Taxation of SMEs in OECD and G20 Countries

On 5 September 2015 the OECD published a comprehensive report on SME taxation in OECD and G20 countries. The report examines the tax treatment of SMEs, the case for SME preferences, and the use of tax preferences and simplification measures across thirty-nine countries.

Key findings for Turkey

• Simplified method: Taxpayers under the simple method file annual tax returns and are not required to file withholding tax, pre-paid tax or VAT returns.
• VAT exemption: Turkey applies a special VAT exemption to supplies of goods and services to SMEs under specific circumstances, mainly in the context of investment projects.
• Venture capital funds: Amounts reserved as venture capital funds may be deducted from the income of investors, provided they do not exceed 10% of the taxpayer’s declared income.
• Business angel system: 75% of investments in early stage companies may be deducted against individual income, rising to 100% for companies with projects falling within the scope of programmes determined by the Ministry of Industry and Technology, TÜBİTAK and KOSGEB.

These provisions have a direct cost impact for foreign investors evaluating early-stage investment and partnership structures in Turkey.