On Friday, Recep Erdogan, the President of Turkey, presented a tax reform package that, if approved by parliament, could significantly change how the country is perceived by wealthy expats and international businesses.
The key proposed change is 0% tax on foreign income and capital gains for 20 years for individuals who relocate to Turkey and have not been Turkish tax residents during the previous three years.
Under this regime, the tax base would be limited exclusively to income sourced in Turkey. Everything earned abroad — dividends, capital gains, passive income — would remain outside Turkish taxation for two decades.
The reform also proposes a fixed 1% inheritance and gift tax, regardless of the value of transferred assets. Currently, standard rates range from 1% to 30%.
At present, individuals who become Turkish tax residents are subject to progressive taxation of 15% to 40% on worldwide income, with partial relief available under double taxation treaties.
What Changes for Business
The standard corporate tax rate in Turkey currently stands at 25%.
The proposed reform introduces:
- 9% for manufacturing exporters.
- 14% for other export-oriented companies.
Companies operating in the Istanbul Financial Center would receive near-complete tax exemption on income from transit trade. International companies relocating their regional headquarters to Turkey could benefit from up to 20 years of incentives on foreign operations, as well as additional benefits for employees.
Citizenship Program and Outlook
Turkey’s citizenship by investment program offers a direct route to a passport through real estate investment from $400,000. Until now, it has mainly been viewed as a “neutral passport” or a “Plan B”. However, the picture may now change: Turkey could become a full-fledged jurisdiction for relocating personal and business interests and optimising taxes.
