Erdogan Proposes 20-Year Tax Breaks on Foreign Income for New Turkish Residents

Turkish President Recep Tayyip Erdoğan unveiled an updated package aimed at attracting both capital and people planning to relocate. At the heart of the proposal is a long-term tax incentive for foreign-sourced income for new tax residents: the plan would grant up to 20 years of exemption from Turkish tax on income earned abroad, including capital gains. Erdoğan also noted that the measure will require parliamentary approval, though the timing for introducing the bill has not yet been specified.

The announcement was made in Istanbul at the Dolmabahçe presidential working residence, within the framework of the “Turkey Century Strong Center for Investment Program”. Erdoğan described the initiative as a “bold, game-changing step”, adding that his goal is to position Turkey as a destination for international investment.

Two decades of relief: who qualifies and under what rules

The mechanism is designed for individuals who have not been Turkish tax residents for at least three years. After moving to Turkey, they would be able to avoid Turkish tax on income generated outside the country for 20 years. At the same time, income earned within Turkey would remain subject to local taxation under existing rules.

The proposal also includes a reduction in tax burdens related to property transfers. Specifically, authorities plan to cut inheritance and gift tax to a flat rate of 1%. For comparison, under the current system rates range from 1% to 30%, which may make outcomes more predictable for families and corporate structures alike.

How it compares with European approaches: longer duration, different logic

Compared with European equivalents, Turkey’s plan stands out for its length. Italy offers a lump-sum style regime for 15 years, while in Greece the non-dom tax status for qualifying non-residents also lasts 15 years. Portugal’s successor to the Non-Habitual Resident (NHR) scheme—IFICI—provides relief for 10 years.

European programs, however, often come with a “price of entry.” In Italy, for example, the fixed threshold for the system rises in 2026 to €300,000 per year. In Greece, the qualifying threshold is set individually and stated at €100,000. In the Turkish proposal, at least in the publicly described version, there is no mention of a mandatory fixed payment specifically tied to foreign income.

Why this matters for CBI strategy and tax certainty

A 20-year window could resolve a concern previously raised by participants in Turkey’s citizenship-by-investment (CBI) program. The issue typically emerged when individuals with CBI transitioned into Turkish tax residency: they faced progressive personal income tax—from 15% to 40%—on their worldwide income. Relief may be partially mitigated through double-tax treaties, but the risk does not automatically disappear.

In theory, the new “tax corridor” may reduce the likelihood of unpleasant outcomes for those who meet the eligibility conditions. In practice, though, the real impact will hinge on the final wording of the bill and how exactly the criteria for applying the regime are defined in the final text.

Timur Polding, a representative of CIP Turkey, called the announcement a potential “turning point”. He believes the move could strengthen Turkey’s positioning—helping shift it from being viewed as a regional hub to a more visible global player. He also suggested that, thanks to economic diversification and the country’s geostrategic location, the measure could become a final piece of a broader investment narrative.

Corporate incentives: lower rates and benefits for exporters

Another key component of the package is a corporate tax cut for exporters. The plan is to reduce the rate from 25% to 9% for manufacturing exporters and from 25% to 14% for other exporting companies.

For businesses operating in the Istanbul Finance Center (IFC), income from transit trade is expected to be fully exempt from tax—replacing a prior approach that offered a 50% deduction. For companies outside the IFC, authorities propose a 95% exemption on profits derived from transit activities. The logic would also extend to regional headquarters managed from Turkey, with 95–100% relief expected for a 20-year period.

Erdoğan further indicated that Turkey may allow the repatriation of assets held abroad. This would cover cash, gold, and securities—applicable to Turkish citizens and companies that fall under a reduced tax rate.

Context and geopolitics: why the window may have opened now

Observers link the timing to current regional turbulence. The Iran war, according to assessments, affected infrastructure in the UAE, Saudi Arabia, and Qatar, while Turkey—analysts note—largely avoided the most damaging consequences thanks to protective measures from NATO air defense systems. Earlier this April, Erdoğan said global instability can open “new doors” for the country.

A few weeks before the initiative was released, the Minister of Treasury and Finance Mehmet Şimşek confirmed plans for “radical” incentives to attract foreign capital. Bloomberg reported on April 8 that officials were working on a rule that would extend IFC-related benefits to foreign companies operating within Turkey.

The IFC itself points to growing “meaningful” participation from overseas institutions. In a comment to Al Jazeera, an IFC representative highlighted strong interest from organizations in East Asia, mentioning Japan, South Korea, and the United Kingdom.

Güney Yıldız, Senior Adviser at Anthesis Group (previously at Abu Dhabi Global Market, ADGM), described the transit-trade incentives as a direct bet on brokerage and intermediary activity—the niche where Dubai has been active for two decades. In his view, the current geopolitical setup has clearly influenced the initiative’s timetable.

Turkey is not Dubai: tax breaks won’t erase structural differences

Even with all the ambition behind the package, Turkey’s economy remains under pressure from inflation and a weakening Turkish lira. In the Global Financial Centres Index, Istanbul ranks 101st, while Dubai is 7th, Abu Dhabi 21st, and Riyadh 61st. As a result, the “gap” cannot be closed by tax measures alone.

Erdoğan also distanced himself from the popular idea of Turkey as a “bridge between East and West.” He emphasized that the country serves as a strategic base for regional energy and trade corridors. At the same time, the full set of legislative changes still has to pass parliamentary procedures.

“Every business and economic community is looking for a route in dense fog,” Erdoğan said on Friday. If Parliament endorses the bill, the proposed tax relief could become one of the reference points that helps investors make decisions amid uncertainty.

Expert view: “Erdoğan proposes” and the hidden mechanism of trust

In my view, what matters in this initiative is not only the size of the benefit, but also the message it sends to the market. When a head of state promises long-term tax predictability (here, 20 years), investors stop thinking solely about the current rate and start planning around the time horizon: it becomes easier to model household arrangements, capital trajectories, and corporate structures (for instance, where profits will accumulate and how cash flows will be documented). One subtle but crucial point in programs like this is the legal definition of what qualifies as “foreign income,” and how mixed transactions are treated—such as transit activity, services, and intermediary work. Those details often determine whether the relief works as intended in practice. That is why the final bill text may end up being just as important as the idea itself.

Additional expert insight: In many countries, “new resident” tax regimes are most effective when they include administrative shortcuts—such as simplified onboarding procedures, clear evidence standards for proving foreign-source income, and predictable audit practices. For Turkish policy, one little-known factor is how the tax authorities may require documentation for foreign income (bank statements, contracts, and proof of where the income was generated). If the rules demand extensive case-by-case verification, the real-world value of the 20-year exemption could be reduced despite the headline figure. Conversely, if compliance is streamlined, the incentive can become materially more attractive to internationally mobile families and professional investors.

Planning a long-term move to Turkey? The proposed 20-year tax relief for new tax residents could significantly improve predictability for foreign-source income and capital gains. Digital Nomad will help you understand eligibility, prepare the required documents, and build a clear plan for your application and next steps.

Our Telegram channel about various types of Greek residence permits, digital nomad programs, and the Greek Golden Visa: @digitalnomadgr