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Sude Naz Ayaksız

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Significant innovations are planned within the scope of tax law in the field of Turkish investment law. The new tax reform package will introduce changes in tax advantages, investment facilitation, and entrepreneurship. This text examines what these innovations are and how they provide advantages to investors.

1. Encouragement of International Direct Investments

Within the scope of the announced tax reform package, it is aimed to take legal, administrative, financial, and institutional steps to support international direct investments. In this context, simplifying the investment environment, increasing predictability and establishing an investor-friendly ecosystem are targeted.

As a concrete reflection of these steps, with the “One-Stop Office” (Tek Durak Büro) implementation, large-scale and qualified international direct investment processes will be managed from a single center, creating a simplified, fast, digitally supported, and investor-friendly structure.

It is planned to assign representatives from relevant institutions and organizations to the “One-Stop Office” under the coordination of the Presidency Investment and Finance Office. Through this structure, all procedures from company establishment to work and residence permits, from tax and social security transactions to İŞKUR processes, as well as land incentives and environmental permits can be easily tracked from a single center.

2. Expansion of Tax Advantages in the Istanbul Financial Center

It is aimed to expand the tax advantages provided to institutions operating in the Istanbul Financial Center. In this context:

• Strong tax advantages will be provided for profits obtained by global companies managing their overseas operations from Türkiye, allowing 100% of the income generated within the Istanbul Financial Center to be deducted from corporate earnings for the next 20 years.
• 95% of the income earned outside the Istanbul Financial Center will be deductible from corporate earnings.

Additionally, it is aimed to introduce salary exemptions for qualified employees working in the Istanbul Financial Center under certain conditions.

These regulations are understood to aim at encouraging global companies to relocate their regional headquarters to Türkiye.

3. Tax Incentives for Transit Trade and International Activities

It is planned to increase the current 50% deduction rate applied to earnings from transit trade or intermediary activities related to international trade conducted within the Istanbul Financial Center to 100%. Outside the Istanbul Financial Center, it is aimed that 95% of such earnings from transit trade activities will be exempt from taxation.

4. Corporate Tax Regulations

The general corporate tax rate in Türkiye is 25%, with a 5-point reduction for exporters and an additional 1-point reduction for manufacturers. With the new regulations:

• This tax rate will be reduced to 9% for manufacturers and exporters,
• It will be applied as 14% for other exporting companies.

5. Incentives Aimed at Generating Foreign Currency for Türkiye

Efforts are being made to ensure that individuals living abroad who have not been tax residents in Türkiye for the past 3 years will not pay taxes in Türkiye on their foreign-sourced income and earnings for 20 years if they relocate to Türkiye. These individuals will only be taxed on their domestic income, if any. Additionally, it is stated that an inheritance tax rate of 1% will apply to these individuals in Türkiye.

6. Incentives for Next-Generation Sectors

Before the regulation, 80% of the foreign earnings of entrepreneurial taxpayers operating in rising sectors such as architecture, engineering, and software and providing services to clients abroad were tax-exempt. Now, it will be possible to deduct the entirety of such earnings from the income and corporate tax base. Thus, entrepreneurs who have established or become partners in companies abroad will be encouraged to bring their earnings to Türkiye.

7. Legal Assurance and Predictability for Large-Scale Investments

It is aimed to provide project-based guarantees to minimize the impact of tax regulations introduced after investment decisions and to define reasonable transition periods.

In addition to these incentives:

• The “digital company” implementation will make company establishment and management processes faster and more flexible,
• It is aimed to make stock option incentives for employees more effective and attractive. In this context, access to financing will be facilitated by simplifying convertible debt mechanisms,
• The action of the first phase of the Terminal Istanbul will also create a strong entrepreneurial infrastructure.

In conclusion, the main objective of the legal, administrative, financial, and institutional regulations outlined above is to provide significant tax advantages, attract investors particularly to the Istanbul Financial Center, and achieve substantial gains in direct investment. It is expected that these reform preparations will be shared with investors by the economic administration and subsequently legislated by the parliament. It should also be noted that the timeline for these developments has not yet been finalized.