Tax Guide

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    Explanations:

    • Certificate of residence is of great importance to apply a lower rate withholding levied on the interest income gained by limited taxpayer real persons and corporations. If the banks fail to obtain the certificate of residence from their customers, then the banks are required to apply taxation on full taxation basis.   
    • Up until the period between 01.01.2006 – 23.07.2006, the portfolio earnings of the investment funds that are exempt from the corporation tax were subject to 15% withholding on the said earnings irrespective of the taxation status. However, pursuant to the Council of Ministers’ Decree numbered 2006/10731, it has been decided that such earnings shall be subject to withholding at the rate of 10% until 24.07.2006-30.09.2006. Again pursuant to the same decree, it has been stipulated that 0% withholding shall be applied on portfolio earnings effective from 01.10.2006. Thus, taxation based on portfolio earnings has been terminated and investor-based taxation has been introduced.  
    • Limited taxpayer real persons are still required to submit their certificates of residence. For the customers failing to submit this certificate, the banks are required to make taxation in accordance with the principles of full taxation. Pursuant to the relevant communiqué; the original copy of the certificate of residence issued and signed by the competent authorities of the relevant country and its translated copy translated by the sworn translators have to be submitted.The certificate of residence submitted by the limited taxpayer real persons has to be renewed every year. Important Note: The certificate of residence given for a calendar year shall be valid until the fourth month of the following year.
    • Effective 08.03.2007, the certificate of residence required to be submitted to the banks by the limited taxpayer corporations has been cancelled. On the other hand, it has been stipulated that the certificate of incorporation of these limited liable taxpayer corporations must be provided to the banks to get benefited from 0% withholding.  For the customers failing to submit this certificate, the banks are required to make taxation in accordance with the principles of full taxation. Pursuant to the relevant communiqué; a Turkish version of the incorporation certificate issued in the country of the limited taxpayer corporation and certified by the Turkish representative office located in that country or a Turkish translation of the incorporation certificate issued in a foreign language and translated by the sworn translator must be submitted.
    • The income earned on Eurobonds is taxed on the basis of declaration.
    • In accordance with the information about the variable funds that is announced by Takasbank on a daily basis, in cases when the condition which requires the fund portfolio to be consist of at least 51% in equities traded in ISE is failed to be fulfilled, then income earned by the redemption of the relevant participation certificates shall be subject to withholding starting from the next day. Thus, this exemption shall not be applicable in the event the fund portfolio reduces below 51%. After an investment period of 1 year, the redemption of funds which consistently invest at least 51% in equities in ISE shall be exempt from withholding.

    CONDITIONS REQUIRED TO BE MET BY LIMITED TAXPAYER REAL PERSONS TO BENEFIT FROM 0% WITHHOLDING

    The original copy of the certificate of residence issued and signed by the competent authorities of the relevant country or the copy translated by the sworn translators shall be submitted by the limited liable taxpayer real persons either directly or via the bank or intermediary institutions to the relevant tax office (Boğaziçi Tax Office) and Special Coded Tax Registration Number must be obtained from the tax office.

    In the event that these documents are failed to be submitted, then taxation shall be made on full taxation basis.

    CONDITIONS REQUIRED TO BE MET BY LIMITED TAXPAYER CORPORATIONS TO BENEFIT FROM 0% WITHHOLDING

    A Turkish version of the incorporation certificate issued in the country of the limited taxpayer corporations and approved by the Turkish representative office located in that country or Turkish translation of the incorporation certificate issued in the foreign language and translated by the sworn translator shall be submitted by the limited taxpayer corporations either directly or via the bank or intermediary institutions to Boğaziçi Tax Office and Special Coded Tax Registration Number must be obtained from the tax office.

    In the event that these documents are failed to be submitted, then taxation shall be made on full taxation basis.

    The information stated above in relation to the taxation of income earned on securities is prepared by TEB by using the information and data obtained from resources that are trusted to be reliable. TEB does not guarantee the completeness, accurateness and permanency of this information. Therefore we suggest the readers to have this information confirmed by experts before taking any action based on the information taken from this site.  The responsibility for the decisions taken on the basis of this information lies with the readers. TEB does not accept any liability for any inaccuracy and incompleteness of this information. Similarly, the employees or consultants of TEB shall not be held liable for any direct or indirect losses arising from the use of this information.
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