Introduction
On May 21, 2026, Turkey’s parliament passed a tax incentive package that is genuinely significant by any regional standard. It is not an announcement or a proposal — it is enacted law. The provisions cover voluntary asset disclosure, a territorial income tax regime for new residents, reduced inheritance tax, corporate tax exemptions for international service centers, and transit trade incentives.
Each measure has specific conditions, deadlines, and eligibility criteria. What follows is a plain-language breakdown of the five main provisions and what they mean in practice for individuals and companies considering Turkey.
Table of Contents
1. Cash Repatriation: Declare Assets at 0–5%
The law revives and significantly improves Turkey’s voluntary disclosure regime — known locally as varlık barışı. It allows individuals and companies to declare previously undisclosed assets and bring them into the formal economy at heavily reduced tax rates.
What can be declared: cash, foreign currency, gold, securities, and other capital market instruments held abroad or undisclosed within Turkey.
Deadline: July 31, 2027. Foreign assets must be transferred to a Turkish bank or brokerage account within two months of declaration. Declarations made from January 1, 2027 onward attract rates 0.5 percentage points higher across the board.
Tax rates by holding period:
| Holding Period | Tax Rate |
|---|---|
| 5 years or more | 0% |
| 4 years | 1% |
| 3 years | 2% |
| 2 years | 3% |
| 1 year | 4% |
| No commitment | 5% |
Assets invested in venture capital funds qualify for the same reduced rates. Pledge documents are exempt from stamp duty.
The critical protection: assets properly declared under this scheme cannot be subject to a tax audit or additional tax assessment. This is a strong amnesty-type guarantee, though it does not shield assets from proceedings under other legislation.
2. Foreign Income Tax Exemption: 20 Years, 100% Exempt
Turkey has introduced a territorial tax model for qualifying new residents — the same structural approach used by Italy, Greece, and Portugal to attract internationally mobile individuals.
Under the new Article 20/D of the Income Tax Law, individuals who relocate to Turkey from January 1, 2026 onward pay zero income tax on their foreign-sourced income for 20 years. The eligibility condition: the person must not have been a Turkish tax resident or had a registered domicile in Turkey during the three calendar years immediately before relocating.
What does not disqualify you: having previously received passive income from Turkish sources — rental income, dividends, or capital gains from Turkish assets — does not affect eligibility.
Practical details:
- No annual tax return needs to be filed for the exempt foreign income.
- Foreign taxes paid abroad cannot be credited against Turkish income tax.
- If conditions are later found not to have been met, unpaid taxes are treated as a tax loss and collected with interest.
This provision is directly relevant to foreign investors, entrepreneurs with overseas businesses, retirees, and high-net-worth individuals considering a change of residence. The interaction with your previous country’s exit tax rules and the applicable double tax treaty requires individual legal assessment before relocating.
3. Inheritance Tax: 1% for Qualifying Residents
Individuals who qualify for the foreign income exemption also benefit from a sharply reduced inheritance tax rate throughout their exemption period.
Turkey’s standard inheritance tax rates range up to 10% for close relatives and up to 30% in other cases, depending on relationship and value. For qualifying residents, inheritances received during the exemption period are taxed at 1% — regardless of the value or the relationship between donor and recipient.
For high-net-worth individuals structuring intergenerational wealth transfers, this is a material advantage that compounds with the income tax exemption.
4. Qualified Service Centers: 0–1.25% Effective Corporate Tax
The law creates a new category — nitelikli hizmet merkezi (qualified service center) — with some of the most generous corporate tax treatment in Turkey’s recent legislative history.
To qualify, a company must:
- Serve affiliated companies or a corporate group active in at least 3 different countries
- Derive at least 80% of its annual revenue from foreign related parties
- Be structured as a capital company (joint-stock or limited liability)
The tax benefit: for 20 fiscal years from the date the center becomes operational, 95% of foreign-sourced income is deductible from the corporate tax base — producing an effective rate of 1.25% (5% of the standard 25% rate). For centers operating inside the Istanbul Finance Center (IFC) or designated Industrial Zones, the deduction rises to 100%, meaning a 0% effective rate.
For employees: income tax is exempt on wages up to 3 times the gross minimum wage. For IFC and Industrial Zone employees, this rises to 5 times the gross minimum wage.
One notable restriction added by parliament: when these centers require legal advisory services for domestic activities or matters of Turkish law, they must obtain those services exclusively from licensed Turkish lawyers under the Bar Association Act.
5. Transit Trade: 95–100% Corporate Tax Exemption
Companies that purchase goods abroad and sell them abroad without those goods ever entering Turkish customs territory — transit trade — now benefit from a 95% deduction on those profits from corporate tax. For companies operating inside the IFC or eligible Industrial Zones, the deduction is 100%.
Qualification conditions: sale proceeds must be transferred to Turkey by the corporate tax return deadline, and both the buyer and seller in the transaction must be non-Turkish parties.
This is directly relevant for international trading companies, commodity traders, supply-chain operators, and holding structures routing commercial activity through Turkey. Transfer pricing, VAT mechanics, and operational substance remain important complementary considerations.
Key Takeaways
The May 2026 law targets three distinct audiences:
Internationally mobile individuals and high-net-worth individuals: The 20-year foreign income exemption combined with the 1% inheritance tax creates a residency proposition that competes directly with Italy’s flat-tax regime and Portugal’s historic NHR model.
Multinational corporations: The qualified service center regime — particularly at the IFC’s 100% exemption — makes Turkey a credible location for regional headquarters managing operations across the Middle East, Central Asia, and Europe.
Individuals and companies with undisclosed assets: The cash repatriation window runs until July 2027. At 0% for a five-year commitment, this is one of the most favourable voluntary disclosure terms Turkey has ever offered, with strong protection against retrospective tax scrutiny.
Each of these provisions has eligibility conditions, interaction effects with other jurisdictions, and structural requirements that depend on individual circumstances. Turkish investment lawyer Baris Erkan Celebi assists clients with international tax planning, structuring residency transitions, cash repatriation declarations, and qualified service center establishment.
- Author Av. Baris Erkan Celebi
- Barış Erkan Çelebi Founder of Turkish law firm
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Baris Erkan Celebi is an English-speaking Turkish lawyer who exclusively represents foreign investors in Turkey. His law firm in Turkey specializes in providing international investors in Turkey with reliable legal counsel and personalized business solutions.
