The Law No. 7590 Introduces Significant Tax and Employment Measures

The Law No. 7590 on Amendments to Certain Laws and Decree Laws, published in the Official Gazette No. 33326 dated 31 July 2026, introduces significant amendments to Turkish tax and social security legislation. The Law primarily aims to support nuclear power plant investments through new tax incentives, while also extending certain employment support mechanisms and introducing important amendments to the Special Consumption Tax ("SCT") regime.

This Tax Alert summarizes the key amendments introduced by the Law, including:

• The stamp tax exemption for documents relating to nuclear power plant investments
• The newly introduced Value Added Tax (“VAT”) exemption and VAT refund mechanism
• The extension of the unemployment insurance premium support;
• The new social security premium support for tourism accommodation facilities
• The amendments introduced to the SCT Law; and
• The thin capitalization rules applicable to borrowings relating to nuclear power plant investments

Stamp Tax Exemption for Nuclear Power Plant Investments

Article 1 of Law No. 7590 introduces a new exemption to Table (2), Section IV ("Commercial and Civil Documents") annexed to the Stamp Tax Code.

Accordingly, documents executed in relation to nuclear power plant investments are exempt from stamp tax, provided that the relevant transaction involves legal entities holding a pre-licence and / or generation licence for electricity generation from nuclear power plants.

The amendment entered into force on 31 July 2026.

New VAT Exemption and VAT Refund Mechanism for Nuclear Power Plant Investments

Introduction

Article 9 of The Law No. 7590 introduces Provisional Article 47 to the VAT Code.

Under the new provision, significant VAT incentives have been introduced for nuclear power plant investments carried out under an Investment Incentive Certificate by taxpayers holding a pre-licence and/or generation licence for electricity generation from nuclear power plants. These incentives will apply until 31 December 2045.

The new framework provides for:

• A VAT refund mechanism for non-recoverable input VAT arising from construction works relating to nuclear power plant investments
• A VAT exemption for machinery and equipment supplied within the scope of an Investment Incentive Certificate
• Specific rules governing the repayment of VAT benefits where the investment is not completed; and
• The authority of the President to extend the application period

Refund of Non-Recoverable VAT Arising from Construction Works

Pursuant to Provisional Article 47, input VAT incurred on construction works relating to nuclear power plant investments carried out under an Investment Incentive Certificate and not recoverable through the deduction mechanism may be refunded to the taxpayer.

The refund applies to VAT incurred as from 1 August 2026, provided that:

• The VAT remains unrecovered at the end of each six-month period of the relevant calendar year; and
• The refund application is submitted within one year following the relevant six-month period

The primary objective of this mechanism is to prevent the accumulation of significant carried-forward VAT balances during the investment period and to reduce the financing burden associated with large-scale investment projects.
 
VAT Exemption for Machinery and Equipment Deliveries
 
The Law No. 7590 also introduces a VAT exemption for machinery and equipment supplied within the scope of an Investment Incentive Certificate relating to nuclear power plant investments.

Accordingly:

• Qualifying machinery and equipment deliveries will be exempt from VAT
• Suppliers will remain entitled to deduct the input VAT incurred in connection with such exempt supplies; and
• Any input VAT that cannot be recovered through deduction may be refunded pursuant to Article 32 of the VAT Code

The amendment is intended to reduce the VAT burden associated with the acquisition of machinery and equipment during the investment phase.

Consequences Where the Investment Is Not Completed
 
The Law also addresses situations where the investment project is not completed.

Accordingly, where the investment is not completed, any VAT that was not collected or refunded under Provisional Article 47 will be recovered from the taxpayer together with tax loss penalties and default interest.

In addition, the Law introduces a specific rule regarding the commencement of the statute of limitations applicable to such assessments.

This provision ensures that the VAT incentives remain available only for investments that are actually completed.
 
Authority Granted to the President
 
Under Provisional Article 47, the President has been granted the authority to extend the application period of the VAT incentives until 31 December 2050.

The amendment introducing Provisional Article 47 entered into force on 1 August 2026.

Extension of the Employer Unemployment Insurance Premium Support
 
Amendment
 
Article 10 of The Law No. 7590 amends Provisional Article 35 of the Unemployment Insurance Law No. 4447.

The amendment extends the application period of the employer unemployment insurance premium support scheme and expands its scope to include 2026 and 2027.

Accordingly, the support mechanism, which was previously scheduled to expire on 31 December 2026, has been extended until 31 December 2028.

New Social Security Premium Support for Tourism Accommodation Facilities
 
Amendment
 
Article 11 of the Law No. 7590 introduces Provisional Article 36 to the Unemployment Insurance Law No. 4447, establishing a new employer premium support scheme for the tourism sector.

The support applies to privately owned accommodation facilities holding a Tourism Operation Certificate under the Tourism Promotion Law No. 2634.

The incentive is available only for the months during which the accommodation facility is in operation between May and December 2026.

Amount of Support

The support amount will be calculated by multiplying the number of premium contribution days reported for employees subject to long-term social security insurance by TRY 116.67.

The resulting amount will be offset against the employer's social security premium liabilities and financed through the Unemployment Insurance Fund.

Conditions for Benefiting from the Support

Employers wishing to benefit from the incentive must:

• Submit the Withholding Tax and Premium Service Return within the statutory deadline
• Pay social security premiums on time; and
• Have no outstanding social security premium debts, administrative fines or related late payment charges (unless such liabilities have been restructured)

If unregistered employment or underreporting of the social security premium base is identified, the support granted will be recovered together with the applicable late payment penalty and default interest.

Persons Excluded from the Support

The following individuals are excluded from the scope of the incentive:

• Employees subject to social security support premiums
• Foreign employees; and
• Employees working abroad

Furthermore, where an employer simultaneously benefits from other social security premium incentives, the amount covered by the Unemployment Insurance Fund under this provision may not exceed the social security premium payable for the relevant month after applying the other available incentives.

Amounts financed by the Fund under this provision will not be treated as income, deductible expense or cost for corporate income tax or personal income tax purposes.

The amendment entered into force on 31 July 2026, effective from May 2026.
 
Significant Amendments to the Special Consumption Tax Law
 
Amendment

Article 14 of the Law No. 7590 introduces significant amendments to Article 12 of the SCT Code.

The amendments introduce a minimum specific SCT for certain motor vehicles and expand the President's authority to determine SCT amounts and taxation criteria.

Introduction of a Minimum Specific SCT

Under the new rules, for motor vehicles classified under Customs Tariff Code 87.03 in Schedule (II) of the SCT Code, the SCT calculated on an ad valorem basis may not be lower than the prescribed minimum specific SCT amount.

Accordingly:

• The minimum specific SCT for Category L motor vehicles has been set at TRY 30,000; and
• The minimum specific SCT for all other vehicles within the scope of the amendment has been set at TRY 100,000

These amounts will be increased annually in line with the revaluation rate announced under the Tax Procedures Code. Fractions below TRY 100 will be disregarded in the calculation.

Expansion of the President's Authority

The Law No. 7590 grants the President broad authority to determine the application of the minimum specific SCT.

Accordingly, the President may:

• Increase the minimum specific SCT amounts by up to ten times or reduce them to zero
• Introduce different tax base brackets; and
• Determine different minimum specific SCT amounts for different categories of vehicles

Furthermore, the President may establish different taxation criteria by taking into account technical characteristics such as:

• Engine cylinder capacity
• Drivetrain
• Engine power
• Battery capacity
• Driving range
• Emission type and emission value
• Vehicle class
• Body type
• Maximum laden weight; and
• Passenger and cargo carrying capacity

The amendment entered into force on 31 July 2026.

Advantage Introduced under the Thin Capitalization Rules for Borrowings Relating to Nuclear Power Plant Investments
 
Article 17 of the Law No. 7590 introduces Provisional Article 20 to the Corporate Income Tax Code.

The amendment provides a significant tax advantage for borrowings obtained by companies holding a pre-licence and/or generation licence for electricity generation from nuclear power plants, provided that the borrowings satisfy the conditions set out in Article 12(2) of the Corporate Income Tax Code and are used for qualifying nuclear power plant investments.

Under the current legislation, 50% of the relevant financing costs is taken into account for thin capitalization purposes.

Pursuant to the new provision, this ratio will be reduced to 25% for qualifying nuclear power plant investments until 31 December 2045.
In addition, the President has been authorised to extend the application period by up to five years.

Practical Implications

Nuclear power plant investments require substantial long-term financing. Accordingly, reducing the financing costs taken into account under the thin capitalization rules is expected to lower the overall tax burden associated with such investments.

When considered together with the newly introduced stamp tax and VAT incentives, the amendment demonstrates the legislator's intention to establish a comprehensive tax incentive package for strategic nuclear energy investments.

The amendment entered into force on 31 July 2026 and will apply to corporate income derived in taxation periods commencing on or after 1 January 2026 (or accounting periods commencing on or after that date for taxpayers with special accounting periods).

CONCLUSION

The amendments introduced by the Law No. 7590 represent significant legislative developments, particularly in terms of encouraging nuclear power plant investments, reducing employers' labour costs and modernising the Special Consumption Tax regime to better accommodate developments in automotive technologies.

In particular, the coordinated incentives introduced in the areas of stamp tax, VAT and corporate income tax are expected to reduce financing costs and improve cash flow for large-scale nuclear energy investments.

At the same time, the extension of the employer unemployment insurance premium support and the introduction of a new social security premium incentive for the tourism sector demonstrate the government's continued focus on supporting employment.

Taxpayers should closely monitor the secondary legislation that will be issued in relation to these amendments, as well as any Presidential Decisions to be adopted under the expanded powers granted by the Law No. 7590, in order to assess the practical implications of the new rules and ensure timely compliance.