The Grand National Assembly of Türkiye approved a major tax reform by passing the economic incentive package introduced by President Recep Tayyip Erdoğan in recent months. The most striking provision of the regulation is a 20-year foreign income tax exemption for new foreign residents who meet certain conditions. With this move, Türkiye is preparing to implement one of the most remarkable long-term tax advantages in the world.
Under the new system, individuals who have not been tax residents in Türkiye during the last three years before relocating to the country will be eligible for this benefit. Foreign-source income earned within this scope will not be subject to taxation in Türkiye and will not need to be declared in annual tax returns. However, income earned within Türkiye will continue to be taxed under the current progressive system at rates ranging from 15% to 40%.
In addition, a major reduction in inheritance and gift taxes is also planned for eligible individuals. Tax rates that normally range between 1% and 30% will be reduced to a fixed rate of 1% for these individuals.
New Asset Amnesty Regulation
Another important element of the regulation is the new “asset amnesty” program. Under this system, individuals and companies will be able to declare assets held abroad — such as money, gold, foreign currency, and securities — and include them in the system by notifying the authorities before a specified deadline. The tax rate applied will vary depending on how long the declared assets remain in Türkiye. Those who keep their assets in Türkiye for a longer period will pay lower taxes, while those who withdraw them quickly will face higher rates.
Authorities stated that assets included in the system will be protected from tax inspections and penal procedures, while opposition parties criticized the regulation, arguing that similar programs in the past paved the way for the inflow of funds with unclear origins.
Major Tax Advantages for Companies and Exports
Significant tax reductions were also introduced for companies. The corporate tax rate for manufacturing companies was reduced from 25% to 12.5%. More favorable rates will apply to exporting manufacturers, while companies operating within the Istanbul Financial Center will benefit from extensive tax exemptions. In particular, income generated from the export of financial services will be completely exempt from corporate tax until 2047.
Türkiye Aims to Attract Global Capital
According to experts, Türkiye aims to attract global capital and transform Istanbul into an international financial hub through these regulations. Some industry representatives also expect major investors to turn toward Türkiye due to political tensions in the Middle East and economic and political dissatisfaction in Western countries.
