The Türkiye and Canada tax treaty: what leaving profit costs
A Canadian parent pays 15% on dividends where it holds at least 10% of the Turkish subsidiary, and 20% below that. Interest is capped at 15% and royalties at 10%. Canada withholds 25% in the other direction, so the treaty matters more to money coming back than going out.
Türkiye refunds half of what a software company or game studio spends on advertising, app store commissions and hosting when it sells to customers abroad, and up to 70% when those customers are in one of twenty target markets. It is paid in cash, against invoices you have already settled. Try it with your own numbers.
01Where does the Canada treaty actually save money?
Türkiye withholds 20% on a royalty with no treaty in place and 10% under this one, so on $500,000 of licence fees paid to a parent in Canada, $50,000 a year stays with the group instead of going to the tax office.
- Licence fee leaving Türkiye$500,000
- Withheld without a treaty, at 20%$100,000
- Withheld under this treaty, at 10%$50,000
- What the treaty saves on this payment$50,000
02What does it cost to pay a dividend to Canada?
This treaty caps Türkiye at 15% to 20% and Türkiye already charges 15% at home, so paying a dividend to a parent in Canada costs 15% either way.
- What Türkiye charges with no treaty15%
- The ceiling this treaty sets15% to 20%
- What Türkiye actually deducts15%
03What does Türkiye withhold on payments to Canada?
| Payment leaving Türkiye | What you actually pay | Türkiye's rate with no treaty | The ceiling this treaty sets | Conditions |
|---|---|---|---|---|
| Dividends | 15% | 15% | 15% to 20% | The treaty allows Türkiye up to 15% to 20% here, which is above the 15% it charges anyway, so this line is unchanged by the treaty.15% where the parent holds at least 10%, otherwise 20%source |
| Interest | 10% | 10% | 15% | The treaty allows Türkiye up to 15% here, which is above the 10% it charges anyway, so this line is unchanged by the treaty.source |
| Royalties | treaty helps10% | 20% | 10% | Türkiye's domestic royalty rate is 20%source |
04How does the Canada treaty compare with Türkiye's others?
Canada shares its 15% dividend rate with Belgium, France, India, Italy and 5 others. 10 of the treaties here go lower, down to 5% for Austria.
- 5%6
- 10%4
- 15%10
Canada sits mid-range at 15% with the easier 10% threshold. What makes it unusual is the other direction: Canada's own domestic rate on outbound dividends is 25%, so a Canadian group moving money both ways is dealing with two different problems rather than one.
05What happens to the money once it lands in Canada?
| In Canada | Rate |
|---|---|
| Corporate tax on ordinary profit | 15% federal, roughly 23% to 26% once provincial tax is addedsource |
| VAT, standard rate | Combined federal and provincial sales taxes of 5% to 15%source |
| Withholding tax on dividends to a foreign parent | 25%source |
Türkiye against Canada, measure by measure.
06What catches out groups based in Canada?
- Canada's own domestic rate on outbound dividends is 25%, so the asymmetry is worth modelling before deciding where the parent sits.
- The 10% threshold is met by most real holdings, so the 20% rate mainly catches genuinely small stakes.
- Provincial tax on the Canadian side changes what the received dividend is worth, and it varies by province.
07How does this sit alongside what Türkiye pays Canada groups back?
None of this touches the export incentive, which reimburses what the Turkish company spends rather than taxing what it distributes. A Canadian group claiming provincial credits at home can claim the Turkish reimbursement through a Turkish company at the same time.
| What you spend it on | Programme item | Paid back | Annual cap |
|---|---|---|---|
| Ads and player acquisition | Digital product promotion: ads & marketing (up to 10 products/yr) | 50% to 70% | 50 000 000 ₺ ≈ $1,043,841 |
| App store and platform commissions | App store & platform commissions (up to 10 products/yr) | 50% | 20 000 000 ₺ ≈ $417,537 |
| Hosting and servers | Hosting costs | 50% | 5 000 000 ₺ ≈ $104,384 |
What Türkiye would pay back on your spending
Türkiye runs a government programme that refunds part of what a software company or game studio spends on reaching customers abroad. It covers advertising, app store and platform commissions, and hosting. The refund is paid in cash against invoices the company has already settled, so it does not depend on the company making a profit. The standard rate is 50%, and it rises to 70% when the customers being targeted are in one of the twenty countries on the Turkish Ministry of Trade's target list.
Put your own yearly figures in below. The rates and the annual caps come from the same file as our full calculator, and the total updates as you type.
08Questions we get asked
Which direction is the treaty most useful?
Coming back to Canada, mostly. Canada withholds 25% domestically on outbound dividends, so treaty relief matters in both directions but the starting points differ.
Do the provincial credits interact with this?
No. They are credits on Canadian labour. The Turkish withholding is a charge on a distribution from a different company.
Who is telling you this
CyberScope Solutions is an Istanbul consultancy that manages Türkiye's IT export incentive claims for software companies and game studios. Treaty rates decide what a group pays to move profit, and they come up in almost every first conversation, so we keep them written down rather than looked up each time.
- Every figure is sourced. Each number links to the page it came from and carries the date we last checked it.
- You find out early if it is not for you. The first call is thirty minutes and we will say plainly if your spend pattern does not suit the programme.
- These pages get rebuilt, not left. Rates and caps come from the same file as our calculator, so when one changes the page changes with it.
Turn that number into money
Send us the rough shape of your spend. You get back what it is worth, what setting it up involves, and how fast the first claim can go in. Companies already operating here treat this as routine, and the six month window means the clock is running on invoices you have already paid.
- A reply from a person within one working day
- No mailing list, no drip sequence
- Thirty minutes, and you keep the numbers either way
Got it.
We will read it properly and reply within a working day. If you would rather get it over with now, pick a time that suits you.
Book a 30 minute call09Where these numbers come from
- https://taxsummaries.pwc.com/turkey/corporate/withholding-taxes checked 2026-08-20
- https://taxsummaries.pwc.com/canada/corporate/taxes-on-corporate-income checked 2026-08-20
- https://taxsummaries.pwc.com/quick-charts/value-added-tax-vat-rates checked 2026-08-20
- https://taxsummaries.pwc.com/quick-charts/withholding-tax-wht-rates checked 2026-08-20