The tax reform announced by Recep Tayyip Erdoğan in April has passed a key stage — the Turkish parliament has approved a 20-year tax holiday on foreign income. The law is now awaiting presidential signature and publication in the official gazette.

What Is Changing

The new rules introduce a 0% tax rate on foreign income and capital gains for 20 years for individuals relocating to Turkey who have not been Turkish tax residents during the previous three years.

The exemption applies to dividends, foreign passive income, capital gains, and other overseas earnings. Domestic Turkish income will continue to be taxed under the standard progressive scale ranging from 15% to 40%.

Inheritance and gift tax will also be reduced to a flat 1% rate instead of the current progressive scale of up to 30%.

Additional measures included in the reform:

  • Corporate tax for manufacturing companies will be reduced to 12.5%
  • Export-oriented companies will benefit from rates between 9% and 11%
  • Companies operating within the Istanbul Financial Center will receive near-complete tax exemptions on transit trade income

The reform also introduces a capital amnesty mechanism. Overseas assets — including cash, gold, foreign currency, and securities — may be legalized through Turkish banks and brokerage firms. If these funds are invested in Turkish financial instruments for at least 5 years, the applicable tax rate will be 0%.

Turkey is clearly positioning itself as a new jurisdiction for international capital amid ongoing instability in parts of Europe, geopolitical tensions in the Middle East, and changing tax policies in countries such as the United Kingdom and the United States. Competition for wealthy residents and globally mobile capital has intensified significantly in recent years.

Until recently, Turkey’s citizenship by investment program was often viewed primarily as a “Plan B.” That perception may now begin to change. The country is gradually positioning itself not only as a destination for obtaining Turkish citizenship through real estate investment, but also as a full-scale tax and business hub for relocation.

If you are interested in obtaining Turkish citizenship, contact our experts. The Astons team will be happy to answer your questions and guide you through the application process.