Turkey Passes a Law Offering 20-Year Tax Breaks on Foreign Income and an Asset Amnesty

On May 21, Turkey’s parliament — the Grand National Assembly — approved a package of fiscal incentives proposed by President Recep Tayyip Erdoğan at the end of April. The centerpiece of the plan is now formally secured in law: a 20-year exemption from Turkish income tax on qualifying foreign-sourced income for eligible new tax residents, rather than remaining a campaign promise.

Erdoğan has 15 days to sign the bill and publish it in Turkey’s Official Gazette (Resmi Gazete). Since the package was initiated by the president himself, a veto is not expected.

How the 20-year personal tax relief works

Individuals can qualify for the 20-year tax holiday if they did not have domicile in Turkey and were not Turkish tax payers during the three previous calendar years before relocating.

For eligible residents, qualifying foreign income does not need to be reported in annual Turkish tax returns. At the same time, income sourced in Turkey continues to be taxed under the standard progressive brackets — from 15% to 40%.

In addition, for those who meet the requirements, inheritance and gift tax is reduced to a flat 1% rate. Previously, the tax used tiered rates ranging from 1% to 30%.

Capital amnesty: the eighth since 2008

The law also introduces a capital amnesty. It allows individuals and businesses to declare assets held abroad, including — among other categories — cash, gold, foreign currency, and securities.

Declarations must be filed through Turkish banks or brokerage firms. The deadline for submitting declarations is no later than July 31, 2027, and the transfer of the declared foreign assets into Turkey must be completed within two months.

The effective tax rate depends on how long the declared funds remain in the relevant Turkish instruments: 0% if held for 5 years, 1% for 4 years, 2% for 3 years, 3% for 2 years, and 4% for 1 year. If the funds are withdrawn earlier, the base rate of 5% applies.

Declared amounts are granted protection against tax audits and penalties. Still, opposition parties criticized the amnesty provision: during the debate, lawmakers argued that similar mechanisms in the past may have helped money linked to illegal sources enter the country.

Corporate tax and the Istanbul Financial Center

Parliament also lowered the corporate income tax rate for manufacturing companies to 12.5% from 25%. Exporters receive even stronger relief: according to the published text shared with Hürriyet Daily News, the rate will be 9% for manufacturers exporting their own products and 11% for other exporters.

For companies operating within the Istanbul Financial Center (IFC), the law provides full exemption from corporate tax on income from transit trade — an improvement over the earlier model, where the benefit was only 50%. Outside the IFC framework, the relief is 95%.

A full tax exemption for export income from financial services in the IFC is also retained — extending up to 2047.

Why Turkey expects the measures to pull in capital

Aran Hoker, who in 2011 supplied trading technology to Istanbul banks and the exchange as part of the financial center’s development, views the approved law as the result of planning that has been underway for nearly two decades.

He notes that former deputy prime minister Nažım Ekren has been pushing the idea since 2009 to position Atashehir as a cornerstone of Istanbul’s bid to become the financial hub of Eurasia. In Hoker’s view, the Istanbul Financial Center is a strategy now becoming reality.

“The Turkish government sees an opportunity and wants to take advantage of the situation,” Hoker said, referring to disruptions in the financial hubs of the Gulf Cooperation Council (GCC) countries caused by the conflict around Iran. He expects the incentives to attract not only capital from the GCC region, but also from farther markets — North America, Europe, and the UK — especially from players who feel uneasy about political conditions in their home countries.

Expert note: tax incentives for foreign income can work differently than headline rates suggest. In many jurisdictions, the key lever is not only the tax holiday itself, but the interaction with residence rules, controlled foreign company (CFC) regimes, and “substance” requirements (such as where decisions are made and where activities are performed). For investors, this means that qualifying for a foreign-income exemption often depends on demonstrating legitimate management and operational presence, not merely holding offshore assets. As a result, well-designed incentive packages can attract capital by reducing uncertainty and compliance friction, even when the nominal benefit looks similar to earlier programs.

If you’re considering Turkey as a place to live and manage cross-border finances, pay attention to the new incentives: 20-year exemption from Turkish tax on foreign-source income for qualifying new tax residents and asset tax amnesty. This can be especially relevant if you’re planning to streamline and regularize international income and assets as part of your residency strategy. The Digital Nomad team will help you assess how these updates may affect your move and investment residency plan.

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