Tax Rates in North Cyprus

Personal Income Tax and Corporation Tax

The earnings of all companies with share capital and other institutions specified in the Corporate Tax Law are subject to Corporate Tax. 

Institutions whose statutory seat or business centres are located within the borders of the TRNC are subject to Corporate Tax at a rate of 10% over the corporate income they earn both within the borders of the TRNC and in foreign countries.

Foreign institutions whose statutory seat and business centres are not located within the borders of the TRNC are taxed at a rate of 10% on the corporate earnings they obtain only from the TRNC.

Taxable net income is determined after deductions for investment allowances and depreciation expenses.

In order to prevent double taxation, from the earnings obtained in foreign countries and transferred to the general accounts in the TRNC, similar taxes paid locally can be deducted from the imposed corporate tax.

Corporate Tax is paid in two equal installments, one in May and the other in October.

Institutions specified in the Corporate Tax Law are subjected to an Income Tax at the rate of 15% over the corporate income not distributed after the deduction of the Corporate Tax that they have to pay.

The income tax deductions on a non-distributed corporate income for TRNC registered, separate legal entity enterprises that invest in education or health services and the manufacturing institutions whose headquarters are located in priority regions for development determined by the Council of Ministers, the ratio of the non-distributed corporate income to the paid-in capital amount is taken as a basis provided that it is not more than the current deduction rate instead of the current income tax withholding rate.

Foreigners operating in the field of transportation, including corporations, shall not be subject to withholding tax on taxable income to be ascertained under the provisions of the Corporation Tax Law and the Income Tax Law.

The net amount of earnings and revenues obtained by real persons residing within the borders of the Turkish Republic of Northern Cyprus from all sources within and outside the borders of the Turkish Republic of Northern Cyprus in a calendar year is subject to the Income Tax.

In order to avoid double taxation, income taxes paid on earnings and revenues obtained in foreign countries are deducted as specified in the Income Tax Law.

The main deductions and exemptions granted to income tax payers within the scope of the Income Tax Law are as follows;

  • Contributions to Social Security Funds
  • Personal Allowance
  • Private Allowance
  • Spouse Allowance
  • Child Allowance
  • Third child and above Allowance
  • Disability and Old Age Allowance

The real persons are subject to income tax under the Progressive Tax System. Income Tax rates are gradually increasing from 10% up to 37%.

Value Added Tax

Value Added Tax (VAT) came into effect in 1996 as a consumption tax. In accordance with the VAT Rates Regulation, 5 (five) VAT rates are applied, which are 0%, 5%, 10%, 16% and 20%.