PERSONAL INCOME TAX

All the TRNC tax resident individuas arre subject to income tax on all income derived from sources in the TRNC and abroad.

In the case of partnership which is not within the scope of corparation tax where two or more individuals are partners, the income of the partnership is divided between partners and each partner is subject to Income Tax on the amount of his/her share of the income.

Individuals who reside in the TRNC for a period more than 6 months in a year continously or during intervals are considered tax resident.

Income derived from operations outside the TRNC are not required to be brought to the TRNC.

Foreign individuals who in the TRNC for a specified or temporary assignment are not considered tax residents even if they stay in the country more than six months.

Foreign nationals and those who are not regarded as tax residents are only taxed on income derived in the TRNC.

  2023 INCOME TAX RATES

The following income tax rates apply to individuals.

For The Tax Year	Chargeable Income	Rate	Calculated	Income Tax
15.000,00	15.000,00	10%	1.500,00	1.500,00
15.000,00	30.000,00	20%	3.000,00	4.500,00
27.000,00	57.000,00	25%	6.750,00	11.250,00
33.000,00	90.000,00	30%	9.900,00	21.150,00
Over 990.000,000		37%
Annual Personal Allowence: 150.000,000 TL
Note: For the salary calculation the division of the total amountof salary to the number of months is considered.

PERSONAL ALLOWANCE
		%	2023
1.	Annual Personal Allowance	-	150.000,00
2.	Special Allowance A- Remunaration from Employment B- Others *This is allowance deductible from the income net of employees social insurance and provident fund contrabutions.	10% 10%
3.	Spouse Allowance A- Spouce Living together B- In the rase of divorce amount paid to spouse	8% 4%	12.000,00 6.000,00
4.	Child Allowance A- ı) Child under 16 not attending school, II) Child in the primary school, III) Daughter who is not married and does not earn income. ( In this situation there is no age limit) B- I) Child under 20 and attending school in the TRNC. II) Child serving compulsary military duty from these serving as officers. III) Child under 18 and attending school outside the TRNC. IV) Child with permanent disability. C- Child not younger than 18 and older than 27 and howing university education (in the TRNC and a board) D- Allowances to families haing three or more children. I) For the third child. II) For each child after the third child (inaddition). ** If spouser have suparate income,child allowance is equally divided between there.	6% 8% 11% 15% 5%	9.000,00 12.000,00 16.500,00
5.	Disability and Old Age Allowance: A-,I) For these who lost 50% of the capability to carry out a work. II) For these who lost 100 % of the capability to carry out work. B- For these tax payers over the age of 65.	15% 30% 5%	22.500,00 45.000,00 7.500,00
6.	Social Insurance Deductions Total of social insurance,provident fund and approved retirment benefit schenes contributions. I) Employers' Contribution, II) Empolyers' Contribution	19% 13%
7.	Other Deductions I) Municipality Occupation Tax. II) These amounts are restrited to the total of social insurance and provident fund employee contributions in a year.

  ALLOWABLE EXPENSES

The following expenses are deductible expenses for the determination of Taxable Net Income.These expenses should be incurred wholly for the purpose of the business from which the income is derived.

- Expenditure incurred for the repair, maintenance rental of building,machiney and equipment.These expenditure should be made wholly for the purpose of business.
- Repairs and petrol expenses and depreciation of motor vehicles owned by the business apart from the saloon type cars having motor power above 1600 cc.
- 50% of the requiry petrol expenses and depreciation of saloon type cars having motor power over 1600cc.
- Motor vehicle having “Z” or “T” number plates are considened motor vehicles for business use and their expenses are fully deductible.
- In the event of a motor vehicle being used for personal purposes , expenses can be partially deductible.
- Purchase, maintenance and repairs of tools,materials and goods.
- In addition to travel tickets, additional daily travel allowance is deductibleas an expense provided it does not exceed the amount set by the Goverment for civil servants.
These allowances cannot be more than 70 days in total for the manufacturing and export companies and not more than 50 days for the others.

- Lunch,clothing and medical expenses provided by the enterprise for its employees and social ınsurance and provident fund contributions paid.
- Part of the amount of social insurance and provident fund contributed by the enterprise for its employees is not allowable if contribution exceeds 15 % of the gross salary.
- Duties and taxes other than income tax and corporation tax.
Premium paid for life insurance .
- Depreciation of fixed assets.
- Any tools, equipment, machinery,furniture and fittings purchased at a cost less than the monthly minimum wage set for the year.
- Receivables which has no value as stated in the Tax Procedures Law.
- Doubtful receivables as stated in the Tax Procedures Law.
- In the event of purchase ,manufacture and useage for the first time of a fixed asset, 50% initial investment allowance on acquisition cost.
This rate can be increesed to 100% for those enterprises which obtain investment incentive for the under Incentive Law.
- Advertising expenses not exceeding 10% of gross profit of the enterprise.

- Entertaining expenses of enterprises provided:
(a) In the case of enterprises wholly engaged in manufacturing and export ,entertaining expenses not exceeding 4% of the gross profit.
(b) In case of other enterprises, entertaining expenses not exceeding 2% of the gross profit.

- Payments to the goverment organisations founded by law,sport clubs registered with sport federations for cultural, educational,health,sporting and scientific activities not exceeding 10% of the net profit of an enterprise.
- Interest paid on loans obtained from companies for the purchase of company shares.
- Loses incurred on the sale of fixed assets.

If a person is forced to move to another place due to his/her job assigment and rents his/her house and rents another:
         (a) If the rent he/she receives is less than the rent he/she pays,the rent he/she receives is deductible.
         (b) If the rent he/she receives is more than the rent he/she pays.The rent he/she pays is deductible.

- Interest on loans he/she obtained to build or buy a residence for himself or his childeren not exceeding 150 m2
There is a restriction that, the property should not be disposed of within 10 years from the date of purchase.If the property is disposed, total of interest deducted until the date of disposal are added back to tax computation in the year of disposal.

  CORPORATION TAX

Limited liability companies, goverment owned enterprises,clıbs and co-operative companies are subject to corporation tax.

Corporation Tax Rate
Corporation Tax rate for all companies is 10%. In addition to the Corporation Tax paid on the net taxable profits , companies in the TRNC are subject to 15% Income Tax.Income Tax is calculated by charging 15% on the profit remaining after the deduction of Corporation Tax.

Allowable Experses:
- Expenditure incurred for the repair, maintenance rental of building,machiney and equipment.These expenditure should be made wholly for the purpose of business.
- Repairs and petrol expenses and depreciation of motor vehicles owned by the business apart from the saloon type cars having motor power above 1600 cc.
- 50% of the requiry petrol expenses and depreciation of saloon type cars having motor power over 1600cc.
- Motor vehicle having “Z” or “T” number plates are considened motor vehicles for business use and their expenses are fully deductible.
- Purchase, maintenance and repairs of tools,materials and goods.
- In addition to travel tickets, additional daily travel allowance is deductibleas an expense provided it does not exceed the amount set by the Goverment for civil servants.
These allowances cannot be more than 70 days in total for the manufacturing and export companies and not more than 50 days for the others.
- Lunch,clothing and medical expenses provided by the enterprise for its employees and social ınsurance and provident fund contributions paid.
Part of the amount of social insurance and provident fund contributed by the enterprise for its employees is not allowable if contribution exceeds 15 % of the gross salary.
- Duties and taxes other than income tax and corporation tax.
- Depreciation of fixed assets.
- Any tools,equipment , machinery,furniture and fittings purchased at a cost less than the monthly minimum wage set for the year.
- Receivables which has no value as stated in the Tax Procedures Law.
- Doubtful receivables as stated in the Tax Procedures Law.
- In the event of purchase ,manufacture and useage for the first time of a fixed asset, 50% initial investment allowance on acquisition cost.
This rate can be increesed to 100% for those enterprises which obtain investment incentive for the under Incentive Law.
- Advertising expenses not exceeding 10% of gross profit of the enterprise.
- Entertaining expenses of enterprises provided:
         (a) In the case of enterprises wholly engaged in manufacturing and export ,entertaining expenses not exceeding 4% of the gross profit.
         (b) In case of other enterprises, entertaining expenses not exceeding 2% of the gross profit.

- Payments to the goverment organisations founded by law,sport clubs registered with sport federations for cultural, educational,health,sporting and scientific activities not exceeding 10% of the net profit of an enterprise.
- Interest paid on loans obtained from companies for the purchase of company shares.
- Loses incurred on the sale of fixed assets.

  LOSSES CARRIED FORWARD

Tax loss incurred which cannot be set off against other income, is carried forward and set off against the profits of the next five year..

Depreciation Rates Of Fixed Assents

Tangable Fixed Assets	Depreciation Rates
Buildings	3.33-10
Furniture,Fixtures,Fittings and Machinery	10-50
Medical Tools and Equipment	10-20
Advertisement	10-50
Electrical Equipment	10-25
Information Technology Equipment and Systems	10-33.33
Motor Vehicle	10-25
Marine Vehicle	5-20
Aircraft and Equipment	8-10
Agriculture and Livestock (Trees and Animals)	2-25
Construction Formwork as Scaffolding	5-25
Electricity Power Station and Transmission Plants	3.33-20
Intargalle Fixed Assets
Brands,Patents,Copyright,Trademarks	20

TAXATION OF COMPANIES INCORPORATED UNDER SPECIAL LAWS

Free Zone Companies

Free zone companies are subject to the applicable tax laws in the TRNC, but due to special provisions in the Free Zone Law,there are exemptions that are available to them.

Free Zone Companies are exempt from Corporation Tax if whole of their operations are conducted outside the TRNC.If these companies carry out trade with the individals or companies in the TRNC the corporation tax and income tax is calculated on the profits they make from these activities.

Free Zone Companies are not subject to VAT for their transactions.

Free Zone Companies are required to deduct taxes from the wages of their employees and also are required to make contribution for social insurance and provident fund premiums.

Serbest Liman Bölgesi şirketleri yaptıkları faaliyetler dolayısı ile KDV ne tabi değildirler.KKTC’nde faaliyet gösteren kişi veya kurumlardan aldıkaları mal veya hizmetlerde bu şirketlere kesilen faturalar KDV’li olsa dahi bu ödenen KDV’sini gider olarak vergiden indirme hakkına sahiptirler.

  INTERNATIONAL BUSINESS COMPANIES (IBCs)

International Business Companies can only carry out transactions outside the TRNC.
International Business Companies are subject to 1% corporation tax on their net taxable profits.

International Business Companies are not subject to VAT on their sales.

International Business Companies are required to deduct taxes for the wages of their employees and also are required to make constribution for social insurance and provident fund premiums.

  VALUE ADDED TAX

Value Added Tax is imposed on the supply of goods and provision of services in the TRNC and as well as on the importation of good into the TRNC.
Taxable persons (real or corporate) charge VAT on their taxable supplies (out put VAT) and are charged with VAT on goods or services which they receive (input VAT) .If VAT received in a period exceeds total VAT paid,the difference is paid to Inland Revenue.If VAT paid in a period exceeds VAT received,the excess VAT paid is carried forward to the next period to be set off against the future VAT payable.
VAT returns are summited to the Inland Revenue on the 20th day of the month following the month to which it relates.

Taxation Of Profit From Sale Of Immovable Property

Any profit made from sale,transfer, exchange or forced acquisition of immovable property is called immovable property sales profit.This profit is taxed in accordance with the Income Tax Law.

At the point of disposal of the immovable property Land Registry Office Calculates 20% surcharge on the profit after deducting 30% exemption.The calculated tax amount is the final tax liability of the person disposing the property .

  BANKING AND INSURANCE SERVICES TRANSACTION TAX

The amount of income received from transactions carried out by banks,bankers,insurance and credit companies are subject to Banking and Insurance Transaction Tax.

Banking and Insurance Services Transaction Tax Rates:

A) In any transaction apart from insurance services the rate is 3%
B) Insurance services are subject to 5% tax.
C) The rediscount transaction between the TRNC Central Bank and local commercial banks are subject to 2% tax.
D) The rate of tax applied in foreign exchange transactions is 0.1%

Banking and Insurance Services Transaction Tax is payable on the 15 of the month following the month the transaction is related.

  INHERITANCE TAX

The inheritance tax rate is 1% on the value of the estate.

The allowances deductible from the value of the estate is20 times the annual minimum wage.

  SPECIAL COMMUNICATION TAX

This tax is applicable to telecomunication services provided by GSM operators.

The rate of Special Communication Tax is 35%.

  STAMP DUTY NOTIFICATION

Stamp Duty Notification issued under the TRNC Stamp Duty Law has been amended and the amended version will be applied as from 1 January 2023.The major stamp duties under this Notification are applicable in 2023 given below with 2023 comparatives.

	2023	2023
Undertakings and Commitments	TL 38,70	TL 10,50
Agreements
i) Amounts below TL 48.300.000		0,05%
ii) Amounts above TL 48.300.000		0,01%
Rent Agreements
i) Amounts below TL 48.300.000		0,05%
ii) Amounts above TL 48.300.000		0,05%
Power of Attorney	TL 0,40
Bill of Exchange Other than Letter of Credit or Cheque	TL 0,40
Promissory Note
i) Amounts below TL 48.300.000		0,05%
ii) Amounts above TL 48.300.000		0,01%
Cheques	TL 0,40
Charter Party Agreements	TL 183,50
Registration of Companies:
- Memorandum of Association	TL 360
- Articles of Association	TL 360
- Duty Payable on authorised share capital	0,05%	0,05%
- Duty on Authorised share capital of companies which are given incentives under 47/20 Incentive Law	0,01%	0,01%
Letter of Credits:
i) Amounts below TL 12.900.000	0,05%	0,05%
ii) Amounts above TL 12.900.000	0,01%	0,01%
Letter of Credits	0,01 %	0,01 %
Insurance Polices	Exempt	Exempt
Bonds:
i) Amounts below TL 12.900.000	0,05%	0,05%
ii) Amounts above TL 12.900.000	0,01%	0,01%
Invoices, Receipst, Payment Vochers
Above TL 62	TL 0,40