Changes to the Rates for the Foreign Participation Income Exemption and Service Exports

Presidential Decree No. 11257, published in the Official Gazette of 30.04.2026, has amended the exemption and deduction rates under Personal Income Tax Law No. 193 and Corporate Income Tax Law No. 5520.

• Under subparagraph (b) of the first paragraph of Article 5 of the Corporate Income Tax Law, with effect from 1 January 2026, the ownership threshold for exempting foreign participation income — which requires holding at least 50% of the paid-in capital of the foreign participation and transferring the income to Türkiye by the date on which the corporate income tax return for the accounting period in which it was derived must be filed — has been reduced from 50% to 20%, while the exemption rate has been raised to 80%.

• Under Article 22 of the Personal Income Tax Law, with effect from 1 January 2026, the ownership threshold has been reduced from 50% to 20% for the rule exempting from personal income tax half of the dividends specified in subparagraphs (1), (2) and (3) of the second paragraph of Article 75 that are derived from entities in the nature of joint stock and limited liability companies whose statutory and business centres are not located in Türkiye, provided that at least 50% of the paid-in capital of those entities is held and that the dividend is transferred to Türkiye by the date on which the annual personal income tax return for the calendar year in which it was derived must be filed.

• Under subparagraph (13) of the first paragraph of Article 89 of the Personal Income Tax Law and subparagraph (ğ) of the first paragraph of Article 10 of the Corporate Income Tax Law, the deduction rate applied at 80% since 1 January 2023 has been set at 100%.

With this change, income derived exclusively from these activities by service businesses operating in the fields of architecture, engineering, design, software, medical reporting, bookkeeping, call centres, product testing, certification, data storage, data processing, data analysis and the vocational training fields determined by the Ministry of Treasury and Finance after taking the opinion of the relevant ministries — where the services are provided in Türkiye to persons not resident in Türkiye and to those whose workplace, statutory and business centres are abroad, and are used exclusively abroad — as well as by businesses operating in the fields of education and health subject to the permission and supervision of the relevant ministry and serving persons not resident in Türkiye, has become 100% exempt from tax, provided that the whole of that income is transferred to Türkiye by the date on which the annual personal income tax/corporate income tax return for the calendar year in which it was derived must be filed.

These provisions entered into force on the date of their publication, to apply to income and earnings relating to taxation periods beginning on or after 1/1/2026.

Yours faithfully.

04.05.2026