80% TAX DISCOUNT ON SERVICE EXPORT EARNINGS

 

Previously, 50% of the earnings related to the services provided by companies in Turkey to individuals and organizations registered outside of Turkey and benefited outside of Turkey were exempt from tax. With an amendment to the law, this exemption rate has been increased from 50% to 80%.

 

In short, if the services specified in the law are exported outside of Turkey, 80% of these service earnings will not be charged income tax/corporate tax.

 

The amendment published in the Official Gazette No. 32413 is as follows; "Article 59 of Law No. 7491. The discount rate of 50 percent applied to earnings from services provided abroad within the scope of Article 10/1 (ğ) of the Corporate Tax Law has been increased to 80 percent depending on the conditions."

 

 

SERVICES FOR WHICH 80% TAX EXEMPTION WILL APPLY

 

The services covered by the 80% tax exemption to be applied in service export earnings are explained in the law as follows;

-        Services that are exclusively used abroad,

-        Architectural services

-        Engineering services

-        Design

-        Software Informatics services

-        Medical reporting

-        Accounting record keeping

-        Call Center

-        Product Testing

-        Certification

-        Data storage, data processing, and data analysis

-        It is called the services provided by the enterprises operating in the specified vocational training areas.

 

 

WHAT ARE THE CONDITIONS FOR BENEFITING FROM 80% TAX EXEMPTION ON SERVICE EXPORT EARNINGS?

 

There are some conditions explained by law in order to benefit from tax deduction in service export earnings. Companies that earn service export earnings must provide these benefits in order to benefit from data exemption. The conditions specified in the law are as follows;

 

1- THE CONDITION OF BENEFITING ABROAD; The services offered by the service exporter should be used outside of Turkey. The services that are the subject of service exports should not be related to the business of companies operating abroad in Turkey.

 

2- CONDITION FOR TRANSFER OF SERVICE EXPORT EARNINGS TO TURKEY; Service export earnings must be transferred to Turkey until the income/corporate tax returns for the relevant period are submitted. Income tax returns are filed in March of the following year, and corporate tax returns are filed in April of the following year. Accordingly, the service export earnings of those who are sole proprietorships until March of the following year, and until April of the following year for companies subject to corporate tax, must be transferred to their accounts in Turkey.

 

3-DOCUMENT REQUIREMENT; In order to benefit from tax exemption in service export earnings, the invoice or invoice substitute document related to the service must be issued on behalf of the customer outside of Turkey.

 

 

 TOP QUESTIONS ABOUT 80% TAX DEDUCTION ON SERVICE EXPORT EARNINGS

 

1- Is there a tax deduction for software services provided to people outside of Turkey?

Yes. Software services provided to individuals and companies abroad are service exports. If the necessary conditions are met, income/corporate tax will not be charged on 80% of the earnings obtained.

 

2- Is there VAT on services provided to individuals and companies outside of Turkey?

The services provided by companies in Turkey to persons and companies outside Turkey are exempt from VAT, provided that the services are used outside of Turkey. That is, on such invoices, VAT is not calculated under the exception.

 

3- Will there be VAT on the service invoice for the vehicle rented to a person registered abroad for his trip in Turkey?

There is VAT on all kinds of services used in Turkey. Since the car rental service is used in Turkey, the service invoice must be issued with VAT.

 

4- Is there a tax deduction for architectural services provided to people outside of Turkey? 

Architectural services provided to persons registered abroad and used outside of Turkey are within the scope of service exports. 80% of the earnings obtained are exempt from tax.

 

In order to benefit from the 80% tax deduction in the export of architectural services, the important criterion is where the architectural services are used. If the architectural service provided is provided for a real estate located within the borders of Turkey, it is not considered as a service export, even if the person receiving the service is registered outside of Turkey. Because architectural services are used in Turkey.

 

5- Is there a tax deduction for service earnings obtained from Turkey through the remote working system?

There are significant tax exemptions for services provided in the form of remote work to companies abroad with a company registered in Turkey.

 

If the legal conditions are met, most of the earnings are exempt from tax. With a company registered in Turkey, the advantages of a business model that provides services to people outside of Turkey with a remote working model are as follows;

 

1- All your company revenues and business are legal. You do not face any risks such as legal liability or tax penalties for the profits obtained.

2-With a registered company, you can expand your activities and offer services to more than one different company.

3- Service export revenues are exempt from VAT. In other words, there is no VAT on service sales abroad.

4- 80% of the revenues earned through service exports are exempt from corporate / income tax. After deducting the discount rate, the remaining taxable profit will be deducted from the other expenses of the company, so the corporate/income tax costs will remain very low.

 

6- Is it easy to establish a company in Turkey for the remote work model, how many days does it take for a company to be ready?

For the registration of a company in Turkey and the subsequent monthly financial transactions, the most important issue is to determine the correct address to receive service. A team of knowledgeable and dynamic experts will quickly set up your company and complete all formal processes on your behalf. At this stage, getting service from an address that does not have enough experience and knowledge, as it is cheaper, will cause you to incur many hidden costs. Clearly, getting service from an inadequate address will do more harm than good to your business.

 

You can always contact us for support in company establishment procedures. The establishment procedures of companies are an area in which we have a lot of experience. We quickly complete the official registrations and procedures.

 

7- Is it easy to establish a company in Turkey, how many days can I establish the company?

Company opening procedures in Turkey take an average of a few days depending on the type of company. As a sole proprietorship, the registration process of real person traders can be completed within one day. Registration of limited liability companies or joint stock companies can be done daily within an average of three or four working days.

 

 

8- Which type of company is more advantageous in terms of tax in terms of establishing a company in Turkey?

When evaluating the tax advantages of a company registered in Turkey, the most important condition to be considered is the volume of activities and the net profit of the company. If we make an evaluation in general; Individual companies may be preferred for small-scale activities because the establishment and closing processes are relatively easy and the monthly costs are lower.

 

As the business volume of the company grows and its revenues increase, limited liability and joint stock companies, which are capital companies, are more advantageous in terms of tax. The tax rates levied on income in limited liability companies are fixed. Tax rates do not increase as revenues increase. In sole proprietorships, as income increases, the taxes to be levied on income increase to 40%.

 

In short, it can be considered that individual companies are more advantageous for small-scale activities and capital companies are more advantageous for medium-sized activities.

 

If we make an evaluation according to the figures of 2024; We can consider activities with an average net profit of less than 110,000 TL as small-scale. We can consider medium-sized businesses with a net profit of more than 110,000 TL.

 

In the light of these data, it is recommended to establish a sole proprietorship for small-scale activities, and to establish a limited liability company or joint stock company for medium and large-scale activities.

 

On the other hand, capital companies are much more prestigious than individual companies. For this reason, it is often preferred by entrepreneurs, even in small-volume jobs. The most preferred type of company by entrepreneurs in Turkey is the limited liability company.

 

 

9- I want to establish a company in Turkey. Where do I start?

If you want to get support in establishing a company in Turkey, you can always visit our office during working hours to meet and discuss in detail.

 

If you do not have enough time to visit our office or if you are in a different region, you can contact us by phone, whatsapp application or email. No matter where you are in the world, we can establish a company that will be given to us. We follow all the necessary transactions on a turnkey basis.

 

10- Is it obligatory to bring the income obtained to Turkey in order to benefit from the 80% tax exemption in service export business? 

Yes, it is obligatory to bring it to Turkey. In order to benefit from the tax deduction, the income must be transferred to the accounts in Turkey at the latest until the date of submission of the tax returns for the relevant period. Income tax returns on income must be filed in March and April of the following year.

 

11-Is there an 80% tax exemption for services provided to the free zone?

Free zones are not accepted abroad according to the law. For this reason, 80% tax deduction cannot be used for the earnings obtained from the services provided to companies operating in free zones.

 

 

12- Will there be a 5-point reduced corporate tax for companies exporting services?

There is a 5-point reduction in the corporate tax rate for the earnings of exporting companies that sell abroad.

 

 

Since 80% of the earnings of the companies engaged in service export activities from service exports are discounted, the discount rate is first deducted from the income base to be taxed. Then, a corporate tax deduction of 5 points can be applied to the remaining taxable income base within the scope of export activities.

 

 

 

 

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