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The Turkish Parliament’s Planning and Budget Commission approved a legislative package containing broad tax reforms aimed at attracting foreign capital and expanding financial activity in the Istanbul Financial Center (IFC).
The proposal has been closely watched since President Recep Tayyip Erdogan first unveiled it in April as part of Ankara’s broader push to attract international investors, multinational companies and globally mobile wealth through long-term tax incentives and expanded financial sector advantages.
Under the proposal, Turkish citizens considered resident in Türkiye will be exempt from income tax on earnings and revenues obtained abroad for 20 years, provided they had neither tax residency nor a registered address in Türkiye during the previous three calendar years before relocating.
The regulation also states that prior tax liability in Türkiye related to real estate income, investment income, or capital gains will not prevent individuals from benefiting from the exemption. Income covered under the arrangement will not need to be declared in annual tax filings.
The package lowers the inheritance and transfer tax rate to 1% for assets inherited during the exemption period by individuals benefiting from the foreign income tax arrangement, aiming to encourage foreign capital inflows into the Turkish economy.
The proposal introduces a new "qualified service center" category covering capital companies operating in at least three countries and generating at least 80% of annual revenue from related companies abroad.
The centers will provide services including financial consulting, strategic management, auditing, legal consulting, digital transformation, research and development, and technical support. These operations and transit trade activities will qualify for major corporate tax incentives under the proposal.
Profits from overseas trade conducted without goods entering Türkiye will be eligible for a 95% corporate tax deduction, increasing to 100% for firms operating in the IFC. Qualified service centers earning income abroad will receive the same incentives for 20 accounting periods, provided earnings are transferred to Türkiye before tax filing deadlines.
The proposal also extends IFC incentives by prolonging the 100% corporate tax deduction for eligible financial institutions until 2047 and expanding license fee exemptions from five years to 20 years.
Qualified personnel will receive income tax exemptions on wages up to three times the gross minimum wage, rising to five times for centers operating in the IFC with participation certificates.
The package reduces the corporate tax rate to 12.5% for companies holding industrial registration certificates and actively engaged in manufacturing, as well as firms operating in agricultural production.
The reduced rate will apply only to profits generated directly from production activities and will take effect for income earned during the 2027 tax year and later periods. Companies benefiting from this reduction will not additionally qualify for the existing five-point export tax discount.
Real and legal persons who declare money, gold, foreign currency, securities and other capital market instruments held abroad to banks or intermediary institutions by that date will be exempt from tax inspections and tax assessments related to those assets.
Assets declared under the scheme must be transferred to accounts in Türkiye within two months of declaration.
Domestically held but unregistered assets will also be eligible if deposited into Turkish financial institutions and recorded in official books.
The proposal is expected to be voted on in a parliamentary session and will take effect after its publication in the Official Gazette.
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