty between Turkey and Côte d’Ivoire was signed on 29 February 2016. On 21 April 2020, Turkey ratified the treaty. Côte d’Ivoire has not yet ratified the treaty. A double tax treaty between Turkey and Somalia was signed on 3 June 2016. On 4 March 2020, Turkey ratified the treaty. Somalia has not yet ratified the treaty. A double tax treaty between Turkey and Argentina was signed on 1 December 2018. On 15 May 2020, Turkey ratified the treaty. On 24 November 2021, the Argentine Foreign Relations and Budget and Finance Committees approved the treaty. A double tax treaty between Turkey and Senegal was signed on 14 November 2015. On 9 March 2020, the National Assembly (parliament) of Senegal approved a bill, authorizing the president to ratify the income tax treaty with Turkey. A double tax treaty between Turkey and Palestinian Authority was signed on 25 October 2018. On 22 November 2018, the Palestinian Council of Ministers approved the tax treaty with Turkey. Turkey has not yet ratified the treaty. A double tax treaty between Turkey and Sri Lanka was signed on 28 January 2022. On 24 March 2022, the Sri Lankan parliament approved the tax treaty with Turkey. A double tax treaty between Turkey and Iraq was signed on 17 December 2020. On 17 March 2022, the Turkish Grand National Assembly approved the Iraq-Turkey Income Tax Treaty. A double tax treaty between Turkey and Nigeria was signed on 20 October 2021.

Turkey has initialed tax treaties with Burkina Faso (22 September 2017), Botswana (23 November 2018), Cameroon (11 July

2014), Gabon (3 September 2015), the Hong Kong Special Administrative Region (SAR) (12 August 2016), Kenya (15 July 2016) and Uganda (12 July 2016). On 22 January 2016, Turkey and Turkmenistan initialed a new income tax treaty that would replace the 1995 treaty between the countries. On 15 March 2022, Ghana and Turkey initialed a tax treaty. On 22 October 2021, Turkey and Korea (South) signed a new income tax treaty, which would replace the 1986 treaty between the countries.

Turkey is negotiating tax treaties with Afghanistan, Liberia, Mali, Mozambique, Niger, Paraguay and Tanzania.

The Turkish Council of Ministers ratified the Foreign Account Tax Compliance Act (FATCA) agreement between Turkey and the United States, signed on 29 July 2015, through Decree No. 2016/9229, which was published in the Official Gazette of 5 October 2016. However, this agreement has not yet entered into force.

Turkey has signed Exchange of Information Agreements Relating to Tax Matters with Bermuda, Gibraltar, Guernsey, the Isle of Man and Jersey. The Exchange of Information Agreement Relating to Tax Matters with Bermuda and Jersey entered into force as of September 2013. On 7 October 2017, the Exchange of Information Agreement between the Isle of Man and Turkey entered into force. The agreement generally applies from 7 October 2017 for criminal tax matters. For other tax matters, it applies in Turkey from 1 January 2013 and in the Isle of Man from 1 April 2013. On 6 October 2017, the Exchange of Information Agreement between Turkey and Guernsey entered into force. The agreement generally applies from 6 October 2017. The Exchange of Information agreement with Gibraltar was rati fied by Turkey on 28 September 2017. Negotiations are continu ing on such agreements with the Bahamas and Barbados.

The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) was signed by Turkey on 7 June 2017. A Draft Law on the MLI was submitted to the Turkish Parliament Plan and Budget Committee on 2 June 2020, officially starting the ratification process of the MLI.

An investment protection agreement between Georgia and Turkey entered into force on 10 June 2021. An investment protection agreement between Turkey and Uzbekistan entered into force on 9 July 2020. An investment protection agreement between Djibouti and Turkey entered into force on 5 July 2020. An investment protection agreement between Turkey and Zambia entered into force on 6 May 2020. An investment protection agreement between Kyrgyzstan and Turkey entered into force on 18 March 2020. From this date, the new agreement replaces the investment protection agreement that was signed on 28 April 1992. An investment protection agreement between Montenegro and Turkey entered into force on 17 March 2020. An investment protection agreement with Cameroon entered into force on 3 January 2019. An investment protection agreement with Korea (South) entered into force on 1 August 2018. An investment protection agreement between Turkey and Mexico entered into effect on 17 December 2017. An investment protection agreement with Vietnam entered into force on 19 June 2017. An investment

protection agreement with Gambia entered into force on 15 June 2017.

On 10 November 2021, the Council of Ministers of Côte d’Ivoire approved the investment protection agreement between Turkey and Côte d’Ivoire, which was signed on 29 February 2016. On 17 June 2019, the Cambodian National Assembly approved the investment protection agreement between Turkey and Cambodia, which was signed on 21 October 2018. On 17 September 2018, Rwanda ratified the investment protection agreement between Turkey and Rwanda, which was signed on 3 November 2016. On 6 September 2018, the Ukrainian parliament (Rada) passed a draft law ratifying the investment protection agreement between Turkey and Ukraine, which was signed on 9 October 2017. On 25 April 2017, the Congress of Guatemala approved the invest ment protection agreement between Turkey and Guatemala, which was signed on 21 December 2015. On 14 March 2017, the Council of Ministers of Mozambique approved the investment protection agreement between Turkey and Mozambique, which was signed on 24 January 2017. Turkey has ratified investment protection agreements with Bangladesh, China (Mainland), Colombia, Ghana, Guatemala, Mali and Pakistan.

Turkey has signed investment protection agreements with Angola, Belarus, Burkina Faso, Burundi, Chad, Congo (Democratic Republic of), Guinea, Kenya, Lithuania, Mauritania, Palestinian Authority, Serbia and Tunisia.

Negotiations regarding investment protection agreements are continuing with Guinea, the Hong Kong SAR, Paraguay, Sri Lanka, Uruguay and Venezuela.

A free trade agreement between Turkey and Ukraine was signed on 3 February 2022.

A Competent Authority Agreement (CAA) on the Automatic Exchange of Information (AEOI) between Latvia and Turkey entered into force on 2 January 2019. A CAA on the AEOI between Norway and Turkey entered into force on 30 December 2018.

The decision on the “Approval of the Multilateral Competent Authority Agreement Regarding the Automatic Exchange of Financial Account Information with the Attached Declaration” was published in the Official Gazette dated 31 December 2019.

On 22 November 2021, the Turkish Ministry of Treasury and Finance announced a Joint Statement of Turkey and the United States regarding a compromise on a transitional approach to existing unilateral measures during the interim period before OECD Pillar One is in effect. Turkey and the United States have agreed that the same terms of the Unilateral Measures Compromise will apply between Turkey and the United States with respect to Turkey’s Digital Service Tax (DST) and the United States trade actions regarding the DST. Accordingly, the Unilateral Measures Compromise described in the 21 October 2021 Joint Statement is incorporated by reference into the Joint Statement between Turkey and the United States.