Proposed Amendments to Tax Laws in Türkiye

A new legislative proposal, “Law Proposal on Amending the Law on the Protection of the Value of Turkish Currency and Certain Laws,” has been submitted to the Turkish Grand National Assembly (TBMM) on June 16, 2025. This proposal aims to combat informality, strengthen tax justice, limit deductions and exemptions, increase the share of direct taxes in overall tax revenues, prevent disputes, and enhance legal certainty.

This bulletin provides a summary of the significant tax changes proposed.

1. Measures to Combat Informality and Strengthen Tax Justice

• LPG Sector Regulation: Similar to previous restrictions in the fuel sector, the proposal introduces a limitation in the LPG sector, preventing distributors from selling LPG acquired from one distributor to another. This is intended to ensure market efficiency, address competitive imbalances, and prevent tax losses.
• Inclusion of SCT in VAT Base for Imported Goods: To prevent tax evasion related to Value Added Tax (VAT) on Special Consumption Tax (SCT) amounts, the SCT amount that is calculated and secured as collateral during the import of goods listed in List (I) of the SCT Law will now be included in the VAT base. This ensures that the VAT corresponding to the SCT amount is collected at the import stage. This addresses issues where the VAT related to SCT was not being remitted to the Treasury, often through fraudulent practices.
• Strengthening Electronic Tax Audits: The proposal modifies the procedures for tax audit reports (yoklama fişi). For electronic audit reports that include GPS-based location information and photographs of the audited site, the signatures of police, gendarmerie, local headmen (muhtar), or members of the council of elders will no longer be required if the audited party or their authorized representative is not present or refuses to sign. This aims to strengthen the evidentiary power of these reports and enhance the fight against fake document issuance, which has been problematic due to difficulties in obtaining such signatures in large cities.
• Enhanced Deterrence for Unauthorized Activities: To provide stronger deterrence against systematic and widespread unauthorized activities, the administrative fine for repeated offenses of unauthorized activity within five years will now be directly applied at the upper limit, rather than simply doubling the fine. Furthermore, if it’s determined that a business operates solely for activities requiring specific permits or authorization, all activities at that workplace will be permanently ceased, and the administrative fine will be applied at its upper limit.

2. Corporate Income Tax (CIT) Changes

• Reduced Corporate Tax for Investment Incentives:
  • The application of reduced corporate income tax rates under investment incentive certificates will now be limited to a maximum of ten accounting periods starting from the first period the deduction right can be exercised.
  • The corporate tax reduction rate is specifically set at 60%.
  • A significant change is that investment contribution amounts that are not utilized despite the presence of taxable income cannot be carried forward to subsequent periods.
  • The President retains the authority to allow the partial use of the investment contribution amount (up to 50% of the total contribution, not exceeding the entitled amount) by applying a reduced corporate income tax rate to earnings from other activities of the corporation, for up to four accounting periods including the first year the deduction right is available. However, the President’s previous authority to increase this rate for other activities is removed.
  • For project-based investments under Law No. 6745, the President is granted new authority to extend the specified periods and increase the applicable rate.

3. Income Tax Exemptions/Incentives (R&D, Design, Support Personnel)

• Limitation on Wage Exemptions: The current unlimited income tax exemption (and related stamp tax exemption) provided for wages paid to R&D, design, and certain support personnel in Technology Development Zones (under Law No. 4691), under Law No. 5746, and for personnel in Research Infrastructures (under Law No. 6550) will now be limited. The exempt wage amount will be capped at forty times the gross minimum wage monthly. The minimum wage exemption will be applied first, and the remaining tax amount will then be subject to the incentive/exemption.

4. Special Consumption Tax (SCT) Changes

• Vehicle SCT Rates and Thresholds:
  • The President is explicitly authorized to set differentiated SCT rates for vehicles (specifically, those falling under GTIP 87.03 classification) based on engine cylinder volume, range, and battery capacity, while staying within the existing lower and upper rate limits.
  • The SCT base thresholds for certain fossil fuel-powered and hybrid passenger cars (GTIP 87.03) are being re-determined to align with current market prices. This is because many vehicles were previously being taxed at the highest rates (80%, 150%, and 220%) due to outdated thresholds.
  • A differentiated tax rate is also being introduced for off-road vehicles classified as pickup trucks (GTIP 87.04).
• SCT Exemption for National Security Vehicles: A new SCT exemption is introduced for the initial acquisition of certain vehicles with a domestic contribution rate of at least 40% by the Ministry of National Defense, Ministry of Interior, Defense Industry Presidency, and National Intelligence Organization, exclusively for national defense and internal security needs. This exemption also applies to trucks, vans, off-road vehicles, and motorcycles for which no domestic production meets their specific requirements.

5. Value Added Tax (VAT) Changes

• VAT Exemption for Foundations’ Immovable Sales: Sales and transfers of immovable properties owned by foundations within the General Directorate of Foundations and those managed by this institution are now explicitly exempt from VAT.

6. Free Zones – Income and Corporate Tax Exemptions

• The existing income and corporate tax exemption for earnings from product sales made from free zones abroad is expanded. The exemption will now also apply to earnings from product sales by taxpayers in free zones to other taxpayers within the same free zone or to other free zones. Sales made from free zones to the domestic market will continue to be subject to tax.

7. Banking and Insurance Transactions Tax (BITT) – Clarification

• The proposal explicitly clarifies that the general tax exemption for Organized Industrial Zones (OIZ) legal entities does not extend to the Banking and Insurance Transactions Tax (BITT) payable on loans utilized from banks. This aims to resolve a previous dispute regarding this specific tax.

8. Fees for Authorized Institutions (Ministry of Treasury and Finance)

• The Ministry of Treasury and Finance will re-regulate and collect various fees for permits granted to commercial foreign exchange institutions, precious metals intermediary institutions, and refiners. These include fees for initial permits, permits for opening branches, permits for changing central or branch addresses to higher activity regions, and fees for share transfers.
• The proposal details specific tariff amounts for these fees, which can be substantial (e.g., 25.9 million TL for a branch-authorized forex permit in Activity Region 1, 40.3 million TL for a refining permit per production site and precious metal type).
• The President is empowered to increase these fees up to double or decrease them by half.

9. Effective Dates of Key Changes

• Beginning of the month following publication: Articles concerning the remuneration of tax audit personnel (Article 5), the inclusion of SCT in the VAT base (Article 7), and the R&D/design/support personnel exemptions (Articles 11, 18, and 19).
• January 1, 2026 (for earnings obtained thereafter): Changes related to free zone exemptions (Article 8).
• Date of publication (for newly issued investment incentive certificates): Changes to the reduced corporate tax for investments (Article 17).
• Date of publication: All other articles.

You can contact us for your questions regarding proposed amendments to tax laws in Türkiye explained in our tax bulletin.