Türkiye passes law granting 20-year exemption on foreign income

The Turkish Grand National Assembly passed a package of fiscal incentives in the early hours of 21 May 2026, writing into law a 20-year exemption from tax on foreign-source income for new residents. The initiative, proposed by President Recep Tayyip Erdogan in late April 2026, has now cleared its only significant legislative hurdle and awaits formal promulgation.

Under the procedure, President Erdogan has 15 days to publish the law in the Official Gazette (Resmi Gazete). As he initiated the package himself, a veto is considered out of the question.

Conditions for the personal tax exemption

Individuals with no habitual residence in Türkiye and no tax liability there in the three financial years immediately preceding their move will qualify for the 20-year exemption. According to Hürriyet Daily News, exempt foreign-source income will not need to be declared in the annual Turkish income tax return. Domestic income remains taxable on the ordinary progressive scale of 15% to 40%.

Inheritance and gift tax for those who qualify is set at a flat 1%, well below the standard progressive scale of 1% to 30% applied to ordinary residents.

Asset amnesty: the eighth since 2008

The new law also introduces an asset amnesty allowing individuals and businesses to declare assets held abroad, including cash, gold, foreign currency and securities, through Turkish banks and brokerage firms. The deadline for declarations is 31 July 2027, and foreign assets must be repatriated to Türkiye within two months of the declaration date.

The rate applied to declared assets depends on how long they are kept in qualifying domestic investment instruments: 0% if held for five years, 1% for four years, 2% for three years, 3% for two years and 4% for one year. Assets withdrawn in under a year are taxed at the base rate of 5%.

Declared amounts are shielded from tax inspection and penalties. According to Hürriyet Daily News, opposition parties objected to the amnesty provision during debate, arguing that previous rounds had made it easier for illicit money to enter the country. This is Türkiye’s eighth asset amnesty since 2008.

Corporate tax reform and the Istanbul Finance Centre

Alongside the personal incentives, the package cuts the headline corporate tax rate for manufacturers to 12.5% from 25%. Export income enjoys a deeper cut, at 9% for manufacturers exporting their own products and 11% for other exporters. The ceiling for unsecured overdue debts is raised to 1,000,000 Turkish lira, roughly US$22,110, and the repayment period for public debt is extended from 36 to 72 months.

Income from transit trade earned by businesses operating in the Istanbul Finance Centre (IFC) is fully exempt from corporate tax, up from the 50% relief available under the previous framework. Businesses outside the IFC receive a 95% reduction on the same activity. For exports of financial services from the IFC, full corporate tax exemption is maintained until 2047.

Abdullah Güler, leader of the Justice and Development Party (AKP) parliamentary group, said the reforms are aimed at a growth model that is “production and export led”, while making Türkiye more attractive to foreign investors.

For investors consideringTürkiye citizenship by investment, the new package opens up a further favourable tax structure once the passport is granted and tax residence moves toTürkiye. The law takes formal effect once published in the Official Gazette, and detailed rules on registration procedures, the list of qualifying investment instruments and the criteria for determining tax residence are expected from the Turkish Ministry of Finance in due course.