Chinese entrepreneurs establishing a company in Turkey must be aware not only of business planning and marketing but also of tax compliance and financial obligations. In this article, we provide detailed information on Turkey’s tax system, the types of taxes companies face, and accounting responsibilities.
1. Overview of Turkey’s Tax System
Turkey’s tax system is categorized into two main types: direct taxes and indirect taxes:
- Direct Taxes: These are levied on income, such as Income Tax and Corporate Tax.
- Indirect Taxes: These include taxes on expenditures, such as Value Added Tax (VAT) and Special Consumption Tax (SCT).
Turkey has signed a Double Taxation Agreement with China, so Chinese entrepreneurs do not pay tax on the same income in both countries.
2. Key Taxes for Chinese Investors
- Corporate Tax (20%): Paid by capital companies operating in Turkey.
- VAT (1% – 20%): Applied to the sale of goods and services.
- Provisional Tax: A quarterly advance tax on earnings.
- Stamp Tax: Levied on official documents.
- Withholding Tax: Collected at source on payments like rent, wages, and interest.
3. Accounting Records and Bookkeeping
Each business must:
- Maintain official books certified by a notary,
- Record all income and expenses with documentation,
- Submit declarations on time.
Systems like e-Invoice, e-Archive, and e-Ledger have become mandatory. Expert consulting makes the transition to these systems easier.
4. Social Security (SGK) and Employee Reporting
For each employee, the following must be managed under Turkey’s Social Security Institution (SGK):
- Employment notification,
- Premium payments,
- Monthly reporting.
Failure to comply may result in administrative penalties.
5. Importance of Tax and Financial Consulting
The Turkish tax system may appear complex to Chinese investors. Therefore, to ensure:
- Compliance with regulations,
- Timely declarations and notifications,
- Transparent accounting processes,
professional accounting services are essential. At Sinogate, we provide full support to ensure investors fulfill tax obligations accurately and without penalties.
6. Common Mistakes and Recommendations
- Focusing only on sales while neglecting tax duties,
- Misinterpreting Turkish documents,
- Missing declaration deadlines.
To avoid these mistakes, both language support and local regulatory expertise are necessary.
Chinese entrepreneurs operating in Turkey must understand tax regulations and manage financial processes with experts. At Sinogate, we ensure smooth, legal, and efficient integration into Turkey’s financial system.
