Turkey’s 20-Year Foreign Income Tax Holiday: What Investors Need to Know

On 21 May 2026, Turkey’s Grand National Assembly passed Law No. 7582, introducing a landmark 20-year tax exemption on foreign-source income for qualifying new tax residents.

Published in the Official Gazette on 4 June 2026, the legislation entered into force immediately, operating alongside Turkey’s existing Citizenship by Investment (CBI) programme

What the Law Provides

The core measure exempts foreign-source income and capital gains from Turkish income tax for 20 years. Income earned outside Turkey does not need to appear on a Turkish tax return for the duration of the exemption period. No related expenses may be deducted during this time, and no credit may be claimed for foreign taxes paid on that income.

Income generated within Turkey remains subject to standard progressive rates of 15% to 40%. The two categories of income are treated separately, and the exemption does not affect domestic tax obligations.

The law also reduces the inheritance tax rate for qualifying individuals to a flat 1%, replacing a graduated schedule that previously reached 30% on larger transfers.

Who Qualifies

The exemption is available to individuals who establish Turkish tax residency on or after 1 January 2026. The qualifying condition requires that the applicant have had no Turkish domicile and have paid no Turkish income tax during the three full calendar years before relocating.

The law includes a carve-out for individuals who previously paid Turkish tax on passive income categories such as rental income, securities income, or capital gains. Those individuals remain eligible, provided the broader residency condition is met.

The exemption took effect on the date of publication in the Gazette for anyone who has been resident since 1 January 2026. For individuals who have not yet relocated, the window to qualify remains open.

Relevance to Citizenship by Investment Applicants

Turkey citizenship by investment programme requires a minimum qualifying investment of $400,000. Applications are typically processed within 6 to 8 months. The programme grants a Turkish passport with access to over 120 countries.

Law No. 7582 is structured to complement this route directly. An investor who obtains citizenship through the investment programme and subsequently establishes Turkish tax residency becomes eligible for the full 20-year foreign income exemption. 

For investors who hold significant foreign income but have not previously considered Turkish residency alongside citizenship, the law materially changes the calculation.

Asset Repatriation Provisions

The same legislation introduces a wealth amnesty running until 31 July 2027. Individuals and companies may declare assets held abroad, including cash, gold, foreign currency, and securities, through Turkish banks or brokerage firms. Declared assets must be transferred to Turkey within two months of declaration.

Tax rates on declared assets are graduated by holding period, as follows:

• 0% tax rate for assets held in qualifying Turkish investment instruments for five years.
• Tax rates range from 1% to 4% for assets committed for shorter holding periods.
• 4% tax rate for assets held for one year.
• 5% base tax rate for assets withdrawn before completing one year.

Declared amounts are protected from tax inspections and associated penalties.

Corporate Tax Changes

The corporate income tax rate for manufacturing companies has been reduced from 25% to 12.5%, effective from the 2027 tax year. Export income is taxed at 9% for manufacturers exporting their own goods and at 11% for other exporters.

Companies operating within the Istanbul Finance Centre benefit from a full corporate tax exemption on transit trade income, expanded from a previous 50% relief. This exemption now applies to all qualifying participants within the centre, with the sunset provision extended from 2031 to 2047.

Last Word,

Turkey’s new 20-year foreign income tax exemption marks one of the most significant tax residency incentives introduced in recent years. Combined with the country’s Citizenship by Investment programme, the reform creates a compelling proposition for internationally mobile investors, entrepreneurs, and high-net-worth individuals seeking long-term tax efficiency.

As the world’s investment and immigration landscape continues to evolve, staying informed is essential. Follow Karibi Consultants for the latest updates, expert analysis, and insights on citizenship, residency, and global investment opportunities.