Corporate Tax and Income Tax Rates to be applied in Türkiye in 2023 and Sample Calculations

February 15, 2023

1- Corporate Tax Rates

Corporate tax rates applied between 2018 and 2023;

2023 – 20%

2022 – 23%

2021 – 25%

2020 – 22%

2019 – 22%

2018 – 22%

(Corporate tax is 25% on the corporate earnings of banks, companies within the scope of Law No. 6361, electronic payment and money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies.)

2- Corporate Tax Calculation Example for 2023

The corporate tax to be paid by the company that earns 1,000,000 TL in 2023;

Example-1

3- Profit Distribution Withholding

After paying the corporate tax, the remaining earnings can be distributed to the company’s shareholders in full or in part (by distributing dividends). Over the dividend that will be paid to the partners, 10% of profits should be withheld. The corporation will offset this payment from the shareholders’ individual income taxes. The leftover sum (after this withholding tax deduction) will be distributed to the company’s owners according to the number of shares they own.

Example-2

(Legal reserves that need to be allocated have been neglected during the calculation) 

If profit distribution is not made, 10% profit distribution withholding will not be paid.

4- Personal Income Tax

Progressive income tax tariff is applied in Türkiye. The higher the income, the higher the tax rate. The lowest tax rate in the Income Tax schedule is 15% and the highest tax rate is 40%.

15% tax rate is applied for incomes up to 70 thousand TL. The tax rate to be applied for the remaining income over 1 Million 900 Thousand TL is 40%. The tax rates are respectively; 15%, 20%, 27%, 35% and 40%. Each rate is applied to the income in its own line.

Income tax tariff for 2023;

(The tariff based on the taxation of income subject to income tax in the first paragraph of Article 103 of the Law No. 193 is taken as a basis for the taxation of 2023 calendar year incomes)

Example-3

Calculation of income tax of a person who receives a dividend;

(The values in Example-2 are taken as basis.)

Calculation Details of Income Tax of 110,400 TL calculated from the above example Calculation Table

The aforementioned income tax rate is also applied to the profits of sole proprietors, business owners, and taxpayers who get rental income from real estate and movable property.

The amount left over after subtracting the income received from the exemptions, exclusions, and reductions allowed by the tax regulations constitutes the tax base, which will serve as the foundation for the income tax schedule.

Ali KARAKUŞ

CPA, Independent Auditor

Karen Audit

İstanbul,

February 15, 2023

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