New Tax Regime In Türkiye: Annual Income Tax Exemption And Other Accompanying Regulations

Introduction

Law No. 7582 on the Amendment of Certain Laws dated 21 May 2026 (“Law”) was published in the Official Gazette dated 4 June 2026 and numbered 33270 and entered into force.

The Law contains comprehensive regulations aimed at strengthening Türkiye’s international investment environment, increasing foreign currency inflows and, in particular, promoting foreign investment and export-oriented economic activities. In this context, long-term tax exemptions have been introduced for income sourced abroad, new incentives have been introduced for qualified service centers, exporting companies and tech start-ups, and new mechanisms have also been adopted for bringing assets into the economy.

Scope and Operation of the 20-Year Income Tax Exemption

Pursuant to repeated Article 20/D added to the Income Tax Law by the Law, the foreign-source income and gains of individuals who meet certain conditions have been exempted from income tax for a period of 20 years following their relocation in Türkiye. This period is relatively long when compared with similar international practices and may position Türkiye as one of the more competitive jurisdictions in this area.

The types of income falling within the scope of the exemption have been regulated in a manner that may be interpreted broadly; dividends received from foreign subsidiaries, interest income received from foreign financial institutions, rental income derived from real estate located abroad, gains arising from foreign capital market instruments and similar foreign-sourced income may fall within the scope of this exemption.

An important feature of the regime is that such income will not be subject to any reporting obligation in Türkiye. No annual tax return will be required to be filed for income falling within the scope of the exemption; and if the taxpayer files a tax return due to other income in Türkiye, such earnings will not be included in the taxable base. Nevertheless, the inability to deduct expenses relating to such earnings in Türkiye and the inability to credit taxes paid abroad constitute the principal limitations of the regime.

Conditions for Eligibility and the “Last Three Years” Criterion

Pursuant to the Law, the main condition introduced for qualifying for this regime is that the person must not have been considered tax resident in Türkiye and must not have been subject to unlimited tax liability in Türkiye in the last three calendar years preceding the date on which they settled in Türkiye. This criterion demonstrates that the regulation primarily targets Turkish citizens living abroad and foreign investors.

At the same time, the fact that the person was previously taxed as a limited taxpayer solely due to deriving rental income from real estate or investment income in Türkiye does not prevent such person from benefiting from the exemption.

Wealth Transfer Dimension: 1% Inheritance and Gift Tax

The regulation is not limited solely to income tax but also covers the intergenerational transfer of wealth. Pursuant to the provision added to Article 16 of the Inheritance and Gift Tax Law, the inheritance and gift tax rate applicable to the transfer upon death of foreign assets held by persons benefiting from the 20-year exemption regime has been set at 1%.

Entry into Force and Timing

Although the regulation entered into force on 4 June 2026, it will also apply to persons who became tax resident in Türkiye as of 1 January 2026. Therefore, it has become possible for persons who moved to Türkiye as of the beginning of 2026 to benefit from the exemption retroactively.

Other Important Regulations: Corporate Tax, Exports, IFC and Tech Start-ups

In addition to the individual taxation regime, the Law also contains important amendments regarding corporate tax and the investment environment.

Reduced Corporate Tax for Export Earnings

With the Law, the corporate tax rate has been determined as 12.5% for the earnings derived exclusively from production activities of corporations holding an industrial registry certificate and engaged in production activities, as well as for the earnings derived exclusively from such activities of corporations engaged in agricultural production activities.

Transit Trade and Service Exports

With the Law, the scope of incentives for earnings derived from transit trade and from the purchase and sale of goods conducted entirely outside Türkiye has been expanded, and the possibility of increasing incentive rates depending on the region where the activity is carried out has been introduced. In addition, it has been made possible to deduct from the tax base, in the calculation of domestic minimum corporate tax, the income deductions available under transit trade, qualified service centers and the Istanbul Finance Center.

Qualified Service Centers (“QSC”)

With the Law, Additional Article 1 has been added to the Foreign Direct Investment Law No. 4875 and the concept of “Qualified Service Center” (“QSC”) has been included in Turkish legislation for the first time. Accordingly, a QSC covers capital companies that are part of a group operating in at least three separate countries, established to provide certain services to group companies, and that derive at least eighty percent of their total annual income from group companies abroad.

This structure aims to attract to Türkiye models such as Global Capability Centers, Shared Services Centers or Regional Headquarters, through which international companies manage their operations in different geographies from a single center. The objective of the regime is to encourage high value-added functions such as management, technology, finance, law and R&D to be carried out through Türkiye, to support qualified employment and to strengthen service exports.

The scope of services that may be provided through a QSC has been defined broadly. Many high-value-added functions, ranging from finance to strategic planning, from risk management to digital transformation projects, from data analytics to human resources processes, and from R&D coordination to compliance activities, have been included within this scope. Accordingly, Turkish legislation has, for the first time, introduced a dedicated corporate framework for service export activities.

Fromatax perspective, 95% oftheforeign-source income of QSCs arising exclusively from these activities may be deducted from the corporate income tax base. In centers located within the Istanbul Finance Center or in industrial zones determined by the President, this deduction rate may increase to 100%. However, in order to benefit from this advantage, the income must be connected with QSC activities, must be derived from group companies abroad and must be remitted to Türkiye within the tax return filing period.

Incentives for employees also constitute an important pillar of the system. The portion of the wages of qualified personnel working within QSCs up to three times the gross minimum wage shall be exempt from income tax; in centers located in the Istanbul Finance Center or in certain industrial zones, this threshold is increasedto five times. Moreover, the exemption from stamp tax of documents relating to wage payments within the scope of the exemption provides employers with an additional cost advantage.

The corporate tax benefit will remain available for twenty accounting periods from the date on which the QSC commences its activities. This term, which is quite long compared to the periods under existing incentive systems, provides investors with long-term predictability, particularly in terms of comprehensive regional center investments.

Assessment of the QSC Regime from a Legal and Professional Services Perspective

One of the most distinctive aspects of the regulation is that legal services have been expressly included among the incentivized services within the scope of QSCs. Accordingly, multinational companies will be able to position their regional legal units, contract management functions, legal operations teams and corporate compliance departments in Türkiye. In international practice, such structures are generally referred to as “Regional Legal Hubs” or “Legal Operations Centers” and enable legal affairs in different countries to be coordinated from a central point.

To explain with a concrete example, a multinational group with subsidiaries in Europe, the Middle East and North Africa may, through a QSC to be established in Istanbul, carry out contract review, legal risk assessment, compliance program management and legal technology solutions for all these regions under a single roof. Thus, it becomes possible to centralize legal operations that are otherwise carried out separately in different countries.

In addition to legal services, compliance and corporate governance functions are also within the scope of the regulation. The regime contemplates that critical functions such as international sanctions monitoring, export control compliance, anti-corruption mechanisms, data protection programs and internal policy development processes will be managed from a single regional center.

On the other hand, the Law also draws an important framework regarding legal services: legal consultancy concerning Turkish law or activities in Türkiye may only be provided by attorneys-at-law or law partnerships authorised under the Attorneyship Law No. 1136. In other words, while QSCs pave the way for multinational companies to move their international legal operations to Türkiye, it does not alter the existing regulatory framework designed to protect the Turkish legal profession.

It is considered that this development will also have indirect but significant effects on the Turkish legal sector. With the spread of regional legal centers, compliance offices and data protection units in Türkiye, the obligation of such structures to receive support from local law firms on matters relating to Turkish law will increase. This may create new areas of work particularly for firms specializing in corporate compliance, personal data protection, international trade and sanctions law, and corporate law.

In conclusion, the QSC regime has the potential to position Türkiye not merely as a manufacturing hub, but as a regional operations center in knowledge-intensive sectors such as finance, technology, law and compliance.

Istanbul Finance Center Incentives

Under the Istanbul Finance Centre regime, the application period of the 100% corporate income tax deduction available for income derived from the export of financial services through the Istanbul Finance Centre has been extended until 2047. In addition, the exemption period during which participating financial institutions operating in the Istanbul Finance Center will benefit from financial activity charges has been increased to 20 years.

Tech Start-ups and Digital Companies

With the Law, significant amendments have been made to share-based incentives provided to employees by employers qualifying as tech start-up companies. In this context, the maximum value of shares eligible for the tax exemption has been increased to twice the annual gross wage, the holding period required to dispose of the shares while retaining the full exemption has been reduced to 6 years, and the tax burden to be applied depending on the holding period of the shares has been revised.

Asset Repatriation Programme

The tax rate to be applied to declared assets varies between 0% and 5% depending on whether the declared assets are maintained for specified periods in term deposit accounts, government domestic debt securities, lease certificates or venture capital investment funds.

Conclusion

Overall, the Law constitutes a comprehensive reform package aimed at encouraging international investors, export-oriented companies, technology start-ups and high-value-added service activities in terms of Türkiye’s tax policy. The 20-year exemption regime introduced in the field of individual taxation is a noteworthy practice on an international scale and has the potential to position Türkiye as an attractive jurisdiction in this area.

In addition, the Law introduces various tax benefits and incentive mechanisms under the Law for corporate investors, exporters, financial institutions, technology companies and international service centers. Accordingly, the Law may be viewed as a comprehensive regulatory package aimed at enhancing Türkiye’s ability to attract international investment and skilled talent and through a broad range of incentives targeting different sectors of the economy.

The full text of the Law may be accessed through the link below.

Law No. 7582 on the Amendment of Certain Laws

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.