Introduction
In Turkey’s evolving financial sector, establishing a finance company—whether a leasing firm, factoring company, digital lender, or consumer financing entity—entails not only meeting licensing and regulatory criteria but also complying with robust tax and accounting obligations.
This article examines the taxation regime, accounting standards, and reporting requirements applicable to finance companies operating in Turkey. It also addresses sector-specific rules issued by the Banking Regulation and Supervision Agency (BRSA), Revenue Administration (GİB), and Financial Crimes Investigation Board (MASAK).
Whether the company is domestically owned or funded by international shareholders, these obligations are not optional. Failure to comply can result in financial penalties, license suspension, or even criminal prosecution.
1️⃣ Corporate Taxation: Basics
All finance companies in Turkey are subject to Corporate Income Tax (CIT) under the Corporate Tax Law No. 5520.
Key Highlights:
- Standard CIT rate: 25% (as of 2023; subject to legislative change)
- Applied on net taxable profit, which is revenue minus deductible expenses
- Quarterly advance tax declarations are required
- Tax year: Typically January 1 – December 31, unless otherwise approved
If the company is profitable, it must pay tax by the 25th of the month following the end of each quarter, with final reconciliation at year-end.
2️⃣ Withholding Taxes
In addition to corporate tax, finance companies must apply and withhold certain taxes at source:
| Transaction | Withholding Rate |
|---|---|
| Dividend payments to individuals | 10% |
| Interest paid to non-residents | 0–15% (per treaty) |
| Rent payments | 20% |
| Independent consultant payments | 20% |
Double Taxation Treaties (DTTs) may reduce these rates. Turkey has treaties with over 85 countries, allowing for reduced or exempt rates on interest, royalties, and dividends.
3️⃣ Value Added Tax (VAT)
Finance companies are subject to VAT Law No. 3065, but the application differs based on the type of financial service.
General VAT Principles:
| Service Type | VAT Rate | Exemption |
|---|---|---|
| Financial Leasing (interest only) | Exempt | ✅ |
| Factoring commissions | 20% | ❌ |
| Consumer finance interest | Exempt | ✅ |
| Asset sales | 20% | ❌ |
| Imported services (reverse charge) | 20% | ❌ |
While most interest-based income is VAT exempt, commissions and ancillary fees are typically subject to VAT. Companies must segregate exempt and taxable income to accurately calculate input VAT deductions.
4️⃣ Banking and Insurance Transaction Tax (BITT / BSMV)
Finance companies in Turkey are subject to a unique sector-specific tax known as:
Banking and Insurance Transactions Tax (BSMV / BITT) under Law No. 6802
Key Features:
- Applied to interest, commissions, and financial services
- Standard rate: 5% (reduced to 1% for some financial leasing activities)
- Calculated over gross revenue, not net margin
- Exemptions apply for export credits and certain foreign-currency denominated transactions
This tax replaces VAT in bank-like financial transactions.
5️⃣ Stamp Duty
Stamp duty is levied on contracts, agreements, and financial documents, including:
- Loan agreements
- Leasing contracts
- Service contracts
- Shareholder resolutions (in some cases)
Standard rate: 0.948% (as of 2024)
Stamp duty is paid at the time of execution and must be declared to the tax office within 15 days.
6️⃣ Financial Reporting: Turkish Accounting Standards (TAS)
Finance companies are required to maintain their accounts in line with:
- Turkish Accounting Standards (TAS) and Turkish Financial Reporting Standards (TFRS), adapted from IFRS
- Uniform Chart of Accounts (UCA) issued by BRSA
Audited Financial Statements Include:
- Balance Sheet
- Profit and Loss Statement
- Cash Flow Statement
- Statement of Changes in Equity
- Explanatory Footnotes
Audit must be conducted by independent audit firms approved by BRSA and Public Oversight Authority (KGK).
7️⃣ BRSA-Specific Reporting
Finance companies licensed by BRSA (BDDK) must comply with regulatory financial reporting under the Regulation on Uniform Reporting Format.
Reporting Frequency:
| Report Type | Frequency |
|---|---|
| Trial Balances | Monthly |
| Credit Risk Reports | Monthly |
| Liquidity Ratios | Weekly or Monthly |
| Capital Adequacy | Quarterly |
| Annual Activity Report | Annually |
These reports are submitted electronically through BRSA’s Data Transmission System (DTP) and must be signed with an e-signature.
8️⃣ Tax Incentives and Sectoral Exemptions
Certain tax incentives may apply depending on:
- Company location (e.g., Technoparks or Development Zones)
- Project type (e.g., R&D, FinTech innovation)
- Employment of qualified personnel
Examples:
- Corporate Tax Reduction for R&D investments under Law No. 5746
- Investment Allowances in Priority Development Regions
- Exemptions from VAT and Custom Duties for imported capital goods
Finance companies rarely benefit from these, unless they have a strong technology innovation component.
9️⃣ AML, KYC, and Tax Compliance Reporting
Under MASAK (Financial Crimes Investigation Board) guidelines and Law No. 5549, finance companies must:
- Perform Know Your Customer (KYC) due diligence
- File Suspicious Transaction Reports (STR)
- Maintain transaction records for at least 8 years
- Submit beneficial ownership declarations
Non-compliance may result in:
- Administrative fines up to TRY 4 million
- Criminal prosecution
- License revocation
Additionally, Turkey participates in the OECD CRS and FATCA regimes, requiring financial entities to report foreign account information.
🔟 Common Risks and Audit Findings
Frequent Violations Include:
- Improper VAT declarations on commission income
- Late submission of quarterly advance tax returns
- Errors in BITT base calculations
- Non-segregation of taxable vs. exempt revenue
- Misclassification of interest as exempt when it includes hidden fees
To avoid penalties, finance companies should:
- Work with experienced tax advisors
- Conduct internal audits regularly
- Keep detailed documentation on each transaction
- Follow BRSA circulars and GİB updates
✅ Conclusion
Taxation and accounting compliance in the Turkish financial sector is far more than a clerical task—it is a core pillar of regulatory trust and operational continuity. With multiple overlapping tax types, sector-specific regulations, and stringent reporting obligations, finance companies must treat compliance as a strategic function.
By integrating robust accounting systems, consulting with licensed tax advisors, and maintaining close communication with BRSA, GİB, and MASAK, finance companies can ensure full compliance and mitigate fiscal risks.
INTERN LAW FACULTY STUDENT
YAĞMUR YORULMAZ
Yanıt yok