Taxation of foreign origin of institutions in Turkey

It is considered that world economy has undergone a major change and transformation since 1970s. This change which is defined as economic liberalization or globalization phenomenon accelerated the integration of national economies; and caused flow of mutual fund, technology and service. Increasing mobility of the capital caused the occurrence of taxable event in various countries.Taxation power which is defined as judicial and actual power of the state by relying on its sovereignty is not a power that states use autonomously anymore in this globalizing world because economic liberalization causes that tax payers operating in abroad become torn between source and resident country and the problem of double taxation arises.Countries use various fiscal policy tools to attract foreign capital which is a vital issue for both developed and developing countries. Foreign capital investments and the actions of multinational companies bring taxation problems. The most important problem of the international tax law is the prevention of double taxation. Double taxation problem between the source and resident country is resolved with taxation method on the basis of limited obligation and the international tax agreements.Foreign institutions can operate in Turkey in two ways. They can establish company according to the provision of Turkish Commercial Code as local-origin companies and they are defined as legally obligated. Second type of activity that foreign institutions can get in Turkey is to earn income through permanent representative or a branch without establishing a company. Mainframe of this study is form by this second type of income.The aim of the study is to determine the taxation method of foreign-origin institutions operating in Turkey according to the Corporate Tax Law no. 5520. So their income was examined individually as seven types of income and proceeds in accordance with Corporate Tax Law; and the subject was enriched with examples and was tried to be examined with deficiencies.