Taxes Payable in Turkey
A lot of people who live in Turkey and who are legally obliged to pay tax there simply do not do so. A lot of people who do not live in Turkey but who are obliged to pay tax to the Turkish government because they have, for example, let out their home in Turkey also do not pay tax to the government in Turkey. If they do not pay taxes in Turkey they usually also fail to pay the taxes they owe in Britain or wherever else they live.
They do not think of this as being wrong (although it is illegal). It is just that there has, in the past, been a culture of not paying taxes. This is particularly true of people working for themselves or who receive income from property rental.
So the first decision you will have to make, when dealing with Turkey, is to decide whether you are going to abide by the law or whether you are going to follow the old-fashioned local 'customs' .
The author believes that the time has come when it will be necessary to comply with your obligations. The changes that came about in Spain, Portugal and Italy after their accession to the European Union will inevitably occur in Turkey, and this will dramatically reduce the scope and possibility of tax evasion. It will also - over time - change people's attitudes so that evading tax liabilities is much less acceptable than it is now-and more heavily punished.
That does not mean that if you don't make a full tax declaration you will be in immediate danger of detection or punishment by the Turkish authorities-that is likely to be a year or two away. But if you have not laid the foundations of payment of tax then the time is likely to come when someone will ask you questions. If it is not the Turkish authorities it could well be the English authorities. This is because one of the features of recent international relationships is the extensive exchange of information between countries, using the excuse of terrorism, drugs and money-laundering to justify the unprecedented disclosure of confidential information between governments.
Most people will sleep easier in their beds if they pay their taxes that are due. That does not mean that you have to pay a lot of money. Under the Turkish tax system there are so many opportunities for successful tax planning and the significant reduction of the taxes that would otherwise be payable that you can stay well on the right side of the law and still have a minimal tax bill.
It comes down to the choice between two different types of tax reduction exercise. Some tax planning is what we call a' hide and seek tax planning. You try to hide the money and let the government try to find it. This will, inevitably, sometimes work. Sometimes it will fail. If it does fail you will face substantial penalties including, potentially, jail sentences for tax evasion. The second type of tax planning is what we call 'kiss and tell'. Kiss-and-tell tax planning is when you make your arrangements to reduce your tax liabilities and then tell the tax office about them on the basis that they are perfectly lawful. If they want to challenge them they can do so but they cannot suggest that you have tried to hide the truth from them.
If you prefer the second option, get advice before you become involved in owning property in Turkey, working in Turkey or doing business in Turkey-there are many more tax reduction opportunities available if they are implemented correctly at the outset. They will include the choice of different legal vehicles for your project and different financial structures.
Under Turkish law it is your responsibility to fill in a tax return in each year when you have any taxable income.
The tax office (vergi dairesi) provides a lot of help and advice - including tax forms and guidance notes - over the internet. It is almost all in Turkish. Tax offices are organized by municipality.
Local Taxes
Both residents and non-residents pay these taxes. The taxes payable fall into various categories.
Property Tax
Property tax [emlak vergisi) is paid if you own a residential property and use it yourself (or have it available for you ruse). It is paid by the person who owned or occupied the property on i January in any year. It is not usually apportioned if they later move. The tax is raised and spent by the town hall (belediye) of the area where you live.
The tax is calculated on the basis of the notional value {nominal deger) of your property. You can appeal against the valuation decision, but the sums involved are usually so small it is not worth while. The amount charged is the nominal value of the property multiplied by the tax rate fixed in your locality.
Environment Tax
Environment tax (cevre vergisi) is the tax imposed by each municipality for collecting your rubbish.
Other Local Taxes
Town halls can also raise taxes for other projects and to cover shortfalls.
Payment of Local Taxes
No demand for payment of local taxes is sent in Turkey. It is the taxpayer's responsibility to learn the amount and the latest payment date due for them. This information is available from the local elected city official {muhtar) for each ward found in every locality or ward of a city.
The combined total of these taxes is low, representing between o.i per cent and 0.3 per cent of the declared value of the property - perhaps £50 for a small cottage or £200 for a larger house.
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