Proposed New Tax Incentive Package in Türkiye

This tax alert summarizes recent public statements made by the President of Türkiye regarding a new incentive program aimed at attracting foreign direct investment. The information currently available is limited and based on high-level announcements; further legislative and administrative details are expected to follow.

KEY HIGHLIGHTS

Incentives for the Istanbul Finance Center (IFC)

Income derived from transit trading activities is expected to benefit from:

• 100% corporate income tax (CIT) exemption if conducted through the IFC
• 95% CIT exemption if conducted outside the IFC

Regional management centers for multinational companies (MNCs)

Multinational companies relocating their regional management centers to Türkiye are expected to benefit from:

• Tax advantages within and outside the IFC
• Incentives expected to be valid for up to 20 years

Exporters regime

Export-oriented activities are expected to benefit from reduced corporate income tax rates:

• 9% CIT for manufacturing exporters
• 14% CIT for other exporters

Qualifying Service Exports

The currently available 80% CIT deduction applicable on income derived from export of architecture, engineering, software and design services will benefit from full tax deduction.

Incentives for individuals relocating to Türkiye

Individuals who have not been Turkish tax residents within the last three years are expected to benefit from:

• Taxation limited to Turkish-source income
• Preferential treatment for foreign-source income
• Reduced inheritance and transfer tax rates (approximately 1%)

Repatriation of foreign assets

A mechanism is expected to be introduced to facilitate the transfer of foreign assets (such as cash, gold and securities) to Türkiye:

• Subject to a low tax cost (approximately 2–3%)
• Applicable within a specified period

One-stop investment office (“Tek Durak Büro”)

A centralized system is expected to be introduced to support investors in areas such as:

• Company formation
• Work and residence permits
• Tax and social security procedures
• Investment and licensing processes

PRACTICAL IMPLICATIONS

Incentive application framework

The incentives are expected to be subject to an application and approval process. Further details regarding eligibility criteria and implementation procedures are yet to be announced.

Operational structure

It is expected that certain incentives (particularly those related to the Istanbul Finance Center) may be linked to operations carried out within designated structures. Detailed conditions are not yet available.

Income classification and reporting

The treatment of exempt or reduced-tax income, as well as the related reporting obligations within corporate tax returns, is expected to be clarified through secondary legislation.

Repatriation of foreign assets

While a mechanism facilitating the transfer of foreign assets to Türkiye has been announced, the declaration procedures, applicable tax treatment and related compliance requirements have not yet been specified.