PUBLIC REVENUES (RECEIPTS)

The Components of Public Revenues 1. Taxes (Substantive, Compulsory, Unrequited) 2.Social Security Taxes 3.Earmarking Taxes 4.Money Supply 5.Debt 6.Other Public Revenues a.Commercial Public Revenues (Income from Divisible Goods) b.Administrative Public Revenues (Licences, Charges, Permits) c. Miscellanous Public Revenues (Income from Desolates, Penalties etc.)

CIRCULAR FLOW OF INCOME AND TAXATION

PERSONAL TAXES VERSUS IN-REM TAXES PERSONAL TAXES: ADJUSTED TO THE TAXPAYER’S ABILITY TO PAY IN-REM TAXES: TAXES ON THINGS (ACTIVITIES OR SALES ETC.)

DIRECT VERSUS INDIRECT TAXES Direct tax generally means a tax paid directly to the government by the persons on whom it is imposed. Indirect tax is one that can be shifted by the taxpayer to someone else.

TAX BASE Income Taxes Consumption Taxes Wealth Taxes Lump-Sum Taxes

TAX EQUITY Benefit Principle Ability to Pay Principle a.Horizontal Equity b.Vertical Equity

GENERAL INFORMATION ABOUT TURKISH TAX SYSTEM I) Income Taxes 1) Personal Income Taxes 2) Corporate Income Taxes II) Taxes on Expenditure 1) Value Added Tax 2) Special Consumption Tax 3) Banking and Insurance Transaction Taxes 4) Stamp Duty 5) Special Communication Tax 6) Tax on Customs III) Taxes on Wealth 1) Inheritance and Gift Taxes 2) Property Tax 3) Motor Vehicle Tax

THE PERSONAL INCOME TAX Income is described as the net amount of profits and earnings obtained by natural persons in one calendar year. The elements of income are classified in seven categories. These are; - Income from commercial activities, - Income from agriculture, - Income from professionals, - Wages and salaries, - Income from capital investment (interest and dividends), - Income from immovable assets and rights, - Other income and earnings.

THE PERSONAL INCOME TAX Natural persons who earn one of or all of those kinds of income are subject to Personal Income Tax. Those people who obtain these kinds of income are Personal Income Tax payers. An individual in Turkey is liable for tax on his income as an employee and on income as a self-employed person. In the case of an individual who answers the test of a “permanent resident”, the tax will be calculated on his or her income earned in Turkey and overseas. A foreign resident who is employed in Turkey pays tax only on his or her income in Turkey.

THE PERSONAL INCOME TAX

THE CORPORATE INCOME TAX Earnings and profits of corporations are the subject of corporate tax. The elements of income subject to corporate income tax are; - Income from commercial activities, - Income from agriculture, - Income from professionals, - Wages and salaries, - Income from capital investment (interest and dividends), - Income from immovable assets and rights, - Other income and earnings. Taxable event is the obtainment of corporate profits/earnings.

THE CORPORATE INCOME TAX The following entities are the taxpayers of the corporation income tax: - Capital companies, - Cooperative companies, - State Economic Enterprises (public corporations), - Economic entities owned by foundations and associations, - Joint Ventures.

THE CORPORATE INCOME TAX Corporate income tax is applied at 20 % rate on the corporate earnings.

VALUE ADDED TAX (VAT) The Turkish Tax System levies value added tax on the supply and the importation of goods and services. The Turkish name for VAT is KDV and is introduced in 1985.

VALUE ADDED TAX (VAT) Transactions carried out in Turkey are the subject of the VAT. Taxable transactions include the supply of goods and services, importation of goods and services and other activities. The following transactions carried out in Turkey are subject to VAT: • Supply of goods and services within the scope of commercial, industrial, agricultural or independent professional activities, • Importation of all kinds of goods and services, • Other activities.

VALUE ADDED TAX (VAT) Three different rates are applied to varied goods and services groups in VAT.

SPECIAL CONSUMPTION TAX Goods in the lists attached to the Special Consumption Tax Law are the subject of the tax. There are mainly 4 different product groups that are subject to special consumption tax at different tax rates: • List I is related to petroleum products, natural gas, lubricating oil, solvents and derivatives of solvents. • List II is related to automobiles and other vehicles, motorcycles, planes, helicopters, yachts. • List III is related to tobacco and tobacco products, alcoholic beverages and cola. • List IV is related to luxury products.

SPECIAL CONSUMPTION TAX Taxpayers are different according to the lists. They are; For List I; manufacturers and importers of the petroleum products, For List II; merchants of motor vehicles, exporters for using or sellers through auction, For List III; manufacturers, exporters or sellers through auction of tobacco, alcoholic beverages and cola, For List IV manufacturers, exporters or sellers through auction of luxury products.

Stamp tax Stamp Tax applies to a wide range of documents, including but not limited to, contracts, agreements, notes payable, letters of credit and letters of guarantee, financial statements and payrolls. Stamp duty is levied as a percentage of the value stated on the document at rates ranging from 0.15% to 0.75%. The Stamp Tax Law provides that each relevant party shall be responsible for payment of the total amount of stamp tax on the agreements. Each original document is separately subject to stamp tax. 

Motor vehicle tax: The subject of the tax is motor vehicle. Taxable event is registration of the motor vehicles in the traffic, municipality and docks.  Taxpayers are real and legal persons who have motor vehicles that are registered to their own names in the traffic, municipality and docks register and the civilian air-vehicle register maintained by the Ministry of Transportation.   Tax is assessed and accrued annually in the beginning of January. The motor vehicle taxes are paid in two equal installments, in January and July, every year.   Motor vehicles are classified into four categories in terms of motor vehicle tax: - List 1 : cars, special utility vehicles and motorcycles, - List 2: minibuses, panel vans, motorized caravans, busses, pickups, trucks etc. - List 3 : yacht-cutter and all sorts of motor ships - List 4 : planes and helicopters             The amount of Motor Vehicle Tax for land transportation vehicles is determined according to their weight, age, cylinder capacity and the fuel used.

Banking and Insurance Transactions Tax (BITT) The subject of the tax is transactions and services produced by banks, bankers and insurance companies.   Taxpayers are banks, insurance companies and bankers.        All transactions and services produced by banks and insurance companies. There will be the tax upon the money, which they collect under the name of interest, commission and expenditure because of the services they produced on behalf of them. Bankers’ certain transactions and services produced and stated in Law are the subject of the tax. Other transactions of bankers are subject to VAT.             Banks and insurance companies are exempt from VAT, but are subject to BITT at a rate of 5%, which is due on the gains of such companies from their transactions. The purchase of goods and services by banks and insurance companies is subject to VAT but is considered as an expense or cost for recovery purposes. Foreign exchange transactions are subject to 0.1% BITT.             Taxation period in BITT is each month of the calendar year. Taxpayers declare their taxable transactions up to the evening of the 15th day of the following month.

Gambling Tax The subject of the tax is betting, lotteries and other forms of gambling. Taxpayers are composers of gambling activities and Gambling Tax is calculated by applying fixed or specific rate of tax.  Taxation period in Gambling Tax is each month of the calendar year. Taxpayers declare their taxable transactions and pay the accrued tax up to the evening of the 20th day of the following month.

Other Indirect Taxes Inheritance and Gift Tax: Items acquired as gifts or through inheritance are subject to a progressive tax rate ranging from 10% to 30% and 1% to 10%, respectively, of the item's appraised value. Tax paid in a foreign country on inherited property is deducted from the taxable value of the asset. Inheritance and Gift Tax is payable in biannual installments over a period of 3 years.    Property Taxes: Property taxes are paid each year on the tax values of land and buildings at rates varying from 0,1% to 0.3%. In the case of the sale of a property a 1% levy is paid on the sales value by both the buyer and the seller. Property tax returns are filed in every four years and annual taxes are paid in two equal installments, the first being in March, April or May and the second in November.    Communication Tax: All types of installation, transfer and telecommunication services given by mobile phone operators are subject to 25% Special Communication Tax. The tax base for Special Communication Tax is the same as the Value Added Tax base. Mobile phone operators will declare the communication tax on the VAT returns and pay the accrued tax by the 15th day of the following month.    Education Contribution Fee: Transactions and certain documents stated in the related law are subject to Education Contribution Fee in different amounts. Education Contribution Fee is taken as a fixed levy according to the document or the transaction. Education Contribution Fee is a temporary fee applicable until 31 December 2010.    Customs Duty :             Goods imported from abroad are the subject of the tax. Taxable events are free circulation of goods, registration of customs declaration, and temporary importation in case of partial exemption.  Taxpayer is principally person who declare to the customs office.              Customs duties are assessed on written declaration by the taxpayer and paid within 10 days dating from communication.

Fees There are different types of fees: Judgment Fees, Notary Fees, Tax Judgment Fees, Title Deed Fees, Consulate Fees, Ship and Harbor Fees, Permit of License and Certificate Fees, Traffic Fees, Passport, Visa and Ministry of Foreign Affairs. Certification Fees.

TAX STRUCTURE IN TURKEY

TAX STRUCTURE IN TURKEY

TAX STRUCTURE IN TURKEY

TAX STRUCTURE IN TURKEY