The Turkish parliament has approved a bill on tax reliefs for transit trading companies

13 February 2023
In accordance with Law No. 7412 of 22 June 2022 on the Istanbul Financial Centre ("the Law"), companies registered in the Istanbul Financial Centre ("the Financial Centre") that sell goods purchased abroad in transit trade or intermediate in the purchase and sale of goods abroad have the right to reduce their corporate tax base by 50% (the standard corporate tax rate in Turkey in 2023 is 20%).

Transit trade is defined in the Law as the sale of goods purchased abroad without their being physically brought to Türkiye or the purchase and sale of goods abroad. In order to have the right to reduce their taxable base by half of profits from transit trade, the company carrying on that trade must obtain a certificate of participation and carry out transactions in the Financial Centre. In other words, entities that engage in transit trade but are not registered in the Financial Centre are not entitled to the relief in question.
It is important to note that transit trade operations carried out by Financial Centre participants should be exempt from VAT and customs duties.

In order to become a Financial Centre participant and be eligible for the above reliefs, it is necessary to:

  • Establish a company in the Financial Centre
  • Obtain a certificate of participation (a sort of licence)
  • Rent an office
  • Carry out transit trade transactions (other activities are possible but they may not qualify for the above-mentioned reliefs)

In order for operations to qualify as transit trade transactions, the buyer and the seller of the goods being traded must be based outside Türkiye.

It is stated in the preamble to the new Law that its objectives are to increase Türkiye’s international competitiveness, promote its economic growth and safeguard its economic stability by increasing the inflow of foreign currency and creating new jobs. In other words, the tax relief is designed to encourage foreign companies to carry out transit trade transactions via Türkiye and accumulate trading margins in that country.
The Financial Centre is not yet fully operational, but it is expected to begin operating within 1−2 months. The legislative framework is likewise incomplete at this stage, and experts expect Turkish regulators to issue clarifications in the very near future.

We believe that registration in the Financial Centre has potential benefits for Russian trading companies or Russian investors, which would be able to use Türkiye as an additional centre for doing business.

B1's experts in Russia and Türkiye are ready to advise companies on possible registration in the Financial Centre and to provide all necessary support.
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