Legal ways to reduce tax in Turkey

WHICH EXPENSES CAN BE SHOWN AS COMPANY EXPENSES IN TURKEY?

        One of the most curious issues of entrepreneurs who are company owners, company partners or who want to establish a company is which expenses can be shown as company expenses and deducted from the company tax liability.

            "What are the expenses that can be shown as expenses, what can companies deduct from tax, what are the expenses that can be deducted from tax, what is the use of showing expenses to the company, which expenses can be written off as expenses, which expenses are deducted from tax, what are the mistakes made when showing expenses"

    First of all, to state; Which types of expenses related to commercial activities will be considered as company expenses is a very comprehensive issue. Tax liabilities vary according to the company's sector, commercial activities, partnership structure, import & export and similar criteria.

    In other words, it would be wrong to say that this item of expenditure is shown as an expense by looking at it from a list. However, you can pay attention to the expense items listed below in order to understand the basic principles and form an idea in this regard.

EXPENDITURE ITEMS THAT CAN BE SHOWN AS COMPANY EXPENSES IN TURKEY

1 – COSTS OF GOODS / SERVICES SOLD 

Property Assets; These are the expenses for obtaining all kinds of commercial goods and products sold by our company. We can count the purchase costs of the goods, the production costs.

Service Costs, on the other hand, all kinds of expenses incurred by companies operating in the service sector and selling services related to the service sold are considered as expenses.

2- FOOD & FOOD EXPENSES

    If you have staff, food fees given to the personnel, business meals, tea, coffee, water, etc. are considered as expenses.

3- ROAD, TRANSPORTATION & TRAVEL EXPENSES

    Expenses related to travels related to company activities and travel fees given to the personnel are considered as expenses.

4- ADVERTISING & PROMOTION EXPENDITURES

    All kinds of expenses incurred for advertising and promotion activities of your company. Promotional expenses such as television advertisements, newspaper advertisements, internet advertisements, brochures, etc., are considered as company expenses.

5- INSURANCE EXPENDITURES

    All kinds of insurance expenditures on company assets, such as workplaces, facilities, machinery and vehicles. Insurance expenses such as business insurance, fire insurance, earthquake insurance, traffic insurance, etc. are accepted as expenses.

6- BANKING EXPENSES & INTEREST EXPENSES

    Expenses incurred in banking transactions and commercial interest paid for financing provided to the company for company activities are considered as expenses.

7- EXPENSES ARISING FROM THE USE OF COMPANY VEHICLES

    There are two different laws in the expense of expenses related to vehicles and automobiles registered to the company, depending on whether the vehicles are COMMERCIAL VEHICLES or PASSENGER CAR STATUS.

    All expenses related to COMMERCIAL VEHICLES (not in the status of passenger cars) used by companies for their commercial activities can be used as expenses. Parking, gasoline, insurance, depreciation, maintenance and repair and all similar expenses are considered as expenses.

    In passenger cars and passenger cars, there are two different applications according to the company sector. These;

a- Companies whose main activity is the purchase, sale, rental of passenger cars with or without a driver, all expenses related to all kinds of cars and vehicles they operate are considered as expenses.

b- ALL OTHER COMPANIES WHOSE MAIN ACTIVITY IS NOT THE PURCHASE, SALE, RENTAL OF PASSENGER CARS WITH OR WITHOUT A DRIVER, 70% of the expenditures related to the thousand cars they own are considered as expenses.

8- AMORTIZATION EXPENSES

The obsolescence shares of the fixed minced meat (fixtures, buildings, machinery, vehicles, facilities, etc.) owned by the company are considered as expenses.

9- PERSONNEL EXPENDITURES

    All expenses incurred for company personnel (salary, overtime wages, travel fees, meal fees, insurance premiums, social benefits, etc.) are considered as company expenses.

10- EDUCATION EXPENDITURES

    Education expenditures up to a maximum of 10% of total income, including spouse and children, are considered as expenses.

11- INSURANCE PREMIUM PAYMENTS

    Bağkur insurance premiums up to a maximum of 5% of the net profit of income taxpayers are considered as expenses, provided that they are paid.

12- CONSULTANCY AND CONSULTANCY EXPENSES

    Consultancy expenses in areas that require expertise such as lawyers, financial advisors, mistress, engineering.

13- OFFICE / WORKPLACE EXPENSES 

    Consumables, cleaning materials, stationery materials, printing materials, representation and hospitality materials, maintenance and repair materials, food mines used for the maintenance of the office are considered as company expenses.

14- INFORMATICS & WEB DESIGN EXPENDITURES

Expenses related to the establishment of the company website, software used in company activities, all kinds of computer programs, antivirus programs, accounting programs, human resources programs, etc.

15- FIXTURE & FIXED ASSET EXPENDITURES

All kinds of machinery, facilities, buildings, devices, telephones, computers, tablets, printers, desk sets, air conditioners, televisions and monitors, security cameras and all kinds of office equipment used for commercial activities, office administration, service activities and production activities are considered as expenses.

16- ENERGY AND COMMUNICATION EXPENDITURES

Expenditures such as electricity, water, telephone, internet, natural gas used by companies are a basic expenditure and are considered as company expenses.

17- RENT AND DUES EXPENSES

Rents and customs used for the workplace are among the main expenses of the company. And it is considered a company expense.

WHAT ARE THE THINGS TO CONSIDER WHEN SHOWING EXPENSES?

    The most basic issue to be considered when showing a company expense is whether the expenditure is related to the activities of the company. According to tax laws, expenses that are not related to the business activities of the company cannot be written off as expenses. In this regard, we can count the following among the things to be considered.

a- Company expense refers to the expenses incurred to carry out the activities of the company. In other words, all expenses incurred to maintain your company's business activities are considered company expenses.

b- When showing the expense of the company, documents such as invoices, receipts, expense slips must be obtained regarding the expenses made. Invoices received or documents in lieu of invoices must be issued to the company name.

c- The personal expenses of the owner of the company, the personal expenses of the company personnel and the expenditures that do not have an invoice, which are made outside the activities of the company, cannot be shown as expenses according to the laws and cannot be deducted.

WHAT ARE THE LEGAL RIGHTS TO PAY LESS TAX IN TURKEY?

    In various periods, many tax incentives, tax deductions, tax exemptions and a number of tax rights are offered by law to support entrepreneurs and companies.

    Following these tax laws, which have a highly dynamic and variable structure, requires a certain amount of knowledge and experience. In order to benefit from tax rights such as incentives, discounts and exemptions offered by law, companies must adopt a dynamic approach in the same way.

    So, questions such as how to create a dynamic approach to these dynamic tax laws, how to use legal tax deductions, how to benefit from tax incentives, how to reduce tax costs, how to pay less taxes, what should be done to benefit from tax deductions and exemptions, what expenses can be shown to reduce taxes, how to reduce taxes, may arise.

We believe that in order to find answers to such questions and to understand the basic principles on these issues, you can pay attention to the following items.

HOW TO OPTIMIZE TAX LIABILITIES IN TURKEY?

1- GETTING SERVICE FROM A DYNAMIC CERTIIED ACCUNTANT WHO IS AN EXPERT IN HIS FIELD

        In order to optimize tax liabilities and benefit from tax incentives, discounts and exemptions offered by law, the first issue that companies should pay attention to is the necessity of working with an expert, experienced and dynamic Financial Advisor.

Competent and dynamic Financial Advisors always follow the tax legislation and guide the companies correctly. It ensures the benefit of tax deductions and rights granted by law. In this way, the tax liabilities of the companies are optimized, and the taxes are reduced to some extent with the discounts used.

From another point of view, some companies and entrepreneurs may refrain from paying fees to a competent Independent Accountant Financial Advisor and may see the fees paid for accounting services as exorbitant. For this reason, in order to get accounting services cheaply, they can turn to people who are not competent and work illegally unregistered.

In particular, in places where cheap service is provided, unregistered and working illegally, sufficient personnel are not employed in accordance with the requirements of the job, and the necessary technological and office investments are not made. In such places, accounting and tax transactions are carried out, so to speak, sloppily. Various tax deductions, incentives and tax exemptions granted by law are not followed. At the same time, monthly accounting transactions are not carried out correctly and the company's most basic tax deduction rights are not used. As a result, while companies think that they receive cheap accounting services, on the other hand, they are unwittingly faced with many hidden tax costs.

    SUMMARIZE; For your accounting work, you should work with a dynamic Independent Accountant Financial Advisor / Financial Advisory team who are experts in their field. An expert Independent Accountant Financial Advisor will offer much more value to your company than the service fee you pay.

2 - BENEFITING FROM TAX INCENTIVES

In some periods, various tax reductions, tax exemptions, tax incentives are offered by the competent authorities to stimulate the economy and support entrepreneurs. Some of these tax deductions and exemptions given by law are as follows.

 
2 a- Young Entrepreneur Income Tax Exemption

In order to support entrepreneurs younger than the age of 29 who will start trading for the first time, a part of their annual income is exempted from income tax for 3 years. In 2024, the Young Entrepreneur earnings exception is 230,000 TL, but this amount is updated every year.

In addition, the insurance premiums of young entrepreneurs for one year are paid by the treasury.

  2 b- Tax Deduction Offered to Disabled Citizens

In order to support disabled citizens who have a certain loss of working power, tax deductions are applied to wages or commercial revenues according to their disability rates.

2 c- Property Tax Deduction for Retired Citizens

Property tax is not charged on one house of retired people in Turkey, with a maximum gross size of 200 square meters. Those who own more than one house or have shares in more than one house, or those who work in an income-generating job despite being retired, cannot benefit from this support.

2 d- Earnings Exemption and Tax Deduction in Service Exports 

VAT EXEMPTION; All kinds of services provided to persons or institutions outside Turkey and used outside of Turkey are exempt from VAT.

In other words, invoices for services to be provided to people abroad with a company registered in Turkey will be issued without VAT.

80% EARNINGS EXCEPTION FOR SERVICE EXPORTS; Services such as informatics, software, web design, architectural design, accounting consultancy, which will be provided to a commercial company registered in Turkey and persons and institutions residing outside Turkey, are exempt from corporate tax, provided that they meet the conditions in the law.

For example; You have earned a net income of 1,000,000 TL from the software services you provide to a company headquartered in Germany from an IT software company established in Turkey. In this case;

Export of overseas services; 1,000,000 TL

Exception for the export of services; (80%) 800,000 TL

Income to be taxed on the export of services; 200,000 TL

Company expenses (office rent, accounting, personnel, etc.); 150,000 TL

Net Income to be Taxed; 50,000 TL

Corporate Tax Payable; 12.500 TRY (25%)

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