TRNC TAX SYSTEM
HOW IS THE NORTHERN CYPRUS TAX SYSTEM?
The earnings of all capital companies and other corporations specified in the Corporate Tax Law are subject to Corporate Tax. Institutions whose legal centers or business centers are within the borders of the TRNC are subject to a 15% Corporate Tax on the earnings they earn both in the TRNC and in foreign countries. Foreign institutions whose legal centers and business centers are not located within the borders of TRNC are only taxed at a rate of 15% on the corporate earnings obtained from the TRNC.
Foreign transport institutions dealing with air transport are taxed at a rate of 36% over the corporate income determined by applying an average equivalent rate of 5% to their revenues, and the military transport institutions dealing with land and sea transport are taxed by applying an average equivalent rate of 10% to their revenues. They are subjected to tax on the corporate income they will have. The earnings obtained from the activities of enterprises with separate legal entities registered in the TRNC, which invest in the purpose of operating higher education institutions, student dormitories, nursing homes or health facilities for education or health services, are subject to 10% corporate tax for five years. In addition, in cases where it is compulsory to pay the income through tax deduction method according to the income tax law, the prescribed rate is reduced to 5%.
The earnings to be obtained from these activities of the manufacturing institutions operating in priority regions for development and registered in the TRNC with legal headquarters and business centers in this region, as determined by the Council of Ministers, are subject to 10% corporate tax for ten years. Taxable net income is determined after deduction of investment deductions and depreciation expenses. In order to prevent double taxation, from the earnings obtained in foreign countries and transferred to the general result accounts in the TRNC, similar taxes paid on site can be deducted from the imposed corporate tax. Corporate Tax is paid in two equal installments, one in May and one in October.
Income Tax Institutions specified in the Corporate Tax Law are subjected to 15% Income Tax over the non-distributed corporate income after the deduction of the Corporate Tax they need to pay. In the corporations that have gained the right to benefit from the reduced Corporate Tax rate (10%) within the scope of the Corporate Tax Law, the ratio of the non-distributed corporate income to the paid-in capital amount is taken as a basis instead of the current income tax rate, provided that it is not more than the current deduction rate. .
Value Added Tax Value Added Tax Value added tax was introduced in 1996 as a consumption tax. 6 value added taxes are applied in accordance with the Regulation on the Value Added Tax Rate. Value Added Tax rates applied 0%, 3%, 5%, 10%, 15%, 20% is.
