The TRNC Income Tax Code and tax structure provide numerous benefits to investors and business managers. According to the Northern Cyprus Corporate Tax Law, corporations with their legal headquarters or business center within the country's borders are subject to Corporate Tax at a rate of 10% on earnings obtained both within and outside the TRNC. Foreign corporations with legal and business centers outside the TRNC are only taxed at a 10% rate on corporate income earned from the TRNC. Earnings subject to corporation tax are calculated after deducting all allowable business expenses. Foreign earnings are exempt from double taxes.
Undistributed company revenue after corporate tax is subtracted is liable to 15% income tax in North Cyprus, According to the Income Tax Law. Under the North Cyprus Income Tax Law, sole traders are subject to a progressive tax system, with the tax starting at 10% and subsequently increasing up to 37% depending on the amount of net income. According to the North Cyprus Value Added Tax Law, the TRNC applies five distinct VAT rates (0%, 5%, 10%, 16%, and 20%) based on the service and product category.
Tax exemptions are available to Free Zone Companies and International Business Companies for their transactions. Earnings of Free Zone Companies from other countries, for example, are exempt from Corporate Tax, Income Tax, Value Added Tax, and Customs Duty. Earnings from the export of goods and services to the Turkish Republic of Northern Cyprus for transit trade, other than products e-mailed in the Free Port and Zone, are not free from these exemptions.
International Business Companies are subject to a 1% Corporate Tax. Dividend payments are exempt from Income Tax and VAT. Profit transfers between International Business Companies and Free Zone companies are free and tax-free in TRNC. Apart from the aforementioned tax benefits, additional incentives are also offered by taking into account the following laws, in addition to the many special and general exemption and exempt incentives stated in the tax laws to stimulate investments in the TRNC.
- Tourism Industry Incentive Law (16/1987)
- Incentive Law (27/2000)
- Technology Development Zones Law (2/2005)
- Renewable Energy Law (47/2011)
How Can We Help You?
We provide tax consulting services to sole traders, legal entities, and local and foreign investors engaging in the TRNC in accordance with the applicable regulations. Within the framework of this service, investors have the opportunity to make the best use of the TRNC's tax advantages.
We provide our clients with the information they require at the correct moment, based on our experience and understanding. We support you throughout the entire process, from tax planning to analyzing tax effects and taking advantage of tax system chances.
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