What Is Advance Tax and When Do Companies Pay It?

The short answer to what advance tax is: advance (provisional) tax (geçici vergi) is a prepayment that companies and earners of commercial income pay on their quarterly earnings during the year and deduct from the annual tax at year-end. It is not a separate type of tax; it is the collection of that year's corporate income tax or personal income tax in installments as income is earned. It does not increase the company's tax burden, but it brings payment forward and directly affects cash planning.

In this article we explain who pays advance tax, the four periods and deadlines in 2026, how the rate is determined and how the cumulative calculation works. We work through a four-period example with fictional figures and also cover the year-end offset and refund step.

What is advance tax and why does it exist?

Advance tax is a prepaid tax collected during the year to be offset against the current year's tax, and its legal basis is repeated Article 120 of the Personal Income Tax Law and Article 32 of the Corporate Income Tax Law. Corporate income taxpayers pay advance tax under the principles of the Personal Income Tax Law but at their own corporate income tax rates.

The logic of the system is simple: the state wants to collect tax within the year in which the income arises. Without advance tax, the tax on 2026 income of a company using the calendar year as its accounting period would only be paid in April 2027. With this system, most of the tax on 2026 income reaches the treasury during 2026.

The consequence for the company is also clear. Advance tax does not increase the annual tax; it only brings the payment schedule forward. If the corporate income tax calculated at year-end is higher than the advance tax paid, the difference is paid in April; if it is lower, the difference is subject to offset and refund. We explain the tax base and filing rules of corporate income tax in our article what is corporate income tax .

Who pays advance tax?

Two groups pay advance tax: corporate income taxpayers and personal income taxpayers taxed under the actual (real) method. Limited liability and joint stock companies, cooperatives and other corporate entities fall into the first group. Sole proprietorships earning commercial income and self-employed professionals are in the second group.

For foreign companies, the distinction works as follows. A foreign-capital limited liability or joint stock company established in Turkey is a full taxpayer and pays advance tax like a domestic company. Limited taxpayer corporations, such as the Turkish branch of a foreign company, pay advance tax only on their commercial and agricultural income.

There are also situations outside the scope of advance tax:

• Simplified-method taxpayers: Small tradespeople whose income is determined under the simplified method do not pay advance tax.
• Multi-year construction and repair work: This income, which falls under Article 42 of the Personal Income Tax Law, is not included in the advance tax base.
• Those who cease business: Under the law, no advance tax is paid in the periods following the period in which business ceases.

This last point is often overlooked in company closure and liquidation plans. For a corporation that abandons liquidation, however, the advance tax obligation starts again from the beginning of the period in which the decision to abandon liquidation is taken.

Advance tax periods and 2026 deadlines

Advance tax periods divide the calendar year into four quarters. The calculated tax is declared by the 17th of the second month following each three-month period and paid on the same day. The text of the law gives the 14th for filing and the 17th for payment; the Revenue Administration's guides, however, tie filing and payment to the same day, the 17th.

From 2022 to 2024, no advance tax return was filed for the fourth period. Law No. 7566 dated December 4, 2025 removed the “first nine months” limit in repeated Article 120. As a result, the fourth advance tax return is filed again for periods starting from January 1, 2025.

For companies assigned a special accounting period, the quarters are counted from the month in which the special accounting period begins. For example, the first advance tax period of a company whose accounting period starts on July 1 covers July, August and September, and the deadline is November 17. You can find the full calendar, together with the other filing dates during the year, in the calendar article in our tax legislation category.

How is the advance tax rate determined?

For corporate income taxpayers, the advance tax rate is the same as that year's corporate income tax rate. According to the Revenue Administration's 2026 Corporate Income Tax Filing Guide, companies subject to the general rate calculate advance tax at 25%. For banks and the financial institutions listed in the law, this rate is applied as 30%.

The rate is different for individuals. According to the Revenue Administration's Commercial Income Tax Guide, earners of commercial income taxed under the actual method pay advance tax at 15%. This rate is tied to the first bracket of the personal income tax tariff; no matter how high a sole proprietorship's annual income is, advance tax is calculated at 15%.

Reduced corporate income tax rates are also reflected in advance tax. According to the guide, when the corporate income tax rate is applied at a reduced level, the corporate advance tax rate is also reduced. Reductions for export income and for manufacturing income of businesses holding an industrial registry certificate are also taken into account in the returns during the year if the conditions are met; this income must be tracked separately in the records.

The law also authorizes the President to reduce the corporate advance tax rate by up to 5 points and to raise it back to the statutory level. Checking the rate each year against the decrees and communiqués in force therefore prevents calculations based on an outdated rate.

How is the advance tax return calculated?

The advance tax return shows the income earned up to the end of the period on an accumulated basis from the start of the year, that is, cumulatively. Tax is calculated on three months of income in the first period, six months in the second, nine months in the third and twelve months in the fourth. The advance tax paid in earlier periods of the same year is deducted from the resulting tax, and the remaining amount is paid.

The path to the tax base is similar to the annual corporate income tax:

• The period profit is determined. The profit after period-end valuation is taken from the books kept on the balance-sheet basis.
• Non-deductible expenses are added. Items such as tax penalties are added back to the base in the advance tax period as well.
• Exemptions and deductions are subtracted. Exempt income meeting the conditions and statutory deductions are taken into account.
• Prior-year losses are offset. Declared losses within the five-year period can also be deducted from the advance tax base.

Period-end inventory may, if preferred, be determined from the records alone; a physical count is not mandatory. Taxes paid by withholding during the period may also be offset against that period's advance tax. The domestic minimum corporate tax check is also carried out in advance tax periods under Article 32/C of the Law.

A fictional four-period example

To see the logic of the cumulative calculation, let's set up a fictional example. The figures do not belong to a real company. Consider a joint stock company subject to the general rate, using the calendar year as its accounting period and reviewing 2026; exemptions, deductions and prior-year losses are assumed to be nil.

In the example, the company made a loss of 100,000 TL in the last quarter and the cumulative base fell. Since the tax calculated in the fourth period is below the earlier payments, nothing is payable in this period. A total of 325,000 TL in advance tax was paid over the year.

Let's also assume the base in the annual return comes out at 1,200,000 TL. The calculated corporate income tax is 300,000 TL, and the 325,000 TL of advance tax paid is deducted from it. The 25,000 TL difference is first offset against other tax debts under the rules described below, and the remainder is subject to refund.

How are advance tax offsets and refunds made?

Advance tax offset means deducting the advance tax paid during the year from the tax calculated in the annual return. For an offset, the advance tax must actually have been paid. Advance tax assessed but not paid cannot be offset in the annual return.

Repeated Article 120 of the Personal Income Tax Law sets the order of offset as follows:

• The advance tax paid is first deducted from the tax calculated in the annual return.
• The amount that cannot be offset is offset against the taxpayer's other tax debts.
• Any amount remaining after these offsets is refunded to the taxpayer if requested in writing by the end of that year.

The last point is subject to a deadline. A company using the calendar year must request in writing any excess advance tax paid for 2026 by December 31, 2027, after the return it files in April 2027. If this deadline is missed, the right to a refund is at risk; in practice, this is the step we see forgotten most often.

Unpaid advance tax also has its own consequence. According to the Revenue Administration's guides, unpaid advance tax that can no longer be offset in the annual return period is written off (cancelled from the records). However, late payment interest applies from the due date until the day the statutory annual return period begins.

What is the consequence of underreporting?

Although advance tax may look like an estimated payment, the return must be based on actual records. Under the law, if an audit finds that advance tax for past periods was underreported by more than 10%, an ex officio or supplementary advance tax assessment is made for the shortfall. Even if these advance taxes are written off after the offset period expires, late payment interest and penalties are collected.

In practice, this rule makes the “we'll fix it at year-end anyway” approach risky. In a quarter where depreciation, provisions, exchange differences and period-end inventory entries are left incomplete, the tax base comes out too low. If the difference exceeds 10%, penalties and interest may arise even if it is corrected in the annual return.

Mistakes we often see in practice

Four mistakes stand out in our clients' advance tax questions.

The first is still thinking the fourth period is abolished; for periods starting from 2025, a return is also filed in February. The second is calculating each quarter independently and forgetting to deduct earlier payments. The third is not paying the assessed tax during a cash squeeze and losing the offset right at year-end. The fourth is not submitting the written refund request for the overpaid amount on time.

We see one more mistake in companies with foreign shareholders. The monthly or quarterly reports requested by the parent company and the advance tax base are calculated under different rules. A reconciliation table explaining why the two figures differ makes things easier both in reporting to the parent company and in a possible tax audit.

The advance tax return is completely separate from the monthly return in which taxes withheld from employee wages are reported. Because the two are often confused, we explain the difference in our article what is the muhtasar (withholding) return article.

At Akal CPA, we treat advance tax not as a form filled in every quarter but as an interim closing that shows the year-end result in advance. Through our Tax advisory and planning service, we close period-end entries, compare the cumulative tax base with the annual forecast and discuss the risk of overpayment before the quarter ends.

Last updated: 17.10.2026