North Cyprus Corporate Tax Guide
This guide summarises how company profits are taxed in the Turkish Republic of Northern Cyprus: the rates, a worked example, the filing and payment calendar, deductible and excluded expenses, and the loss carryforward rules. The information is compiled from publicly available sources.
Company profit in North Cyprus is taxed in two stages. Corporate tax is charged first on net corporate profit; income tax is then withheld on the profit remaining after corporate tax. Taken together, the two stages amount to roughly a quarter of the profit.
Rates
| Tax | Rate | Base |
|---|---|---|
| Corporate tax | 10% | Net corporate profit |
| Income tax withholding | 15% | Profit remaining after corporate tax |
| Total effective burden | about 23.5% | Profit before tax |
Worked example
For a company earning a profit of 100,000 ₺ the calculation runs as follows:
| Step | Amount (₺) |
|---|---|
| Profit before tax | 100,000 |
| Corporate tax (10%) | 10,000 |
| Profit after corporate tax | 90,000 |
| Income tax (15%) | 13,500 |
| Total tax | 23,500 |
| Net profit after tax | 76,500 |
The total tax of 23,500 ₺ corresponds to an effective burden of 23.5% on the 100,000 ₺ profit.
Filing and payment calendar
| Item | Deadline |
|---|---|
| Annual corporate tax return | 30 April |
| Corporate tax, 1st instalment | 31 May |
| Income tax payment | 30 June |
| Corporate tax, 2nd instalment | 31 October |
Corporate tax is paid in two equal instalments; filing on time and paying on the instalment dates avoids late interest and penalties.
Deductible expenses
The following can be deducted when determining net corporate profit:
- Ordinary operating expenses related to the business
- Formation and organisation costs
- Share and bond issuance expenses
- Donations and contributions of up to 5% of net profit
- Technical reserves for insurance companies
Expenses that cannot be deducted
- Interest paid or accrued on equity capital
- Interest on hidden capital
- Reserve provisions of any kind other than legal reserves
- Fines and tax penalties
- Corporate tax itself
Loss carryforward
Financial losses can be carried forward for 5 years and offset against the profits of following years. To preserve the right of offset, losses must be shown consistently in the annual returns.
Compliance and incentives
Taxpayers who file on time, pay punctually and face no additional assessments for three consecutive years qualify for a 5% tax reduction. Books and records must be kept for 7 years, and tax examinations can look back over that period. Corporate tax returns must be certified by an approved auditor and accountant.
The rates and rules in this guide are compiled from publicly available sources. Legislation can change; contact us for calculations specific to your company and for the values currently in force.