Every tax a foreign-owned Turkish software company actually pays

Search for Turkish corporate tax and you get 25%, which is accurate and tells a software exporter almost nothing about what they will pay. The number that matters depends on where your customers are, how you take money out, and how much of your cost base is payroll.

Here is every tax a foreign-owned Turkish software company meets, and what each one actually costs.

Corporate tax: 25%, and why exporters see something else

The headline rate on company profit is 25%.

The part that changes the answer is the IT export regime. Income a Turkish company earns from customers outside Türkiye is not taxed under that regime, which is the mechanism behind the 0% figure you will see on this site and elsewhere. It applies to income from foreign customers and it carries conditions about the nature of the activity.

For a studio whose players are all abroad, that means the 25% headline applies to very little. For a company with substantial Turkish revenue, it applies to that part. We wrote about the 0% regime in detail, including where it stops.

VAT: 20%, mostly on the way in

Türkiye's standard VAT rate is 20%.

Exported services sit outside its scope, so a company selling software or games to customers abroad is generally not charging Turkish VAT on those sales. It does pay VAT on the purchasing side, which is where the rate turns up day to day.

One detail that matters for claims: support under the export incentive is calculated on the invoice amount including taxes, so VAT on a claimable purchase is inside the reimbursement rather than outside it.

Dividend withholding: 15%, or much less

Taking profit out to a foreign parent costs 15% domestically.

A double tax treaty usually reduces that, and the reduction repays the effort of structuring for it. Germany, Finland and Spain all reach 5% on a qualifying shareholding. The United Kingdom and Sweden sit at 15% to 20%. The United Arab Emirates has the kindest fallback in the network at 12% where most treaties charge 15% or 20% when the shareholding threshold is missed.

Most treaties set that threshold at 25% of the shares, and a few, including the American, French and Canadian ones, set it at 10%. Which side of it you fall on is decided by how the holding was structured, which is why it is worth deciding before the first distribution rather than after. We keep the rates by country in the treaty pages.

Payroll: the number that surprises people

Employer social security runs at 20.75%, plus 2% unemployment insurance, and reduces to 16.75% plus 2% where the standard discount conditions are met.

The part that changes the arithmetic is that contributions are capped at a monthly earnings ceiling. Above that ceiling the employer pays nothing further, so the effective cost of a senior engineer is far below the headline percentage. Compare that with the United Kingdom, where employer National Insurance runs on the whole salary with no ceiling, and the difference on a senior team is substantial.

There is also salary support inside the export incentive itself for newly hired sales, marketing and business development staff, which is a reason to time hires around the application.

What the export incentive does to all of this

Everything above is about what leaves the company. The export incentive works in the opposite direction: it pays cash back on what the company spends reaching customers abroad.

That distinction matters more than it sounds. A tax credit is worth nothing to a company with no taxable profit. A cash reimbursement lands either way, which is why it reaches studios in a growth phase that European tax credits do not.

Putting the numbers together

For a typical foreign-owned studio selling abroad, the picture ends up looking like this. Little or no corporate tax on export income. No VAT charged to foreign customers. Employer costs capped at a ceiling. Fifteen percent, or as little as five, on profit taken out. And half to seventy percent of the growth spending refunded in cash.

The last line is usually the largest of them, which is why the calculator sits above the tax discussion on this page.

The three things people get wrong

Assuming 25% is the answer. It is the headline, and for an exporter it applies to a small part of the picture.

Ignoring the dividend rate until the first distribution. By then the shareholding is set. Five percent against fifteen is a threefold difference on every payment out, and it depends on a structure decided at formation.

Treating the incentive as a tax matter. It is a reimbursement claimed against invoices, on a six month clock from each payment. It sits with the finance function rather than with the annual tax return, and companies that treat it as a year-end job lose the early months.

Where to check the current numbers

Rates change, and the caps inside the incentive programme are revalued upward every year. Rather than print figures that go stale, we keep them in the guides and in the calculator, which both read from the same file. The tax rates above are sourced and dated at the foot of this article.