Taxes subject to local companies operating in the Northern Cyprus
Value-added tax
Value Added Tax is the tax levied on the goods and services delivered in education, health, tourism, commercial, industrial and agricultural activities carried out in the Northern Cyprus. In addition, Value Added Tax is levied on goods imported from abroad.
Real and legal persons subject to Value Added Tax add Value Added Tax to the price or fee they determine in return for the goods they sell or the services they provide. These real or legal persons also pay Value Added Tax on the goods or services they buy.
Value Added Tax Rates are variable. The general rate is 16%. Other rates are 5%, 10% and 20%.
Income tax
Every real person residing (residence) in the Northern Cyprus is subject to Income Tax on income earned in this country and abroad.
This article states that if the income and incomes are obtained by two or more persons, on the basis of partnership, in businesses that are not covered by the Corporate Tax Law, the amount of the person’s share of the accrued income of the partnership is considered as income and is taxed under the Income Tax Law.
Residence (residence) conditions in the Northern Cyprusare specified in the Income Tax Law.
According to this article, those who reside in the Northern Cyprus permanently or intermittently for more than six months within a taxation period are deemed to have settled in the Northern Cyprus.
The condition of bringing the earnings and incomes obtained outside the borders of the Northern Cyprus to the Northern Cyprus is not required.
Foreigners who come to the Northern Cyprus for a certain and temporary duty or job are not considered to have settled in the Northern Cyprus, even if they have stayed within the borders of the Northern Cyprus for more than six months.
Foreigners and real persons who are not settled within the borders of the Northern Cyprus are taxed only on the earnings and incomes they obtain within the borders of the Northern Cyprus.
Corporation tax
The earnings of Capital Companies, Economic Public Institutions, Economic Enterprises belonging to Associations and Foundations and Cooperative Companies are subject to Corporate Tax.
Foreign institutions (branches registered in the Northern Cyprus) registered in accordance with the Companies Law and whose establishment is the same as Limited Companies are capital companies.
Commercial, industrial, touristic and agricultural enterprises that belong to or are subject to the state, local institutions, other public administrations and organizations and are operating continuously are Economic Public Institutions.
Commercial, industrial, touristic and agricultural enterprises belonging to or affiliated with associations and foundations and operating continuously and foreign enterprises of the same nature are the economic enterprises of associations and foundations.
Cooperative companies established and registered in accordance with the Cooperative Companies Law and foreign organizations of the same nature are cooperative companies.
Commercial, industrial, touristic and agricultural enterprises, which are owned or subject to foreign states, foreign public administrations and institutions but not capital companies, are subject to Corporate Tax, such as Economic Public Institutions.
Corporate Tax rate is 10%.
Income Tax Rates
Salary
Self-employment earnings of foreigners
Paid to foreigners for patent rights
Payments to foreign artists
Goodwill payments
Payments made to producers for agricultural products
– In dry farming
– In livestock
– In irrigated agriculture
For those who buy and sell immovable goods, the net income determined over the sale price and the market value, whichever is higher,
From bank interest income of legal entities
From bank interest income of real persons
From Dividends
From undistributed corporate income, including foreign institutions
From rental income
Interest paid on loans from sources other than Local Banks and Cooperatives
By Base
20/5
10
10
20
1
2
3
20
12
10
15
15
10
20/10