Taxation of the construction sector

The construction sector is a comprehensive industry that holds strategic importance in terms of economic growth, development, employment rates, and investment returns. The activities within the sector are directly or indirectly associated with various types of taxes. In Turkey, several taxation methods are applied in the construction sector, including income tax, corporate tax, value-added tax (VAT), and stamp duty. While the earnings of individuals and contractors are taxed under the scope of income tax, capital companies are subject to corporate tax, as per public regulations. In the taxation of the construction sector, declarations are taken into account, and the profits are taxed in the year the project is completed. From a VAT perspective, activities in the construction sector are generally subject to the standard rate of 20%. However, in the case of residential property deliveries, this rate may vary depending on the building permit and the net square meter area. Furthermore, VAT obligations arise during subcontractor services and the procurement of construction materials. While stamp duty is applied to contracts and commitments, fees are collected during the processes of obtaining building permits and occupancy certificates. As such, the sector is subject to a comprehensive and multi-layered taxation system. In conclusion, the taxation process in the construction sector involves a wide range of detailed and diverse procedures. Therefore, taxpayers operating in the sector must have a sound understanding of the tax legislation governing the industry's operations.