Law No. 7582, published in the Official Gazette on 4 June 2026, introduces a series of significant changes to Turkish tax legislation that may directly affect you or your business. Below, we have set out each change with a clear explanation of who it applies to, what conditions must be met, and what to watch out for.
1. For Those Living Abroad Who Are Considering Relocating to Turkey: 20-Year Income Tax Exemption
Income you earn outside Turkey may be exempt from Turkish income tax for 20 years after you establish residence in Turkey.
Who qualifies?
To benefit from this exemption, you must not have been resident in Turkey and must not have had any Turkish tax liability — of any kind — during the three full calendar years immediately before your relocation. Both conditions must be met simultaneously. Simply living abroad is not sufficient; you must also have had no Turkish tax registration or obligation during that period.
That said, if you previously had limited tax liability in Turkey solely due to rental income, investment income, or capital gains from Turkish assets, this does not disqualify you.
What does the exemption cover?
All income earned outside Turkey — including rent, dividends, interest, and investment gains — is covered. You will not be required to file an annual tax return in Turkey for this income. Even if you file a return for other reasons, this income is excluded from it.
Important limitations and risks:
Expenses and costs related to your exempt foreign income cannot be deducted against your taxable income in Turkey. Taxes paid abroad on this income cannot be credited against your Turkish tax liability. Most critically, if it is subsequently determined that you did not meet the qualifying conditions, all taxes that were not collected will be treated as lost tax revenue and may be assessed with penalties and interest. It is therefore essential to verify that all conditions are fully satisfied before relying on this exemption.
Effective date: This provision is effective as of today and applies to individuals who have established Turkish residence on or after 1 January 2026.
2. For Heirs of Those Benefiting from the Above Exemption: 1% Inheritance Tax
If a person benefiting from the foreign income tax exemption passes away during the exemption period, their heirs will be subject to inheritance and gift tax at a rate of only 1% on the inherited assets.
Important limitations:
This reduced rate applies only to inheritances — not gifts or other gratuitous transfers — and only to deaths occurring within the exemption period. Standard inheritance and gift tax rates continue to apply outside these circumstances.
3. For Those with Undeclared Assets Abroad or Off the Books in Turkey: New Asset Declaration Scheme
Individuals and companies with assets held abroad, or assets in Turkey that are not reflected in their statutory books, may declare these assets by 31 July 2027, pay a modest tax, and gain protection from tax audit and assessment.
What assets are covered?
Cash, foreign currency, gold, shares, bonds, and other capital market instruments — whether held abroad or unrecorded in Turkey — are all within scope.
Tax rates:
The standard rate is 5%. However, if you commit to holding the declared assets in eligible instruments — such as term deposit accounts, government bonds, lease certificates, or venture capital investment funds — the rate reduces as follows:
- 5-year commitment → 0%
- 4-year commitment → 1%
- 3-year commitment → 2%
- 2-year commitment → 3%
- 1-year commitment → 4%
Declarations made between 1 January 2027 and 31 July 2027 will be subject to rates that are half a percentage point higher. If the deadline is extended by presidential decree, an additional half point will apply during the extension period, bringing the total increase to one percentage point.
What you must do:
Assets held abroad must be transferred to a bank or brokerage account in Turkey within two months of the declaration date, or physically brought into Turkey and deposited into such an account. Assets already in Turkey must be deposited into a bank or brokerage account on the date of declaration. The tax assessed must be paid on time, and any investment commitment must be honoured.
Once recorded in your books, declared assets cannot be withdrawn from the business for two years. After that period, they may be withdrawn without being treated as taxable income.
Protection from audit — and its limits:
Provided all conditions are met, no tax audit or assessment may be conducted in respect of the declared assets. However, this protection is not absolute. Declarations made after a tax audit has commenced or after a file has been referred to an assessment commission do not benefit from this protection. Furthermore, if a tax audit uncovers a difference in the tax base for reasons unrelated to the declared assets, that difference remains subject to assessment. The tax paid under this scheme cannot be deducted as an expense, offset against other taxes, or refunded.
Deadline: 31 July 2027. This may be extended by presidential decree for periods of up to six months at a time, subject to a maximum one-year extension.
4. For Those with Outstanding Tax Debts: Instalment Period Extended to 72 Months
The maximum period for deferring and paying tax debts in instalments has been extended from 36 to 72 months. In addition, the threshold below which tax debts may be deferred without collateral has been raised from TRY 50,000 to TRY 1,000,000.
Important limitations:
This does not apply automatically. A formal deferral application must be submitted to the relevant tax office, and approval is required. Deferral interest continues to apply throughout the instalment period. Collateral is still required for debts exceeding TRY 1,000,000. If instalments are missed or the application is rejected, the full debt may become immediately due.
5. For Employees of Qualified Service Centres: Income Tax Exemption on Wages
Employees who directly deliver services at a "qualified service centre" — a Turkish entity set up to provide services to a multinational group — will benefit from an income tax exemption on the portion of their salary up to three times the gross minimum wage. For qualified service centres operating in Istanbul Finance Centre or in designated industrial zones, this threshold increases to five times the gross minimum wage.
Important limitations:
The exemption applies only to employees who directly deliver the qualifying services — administrative and support staff are excluded. Employees at qualified service centres within Istanbul Finance Centre who benefit from this exemption are not also entitled to the separate wage exemption available under the Istanbul Finance Centre Law; the two cannot be combined. The President has the authority to adjust these thresholds within set limits, so the rates may change.
6. For Companies Providing Services to Multinational Groups: Qualified Service Centre Status and 95% Corporate Tax Deduction
Companies established to provide services exclusively to a group of related companies active in at least three different countries, where at least 80% of annual revenue is derived from those related foreign entities, may qualify as a "qualified service centre." Such companies will be entitled to deduct 95% of the foreign-source income earned through these activities from their corporate tax base. For those operating within Istanbul Finance Centre or eligible industrial zones, the deduction rate rises to 100%.
What activities qualify?
Eligible services include financial advisory, risk management, budgeting, financial reporting, human resources, legal advisory, R&D coordination, technical support, procurement coordination, and similar management and coordination functions provided to related foreign entities. The key criterion is that the activity must be a service of a coordination or management nature — direct production or trading does not qualify.
Important limitations:
The deduction applies only to income derived from these specific activities, not to any other income of the company. The qualifying income must be transferred to Turkey before the corporate tax return for the relevant year is due. The deduction is available for a maximum of 20 fiscal years from the year in which the centre commences operations. Obtaining this status will require an application to the Ministry of Industry and Technology with supporting documentation; the detailed procedures have not yet been published.
7. For Companies Engaged in Offshore Trading or Intermediation: 95% Corporate Tax Deduction
Companies that purchase goods abroad and sell them abroad without bringing them into Turkey, or that act as intermediaries in such transactions, may deduct 95% of the resulting profits from their corporate tax base. The rate increases to 100% for companies operating within Istanbul Finance Centre or eligible industrial zones.
Important limitations:
The profit must be transferred to Turkey before the corporate tax return for the relevant year is filed. For intermediation transactions, neither the buyer nor the seller may be based in Turkey — if either party is Turkish-resident, the deduction does not apply. If goods physically enter Turkey at any point, the deduction is lost. The President has the authority to adjust the rate to anywhere between 0% and 100%.
Effective date: Applies to income earned in accounting periods beginning on or after 1 January 2026; returns reflecting this deduction may be filed from 1 July 2026.
8. For Manufacturing and Agricultural Production Companies: 12.5% Corporate Tax Rate
Companies holding an industrial registry certificate and actively engaged in manufacturing, as well as companies engaged in agricultural production, will benefit from a reduced corporate tax rate of 12.5% on profits derived exclusively from those production activities. Given that the standard corporate tax rate is 25%, this represents a significant advantage for qualifying businesses.
Important limitations:
The reduced rate applies only to profits from manufacturing or agricultural production — it does not extend to trading income, property income, or financial income. Companies benefiting from this reduced rate cannot also claim the export income deduction on the same profits; the two benefits cannot be combined. The industrial registry certificate must be valid and current, and production must be genuinely ongoing.
Effective date: Applies to profits earned in the 2027 tax year and beyond.
9. For Technology Entrepreneurs: Simplified Capital Increases and Membership Fee Exemption
Non-listed companies holding a techno-venture badge issued by the Ministry of Industry and Technology will no longer be subject to the complex conditional capital increase provisions of the Turkish Commercial Code when carrying out capital increases based on convertible note agreements. This is expected to significantly streamline angel investment and early-stage funding processes.
Additionally, startups that have completed a technology incubator programme and qualify as "digital companies" under criteria to be determined by the Ministry will be exempt from chamber of commerce and exchange membership fees and dues for up to three years from the date of incorporation.
Important limitations:
The techno-venture badge must be active, and the company must not be publicly listed. The detailed procedures for capital increases under this provision are to be determined by the Ministry of Industry and Technology and have not yet been published. Similarly, the definition of "digital company" has not yet been issued, meaning it may not be possible to benefit from the membership fee exemption until that definition is published.
10. For Those Operating or Considering Operating in Istanbul Finance Centre: Deadlines Extended to 2047
The period during which the tax exemptions and incentives available under the Istanbul Finance Centre Law remain in effect has been extended from 2031 to 2047. Related activity periods have also been extended from five to twenty years. This provides meaningful long-term planning certainty for businesses considering Istanbul Finance Centre as part of their structure.
Important limitations:
To benefit from the extended period, a valid and current participant certificate must be held. Those who have not yet applied will need to complete the application process. For existing participants, the extension applies automatically.
11. For Turkish Staff Working at Foreign Diplomatic Missions or International Organisations: Updated Wage Exemption
The wage exemption available to Turkish nationals employed at foreign embassies, consulates, and international organisations has been increased in amount, while the minimum periods of service required to qualify have been shortened. If you work in such a role, or are considering doing so, we recommend reviewing your position in light of these changes.
If any of the above applies to you or your business, we strongly encourage you to get in touch with us. Each of these measures comes with its own specific conditions, deadlines, and potential risks. A general reading of the law is not a substitute for an analysis of your individual circumstances, and acting on assumptions without proper advice could lead to unexpected tax consequences.
Please do not hesitate to contact us.
