Tax and LawJuly 14, 20230

What is Corporate Tax? How is it calculated?

Corporate Tax, under the Corporate Tax Law No. 5520, is a tax levied on the earnings obtained by the enterprises in a certain period.

Different corporate tax percentages are charged for different levels of profits earned by businesses. Tax must be paid by the end of the month in which the return is filed. You can defer the corporate tax given to the tax office until the end of April each year within certain conditions and days. Corporate tax is usually levied on a company’s income after deductions of certain expenses have been made. What can be counted as an expense and deducted is as follows:

  • Installation expenses
  • Issuance expenses
  • Meeting expenses
  • Insurance expenses
  • A limited partner’s dividend (the profit derived herein is the commercial gain)
  • Donation expenses incurred
  • Sponsorship expenses

On the contrary, the expenses that are not refunded, that is, the expenses that are not refunded, are as follows:

  • Fines
  • Indemnities
  • Vehicle expenses
  • Interest expenses paid
  • Earnings expenses that have been distributed


Many countries charge corporate tax to facilitate the tax process of businesses. In different countries, there are different rules that apply to income tax. This type of tax is applied to the corporations listed in Article 1 of the Corporate Tax Law. These institutions are:

  • Capital companies: Incorporated Companies and Limited Liability Companies
  • Cooperatives
  • Public economic institutions
  • Economic enterprises belonging to associations or foundations
  • Partnerships


What is Corporate Tax Obligation?

Corporate tax is handled with two different concepts. They are Full Taxpayer and Narrow Taxpayer.

Full Taxpayer: Companies whose legal and business center is within the borders of Turkey are called full taxpayers in the Corporate Tax.

Narrow Taxpayer: Companies that are not within the borders of Turkey and the legal and business center are called narrow taxpayers in the Corporate Tax.


How is Corporate Tax Calculated?

It is taken by calculating the rate determined as a percentage over the earnings of the institution in the relevant year. The corporate tax rate varies for each country. Therefore, you can calculate based on the Corporate Tax rate in your company’s location.

The above expenses are deducted from the company’s earnings and you will find the amount of tax you need to pay by multiplying the remaining earnings by the Corporate Tax rate. For example; If you have earned 300.000 TL and the Corporate Tax rate is 25%, you need to pay 300.000 x 0,25 = 75.000 TL tax.


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