The Turkish Republic of Northern Cyprus occupies the northern part of the island of Cyprus. It is recognized as a sovereign state solely by Turkey; the United Nations and the vast majority of states consider the area part of the Republic of Cyprus, currently under Turkish military occupation. Despite the lack of broad recognition, the TRNC operates an independent domestic legal and tax system.
The Turkish Republic of Northern Cyprus (TRNC), recognized as a sovereign state solely by Turkey, taxes companies under Law 41/1976 at a flat 10% corporate tax on net profits followed by a 15% income tax on the after-tax remainder, for an effective combined burden of roughly 23.5%; International Business Companies operating entirely outside the TRNC pay only 1% on net taxable profit, and qualifying Free Zone companies are exempt from corporate tax altogether.
A specific statutory tax year-end and corporate filing deadline is not itemized in available primary sources; confirm current filing deadlines directly with the TRNC's tax authorities before relying on this page.
Companies pay a flat 10% corporate tax on net profits (Law 41/1976), followed by a 15% income tax on the after-tax remainder, for an effective combined burden of roughly 23.5%. International Business Companies (which must operate entirely outside the TRNC) pay only 1% on net taxable profit, and qualifying Free Zone companies are exempt from corporate tax altogether.
Individual income is taxed progressively; published 2026 brackets run up to 37% for income above ₺236,500, with lower bands reported as low as 0-10% depending on the source consulted.
The standard KDV (VAT) rate is 16%. Free Zone and qualifying International Business Company transactions fall outside the scope of TRNC VAT. New-build property purchases are subject to a separate 5% VAT plus other property-specific transfer taxes.
An individual is TRNC tax resident if present in the territory for more than 183 days in a year, with official employment or a managerial position in the TRNC as an alternative basis for residency status. A company is resident under Law 41/1976 if incorporated or centrally managed in the TRNC.
A company is TRNC tax resident under Law 41/1976 if incorporated or centrally managed in the TRNC, taxed on that basis at the standard 10%/15% combined rate described elsewhere on this page; a foreign company operating through a permanent establishment in the TRNC without meeting the incorporation or central-management residence test would be brought within the same corporate tax framework on income attributable to that establishment, though a codified PE test comparable to a full OECD Model treaty article is not itemized in the primary source reviewed.
No CFC-style attribution provision was found in the TRNC's corporate tax framework (Law 41/1976 and related legislation). Given the TRNC's own International Business Company regime specifically requires the IBC to operate entirely outside the TRNC in exchange for its 1% preferential rate, the absence of a CFC mechanism is consistent with a tax system not built around policing outbound investment by TRNC-resident parents.
No thin capitalization ratio or related-party interest-deduction cap was found in the sources reviewed for TRNC corporate tax law.
The TRNC classifies entities under Law 41/1976 and related legislation rather than offering an elective check-the-box system, and no ATAD2-style anti-hybrid mismatch regime addressing double-deduction or deduction-without-inclusion outcomes has been identified, consistent with the absence of a CFC-style attribution provision described elsewhere on this page; the TRNC's own International Business Company regime, which requires the IBC to operate entirely outside the TRNC in exchange for its 1% preferential rate, reflects a tax system not built around policing outbound investment by TRNC-resident parents.
No domestic FBAR-equivalent regime requires TRNC residents to separately disclose foreign financial accounts, and the TRNC is not a CRS participating jurisdiction, given its recognition status outside the OECD framework. US persons remain independently subject to FinCEN Form 114 (FBAR) and potentially Form 8938 regardless of the TRNC's own rules.
A dedicated participation exemption regime for dividends or capital gains from a qualifying subsidiary is not confirmed in available primary sources; confirm current treatment of intercompany dividends and share disposals directly with TRNC tax authorities before relying on this page.
The TRNC's sole confirmed tax-related bilateral arrangement is with Turkey, its sole recognizing state, which includes provisions on the prevention of double taxation on income, per the US Department of State's Investment Climate Statement on Cyprus; outside that single relationship, a broader general unilateral foreign tax credit mechanism is not confirmed in available primary sources, and the internationally recognized Republic of Cyprus's own large treaty network (60+ countries) does not extend to the TRNC.
The TRNC has one confirmed tax-related bilateral arrangement: bilateral investment and taxation agreements with Turkey, which include provisions on the prevention of double taxation on income - the US Department of State's own Investment Climate Statement on Cyprus, which states plainly that the TRNC "has bilateral investment and taxation agreements only with Turkey" and "is not recognized" by any country other than Turkey, nor is it "a party to any multilateral trade or investment instruments." This corrects a common assumption that the TRNC has literally zero tax treaties - it has exactly one, with its sole recognizing state. The separate, internationally-recognized Republic of Cyprus (governing the southern part of the island) maintains its own large independent treaty network of 60+ countries, which does not extend to the TRNC and should not be confused with it.