Starting a Company in Turkey: What Tax Incentives Are Available to International Businesses?

Turkey attracts the attention of international entrepreneurs due to its strategic location between Europe and Asia, well-developed infrastructure, and opportunities to access new markets. In addition to access to international trade, the country offers tax incentives for companies that invest in manufacturing, exports, technology, and other priority economic sectors. However, it is important to understand that registering a company in Turkey does not, in itself, guarantee tax benefits. Eligibility for these benefits depends on the type of business activity, the location of operations, the volume of investment, and compliance with conditions stipulated by law.

The standard corporate tax rate in Turkey is 25% for most companies. A higher rate applies to certain categories of financial institutions. In addition to corporate tax, businesses may be subject to VAT, payroll-related taxes, and other mandatory payments, depending on the nature of their operations. At the same time, Turkish legislation provides for a number of special regimes and incentives that can significantly impact the overall tax burden.

One of the most compelling instruments for international business is the Turkish Free Zones. These zones were established to promote exports, attract foreign investment, and support manufacturing activities.

Companies that meet the requirements for operating within these Free Zones may benefit from the following:

• exemption from corporate tax on specific income derived from manufacturing activities;
• VAT exemptions for transactions as provided for by law; customs advantages for goods moved within the scope of the applicable regime;
• specific relief on payroll-related taxes, contingent upon meeting export targets and other established requirements.
• It is important to note that the tax benefits available in free zones do not automatically apply to all companies. The extent of these benefits depends on the nature of the business activity, the possession of the appropriate license, and compliance with specificconditions. Turkey also offers government support programs for investment projects. These can be particularly attractive to companies planning to establish manufacturing facilities, create jobs, or invest in priority sectors.

Depending on the specific program and the nature of the project, a business may be eligible for:

• a reduction in corporate tax;
• VAT exemptions on certain equipment;
• exemption from customs duties;
• subsidies for social security contributions;
• other financial incentives provided under the program.

To access many of these benefits, it is necessary to obtain an Investment Incentive Certificate. Therefore, the structure of the planned operations and the alignment of the investment project with established criteria should be assessed prior to implementation. For technology companies, Turkish technoparks and Technology Development Zones are of particular interest.

Under the applicable regime, income derived from qualifying activities—such as software development, research, and design—may be exempt from corporate tax until the end of 2028. Furthermore, specific VAT exemptions are available for certain software products, alongside tax incentives related to personnel engaged in research and development (R&D). For international IT companies, this presents an opportunity to establish a development center in Turkey and optimize costs related to the development of technological products. However, these incentives apply only to activities that meet the specific conditions of the special regime.

Companies using Turkey as a base for international trade can also benefit from tax advantages. Specifically, Turkish legislation provides for a 5-percentage-point reduction in the corporate tax rate on qualifying export-derived profits. This makes Turkey an attractive destination for companies planning to supply goods to international markets, set up production facilities, or expand export operations.

Selecting the appropriate corporate structure and tax regime should be done prior to business registration, as not all companies will be eligible for these special incentives once operations have commenced.

Before entering the Turkish market, it is advisable to analyze the following:

• Corporate form. The most common options are the Limited Liability Company (*Limited Şirket* – Ltd. Şti.) and the Joint-Stock Company (*Anonim Şirket* – A.Ş.).
• Nature of business activity. Sectors such as manufacturing, exports, and IT may qualify for various support programs.
• Location of registration and operations. Operating within a free zone or a technopark can provide access to specific incentives.
• International taxation. Considerations include transactions with foreign counterparties, transfer pricing, and double taxation avoidance agreements.
• Requirements for incentives. Certain incentives may require prior approval, certification, or the fulfillment of specific investment commitments.
• Sound tax planning makes it possible not only to estimate potential savings but also to avoid situations where a company loses its eligibility for tax benefits due to the improper structuring of its operations.

Turkey offers international businesses a range of tax advantages—from incentives for exporters to special regimes for manufacturing and technology companies. 

At the same time, the effectiveness of these tools depends on the specific business model and proper compliance with legal requirements. Are you planning to open a company in Turkey and wish to take advantage of available tax benefits? Turn to Antwort Law! Our lawyers will help you select the optimal corporate structure, analyze potential tax incentives, guide you through the company registration process, and prepare the necessary legal documentation. Contact Antwort Law for a tailored solution to help your business enter the Turkish market.

Lidia Ivanova

International lawyer
Antwort Law