Corporate Tax for Foreign-Owned Companies in Turkey: 2026 25% Rate, Full Taxpayer Status and Shareholder Separation

1. Turkish-incorporated companies are full taxpayers regardless of who owns them

Corporate Tax Law Article 3 treats institutions whose statutory centre or business centre is in Türkiye as full corporate taxpayers. A Turkish limited company incorporated and registered under the Turkish Commercial Code therefore falls within Turkish corporate taxation even if its only shareholder lives abroad.

The company is taxed on corporate income obtained in Türkiye and abroad, subject to statutory exemptions and foreign-tax-credit rules.

Shareholder residence does not replace company residence.

2. Foreign investment law permits foreign ownership but does not create tax exemption by itself

Türkiye generally applies equal treatment to foreign investors under the Foreign Direct Investment Law. A foreign natural person or company can own shares in a Turkish company subject to sector-specific restrictions.

Equal investment treatment does not mean exemption from corporate tax. The Turkish company must register, keep books, issue documents and file returns like comparable domestic-owned companies.

Specific investment incentives can reduce tax in qualifying projects, but they must be separately earned.

3. The general 2026 corporate tax rate is 25%

The Revenue Administration’s current 2026 corporate-tax-rate table states that ordinary corporate taxpayers outside the special categories are taxed at 25% of taxable corporate income.

The rate applies to the tax base after statutory additions, deductions, exemptions and loss carryforwards.

A company’s foreign ownership percentage does not change this general rate.

4. Specified finance, insurance and PPP sectors use a 30% rate

The 2026 rate table applies 30% to banks, companies within Law No. 6361, electronic payment and money institutions, authorised foreign-exchange establishments, asset-management companies, capital-market institutions, insurance/reinsurance and pension companies, as well as companies acting as contracting parties in specified build-operate-transfer and health PPP projects.

A foreign investor acquiring such a company should use the sector rate rather than the ordinary 25% assumption.

The legal activity and licence category control.

5. Corporate tax is charged on taxable profit, not turnover

Commercial accounting profit is adjusted under the Corporate Tax Law, Income Tax Law and Tax Procedure Law to reach taxable corporate income.

Sales revenue, service income, foreign exchange gains, rent, interest and other corporate income can enter the tax base, while qualifying business expenses reduce it.

A loss-making company can have VAT/payroll/withholding obligations even when no annual corporate tax is due.

6. Business expenses must be connected, documented and legally deductible

Ordinary business expenses can be deducted where they satisfy statutory conditions. Foreign-owned companies frequently incur management, software, licence, travel, consulting and financing expenses paid to related foreign parties.

Those expenses must be real, business-related, properly invoiced and compliant with transfer-pricing/withholding/VAT rules.

A payment is not deductible merely because the foreign parent issued an invoice.

7. Some expenses are specifically non-deductible

Corporate Tax Law Article 11 and related statutes disallow specified expenses, including certain related-party transfer-pricing amounts, thin-capitalisation interest, penalties and other items.

Accounting recognition and tax deductibility are therefore different.

Foreign investors should review shareholder charges before year end, not only after an audit.

8. Domestic minimum corporate-tax rules can affect companies with incentives or deductions

Recent Turkish legislation introduced minimum corporate-tax mechanisms. The calculation interacts with exemptions, deductions, investment incentives and the corporate-tax return.

A foreign-owned company benefiting from reduced tax or exemptions should calculate both ordinary tax and applicable minimum-tax rules using current annual guidance.

The existence of an incentive does not guarantee zero tax.

9. Corporate tax and VAT are separate

A company can owe VAT on supplies even where annual corporate profit is low or negative. Import services from abroad can create reverse-charge VAT.

Export transactions can benefit from VAT exemptions/refunds under the KDV Law.

Corporate income tax rate should never be used as a proxy for the total Turkish tax burden.

10. Employees create payroll and social-security obligations

A Turkish company employing Turkish or foreign personnel generally must operate payroll withholding and SGK contributions. Foreign employees also require work-permit analysis.

Payments to directors can be salary, attendance fee, dividend or another category depending on the legal basis.

Correct classification affects withholding and deductibility.

11. After-tax profit distributed to foreign shareholders creates a second tax layer

Corporate tax is paid by the company on its profit. When remaining profit is distributed, Turkish dividend withholding can arise at shareholder level.

A double-tax treaty can reduce the source-state withholding rate for qualifying foreign residents where the residence/beneficial-owner conditions are met.

Corporate tax and dividend withholding should not be combined into one nominal rate without calculating both layers.

12. Payments to foreign affiliates receive special scrutiny

Management fees, royalties, interest, software charges, technical services and cost allocations paid to related foreign companies can be subject to transfer pricing, withholding, VAT and documentation rules.

Tax authorities examine whether the service actually existed, benefited the Turkish company and was priced at arm’s length.

Duplicative shareholder activities can be non-deductible.

13. Foreign shareholder debt financing can trigger thin-capitalisation rules

Corporate Tax Law Article 12 limits tax benefits where related-party debt exceeds statutory ratios in relation to equity, subject to definitions and exceptions.

Interest, foreign-exchange differences and similar expenses paid or accrued on thin capital are non-deductible under Article 11(1)(b). Article 12(7) separately treats interest and similar payments or accrued amounts as distributed profit (or a remittance to the head office for limited taxpayers), but expressly excludes foreign-exchange differences from that treatment.

Debt/equity structure should be planned before funding.

14. Transfer pricing applies to foreign related-party transactions

Corporate Tax Law Article 13 requires arm’s-length pricing in transactions with related parties. The company should select and document a defensible method based on functions, assets and risks.

Related-party prices that differ from arm’s-length conditions can lead to disguised profit distribution.

Documentation requirements vary by taxpayer and transaction.

15. Tax treaties matter mainly at cross-border shareholder/payment level

A Turkish company remains Turkish resident under domestic law and most treaties. Treaties then regulate foreign tax credits, dividends, interest, royalties and foreign permanent establishments.

A foreign shareholder claiming reduced withholding should provide a valid residence certificate.

Our double-tax treaty guide explains proof.

16. A Turkish subsidiary and a foreign-company branch are different structures

A subsidiary is a separate Turkish legal person and full corporate taxpayer. A branch is part of the foreign parent and generally taxed as a limited taxpayer on Turkish-attributable business profits.

Liability, profit remittance, treaty application, governance and exit differ.

Investors should choose structure based on commercial/legal needs, not only headline tax rate.

17. Foreign owners should maintain Turkish corporate governance and tax evidence separately

Board/shareholder resolutions, transfer-pricing files, invoices, contracts, bank records, capital payments and dividend resolutions should be preserved in a form usable in Turkish audits and courts.

Foreign-language corporate documents can require apostille/legalisation and Turkish translation for registry or litigation use.

Bakırcı & Keskin Hukuk Bürosu has physical offices in Istanbul and Mersin. Foreign-investor company matters throughout Türkiye can be coordinated from these offices together with qualified tax and accounting professionals.

Conclusion

Foreign ownership does not make a Turkish company foreign for corporate-tax purposes. A Turkish limited or joint-stock company is generally a full taxpayer; the 2026 ordinary corporate rate is 25%, with 30% for specified finance/insurance/PPP categories. The major cross-border issues arise after that: dividends, shareholder loans, related-party services, transfer pricing and treaty relief.