Taxation of limited corporate taxpayers

Limited liability is one of the forms of liability regarding taxes levied on income in the Turkish taxation system. According to the Corporate Income Tax Law (KVK), legal entities whose headquarters are not in Turkey are limited liable taxpayers, and they are taxed for the income and earnings that they derive only in Turkey. The purpose of this study is to identify the limited taxpayer corporates' liabilities that arise from, particularly KVK, new taxes added to the Turkish taxation system along with all the other tax laws. According to the definition of limited liability, the foundation of taxation is the principle of territoriality. Nevertheless, since every state does not prefer the same principle while applying their laws in terms of location and tends towards the principle of personality rather than the principle of territoriality, their taxation authorities conflict and the problem of double taxation, which is one of the most important problems of the international tax law, occurs. Since the measures that states take unilaterally on the issue of double taxation are inadequate, states apply to the treaties of preventing double taxation (ÇVÖA) as one of the most important instruments of international tax law. States resolve the issue of taxation authority conflicting with the ÇVÖA by either leaving the authority to one of the signatories or sharing it among each other. In this study, taxation of limited taxpayer corporates in the United States, Germany, United Kingdom and France have been compared with the practices in Turkey, and the treaties of preventing double taxation (ÇVÖA) signed between Turkey and those countries have been examined. Legal framework has been sought to be drawn by considering national and international problems that result from the taxation of limited taxpayer corporates, tax treaties, local tax legislation, opinions from the administration and the verdicts of the tax jurisdiction. Consequently, limited liability is an important tax law institution that has many benefits such as the establishment of the fiscal sovereignty of Turkey, achievement of justice and equality in taxation and increased tax revenue. Keywords: Corporations with limited liability, limited liability, double taxation prevention treaties, double taxation, taxation authority, corporation tax, tax law