Tax Alert 2026-18: Significant Amendments Affecting the Turkish Tax and Investment Environment
The legislative package recently approved by the Turkish Grand National Assembly and expected to be published in the Official Gazette introduces significant amendments relating to taxation, foreign direct investment, the Istanbul Financial Center regime, technology ventures, asset repatriation measures and the collection of public
The amendments notably include:
- extension of the maximum deferral period for public receivables to 72 months,
- a reduced 1% inheritance and transfer tax rate for certain qualifying structures,
- a 20-year income tax exemption for qualifying foreign-source income,
- introduction of the “Qualified Service Center” regime,
- employment income exemptions for qualified service personnel,
- corporate tax deductions for transit trade and qualified service center income,
- a new asset repatriation regime,
- expanded incentives for technology ventures, and
- broader incentives under the Istanbul Financial Center framework.
SCOPE OF THE AMENDMENTS
1. Deferral Period for Public Receivables Extended to 72 Months
The maximum deferral period for public receivables is increased from 36 months to 72 months.
In addition, no collateral will be required where the deferred public debt does not exceed TRY 1 million. For amounts exceeding this threshold, collateral equal to one half of the excess amount will be sufficient.
The amendment is expected to provide additional flexibility particularly for taxpayers facing temporary liquidity constraints.
2. Reduced 1% Inheritance and Transfer Tax for Certain Structures
A reduced inheritance and transfer tax rate of 1% will apply to certain inheritance transfers involving individuals benefiting from the foreign-source income exemption regime.
The measure appears to form part of the broader policy objective of encouraging international capital and high-net-worth individuals to relocate assets and activities to Türkiye.
3. Twenty-Year Income Tax Exemption for Foreign-Source Income
Individuals deemed tax resident in Türkiye may benefit from a 20-year income tax exemption for qualifying foreign-source income, provided that they were neither resident nor tax registered in Türkiye during the preceding three calendar years before becoming resident.
Such income will not be subject to annual declaration in Türkiye, and foreign taxes paid abroad in relation to exempt income will not be creditable against Turkish taxes.
The regime may be particularly relevant for international investors, entrepreneurs, family offices and globally mobile individuals considering relocation to Türkiye.
4. Introduction of the “Qualified Service Center” Regime
The amendments introduce a new “Qualified Service Center” status under the Foreign Direct Investment Law.
Under the new regime, Turkish companies established to provide services to related group entities operating in at least three different jurisdictions may qualify as a “Qualified Service Center”, provided that at least 80% of their annual revenues are derived from foreign related parties.
The permitted activities include, among others:
- financial advisory,
- strategic management,
- risk management,
- treasury and liquidity management,
- financing and borrowing coordination,
- investment and capital structure planning,
- budgeting,
- financial reporting and analysis,
- international accounting and compliance,
- audit services,
- digital transformation and technology consultancy,
- legal advisory,
- human resources and training,
- marketing and brand management,
- sales support,
- technical support,
- research and development,
- procurement and outsourcing coordination,
- testing and laboratory services.
The regime appears designed to position Türkiye as a regional management and operational hub for multinational groups.
5. Specific Restriction for Legal Advisory Services
Although legal advisory services are included within the scope of the Qualified Service Center regime, services relating to Turkish law or domestic Turkish activities may only be provided through lawyers or law partnerships authorised under the Turkish Attorneyship Law.
The amendment therefore preserves the boundaries of the Turkish legal profession framework while still permitting multinational groups to centralise certain regional legal and compliance functions in Türkiye.
6. Employment Income Exemption for Qualified Personnel
Employment income derived by qualified personnel working within Qualified Service Centers will benefit from an income tax exemption up to three times the gross minimum wage.
For Qualified Service Centers operating within designated industrial zones or the Istanbul Financial Center, the exemption threshold may increase to five times the gross minimum wage.
The measure may materially affect labour costs for multinational operational, finance, technology, legal and compliance teams located in Türkiye.
7. Expanded Corporate Tax Deduction for Transit Trade Income
The corporate tax deduction applicable to qualifying transit trade income is increased to 95%.
For entities operating within the Istanbul Financial Center or designated industrial zones, the deduction rate may reach 100%.
The incentive applies to income derived from offshore purchase and resale transactions where the goods do not physically enter Türkiye, subject to certain transfer and repatriation conditions.
8. Corporate Tax Deduction for Qualified Service Center Income
Income derived abroad by Qualified Service Centers from qualifying activities may benefit from a 95% corporate tax deduction.
For entities operating within designated industrial zones or the Istanbul Financial Center, the deduction rate may increase to 100%.
The incentive may apply for up to 20 fiscal periods, provided that the relevant income is transferred to Türkiye within the prescribed timeframe.
9. Protection of Incentives Within the Minimum Corporate Tax Regime
The amendments also address the domestic minimum corporate tax framework.
Corporate tax deductions relating to transit trade, Qualified Service Centers and certain Istanbul Financial Center financial service activities will continue to be taken into account when calculating the domestic minimum corporate tax base.
This is particularly important in preserving the practical effectiveness of the newly introduced incentives.
10. Amendments Relating to Manufacturing and Agricultural Activities
The legislative package also envisages a reduced corporate tax burden for qualifying manufacturing and agricultural activities carried out by eligible entities holding industrial registry certificates.
Further details are expected to become clearer following publication of the final text in the Official Gazette.
11. Introduction of a New Asset Repatriation Regime
A new asset repatriation mechanism is also being introduced.
Assets held abroad — including cash, gold, foreign currency, securities and other capital market instruments — may be declared and transferred to Türkiye until 31 July 2027 without triggering tax inspection or assessment, subject to compliance with the statutory conditions.
The standard tax rate is set at 5%, although reduced rates will apply depending on the duration for which the assets are retained in qualifying instruments or investment structures.
The regime also extends to certain unrecorded domestic assets owned by Turkish taxpayers.
12. Amendments to Technology Venture Share Incentives
The amendments revise the employment income tax exemption applicable to discounted or free share awards granted by qualifying technology venture companies.
A clawback mechanism is also introduced depending on the holding period of the shares.
13. Simplified Conditional Capital Increase Mechanism for Technology Ventures
Non-public technology venture companies holding a qualifying “Technology Venture” designation will benefit from a simplified conditional capital increase regime for convertible debt structures.
The detailed implementation framework will be determined jointly by the relevant ministries.
14. Chamber Fee Exemption for Certain Digital Companies
Certain digital companies established by qualifying incubation entrepreneurs within technology development zones may benefit from exemptions from specified chamber and union fees for up to three years.
15. Expansion of Istanbul Financial Center Incentives
The amendments also broaden the scope of incentives available under the Istanbul Financial Center regime.
The employment income advantages previously limited to certain categories of foreign-experienced personnel are being expanded, while the duration of certain corporate tax and financial activity fee incentives is also extended.
COMMENT
The legislative package should not be viewed merely as a technical tax amendment package. Rather, it reflects a broader policy initiative aimed at positioning Türkiye as a more competitive regional platform for investment, finance, technology, manufacturing and multinational operational structures.
In particular, the combined effect of the Qualified Service Center regime, transit trade incentives, Istanbul Financial Center measures and foreign-source income exemptions suggests a strategic effort to attract multinational groups, regional headquarters, international investors, family offices and high value-added service activities to Türkiye.
At the same time, the practical impact of the regime will depend heavily on secondary legislation, administrative implementation, transfer pricing considerations, economic substance analyses and the operational structuring of activities carried out in Türkiye.
Accordingly, multinational groups, technology companies, regional management platforms, transit trade operators and international investors may wish to reassess their existing structures in light of the new framework.