Income Taxes
The Turkish tax legislation includes two main income taxes, namely individual income tax and corporate income tax. Although individual income tax and corporate income tax are governed by different laws, many rules and provisions pursuant to individual income tax also apply to corporations, particularly in terms of income elements and the determination of net income.
Individual Income Tax
Real persons' income is subject to individual income tax. Income is defined as the net amount of all earnings and revenues derived by an individual within a single calendar year. As per the Income Tax Law, income may consist of the elements listed below:

• Business profits
   
• Agricultural profits
   
• Salaries and wages
   
• Income from independent personal services
   
• Income from immovable property and rights (rental income)
   
• Income from movable property (income from capital investment)
   
• Other income and earnings
   According to the Turkish tax legislation, there are two main types of tax statuses regulated on the basis of residence: resident taxpayers and non-resident taxpayers. Resident taxpayers (those who reside in Turkey, and those who spend more than a continuous period of six months in Turkey within a calendar year) are taxed on their earnings and incomes derived in and outside Turkey, whereas non-residents (those who do not reside in Turkey and those who do not spend more than a continuous period of six months in Turkey within a calendar year) are taxed only on their earnings and incomes derived in Turkey.

Individual income tax rates vary from 15% to 35%.

Individual income tax rates applicable for 2018 are as follows:

In case income elements specified in the Income Tax Law are derived by corporations, taxation is applicable on the legal entities of these corporations. Corporate taxpayers defined in the law are as follows:

• Capital companies
   
• Cooperatives
   
• Public economic enterprises
   
• Economic enterprises owned by associations and foundations
   
• Joint ventures

Corporations with legal or business centers located in Turkey are qualified as residents and are subject to tax on their income derived in Turkey and other countries. If both the legal and business centers are not located in Turkey, then these corporations are qualified as non-residents and subject to tax only on their income derived in Turkey. The legal center is the place stipulated in the Articles of Association or the incorporation law of corporations that are subject to tax, while the business center is defined as the place where business activities are concentrated and managed.

In Turkey, the corporate income tax rate levied on business profits is 20%. The rate for corporate income tax has been increased to 22% for the tax periods 2018, 2019, and 2020; however, the Council of Ministers is authorized to reduce the 22% rate to a rate as low as 20%.

Resident corporations are subject to a 15% withholding tax when dividends are paid out to shareholders. However, dividends paid by resident corporations to resident corporations are not subject to withholding tax. As a share capital increase by the corporation using the retained earnings is not considered to be a dividend distribution, no withholding tax applies in such cases. Similarly, non-resident corporations are subject to a 15% withholding tax during remittance of such profits to their headquarters. Withholding tax is applied on the amount after the deduction of corporate income tax from taxable branch profits.