It applies when the statutory conditions (share of passive income, effective tax burden and revenue threshold) are met together. Its impact should be assessed in advance when structuring operations abroad.
Source: 5520 sayılı KVK m. 7
Related terms
Full and limited tax liabilityFully liable taxpayers are taxed on their worldwide income, while those with limited liability are taxed only on income earned in Turkey.Transfer pricingThe pricing of goods, services and financing transactions between related persons; tax legislation requires these prices to be at arm's length.Corporate income taxThe tax levied on the earnings of capital companies, cooperatives and other corporate entities.Advance taxTax paid in advance during the year by income and corporate taxpayers, in quarterly periods, on current-period earnings.Advance tax rulingA written explanation issued by the tax administration upon a taxpayer's written request about its own tax position or matters it considers unclear.Arm's length principleThe principle that transactions between related persons should be carried out at the prices and on the terms that would apply between independent parties with no such relationship.
Last updated: October 31, 2026 · This definition is for general information only.