7 Tax Planning Strategies for Newly Formed Turkish Companies in 2026

Establishing a business presence in Türkiye offers remarkable opportunities, but navigating the Turkish tax landscape requires strategic planning from day one. At Akkas CPA & Turkish Accounting Firm, we have guided international and domestic entrepreneurs through company formation in Türkiye since 2017, and we understand that effective tax planning is fundamental to long-term business success.

The Turkish tax system presents numerous opportunities for newly formed companies to optimize their tax positions legally and efficiently. Whether you are establishing a joint stock company formation or pursuing limited liability company formation, understanding these strategies can significantly impact your bottom line and competitive positioning in the Turkish market.

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Understanding the Turkish Corporate Tax Framework

Turkey’s corporate tax rate stands at 25% for resident companies, applied to worldwide income. However, this baseline figure tells only part of the story. The Turkish government actively encourages investment through various incentive schemes, special tax regimes, and deduction opportunities that can substantially reduce your effective tax rate.

Newly formed companies must complete tax registration within specific timeframes following incorporation. This initial registration sets the foundation for your tax compliance journey and determines your obligations to the Turkish Revenue Administration. Working with experienced Turkish company formation lawyers ensures this critical process is handled correctly from the outset.

The Turkish tax landscape is dynamic, with recent legislative changes—including the introduction of a domestic minimum corporate tax regime—making professional guidance an absolute necessity. Generic advice is no longer sufficient; success in 2026 and beyond requires a precise, legally sound tax plan integrated from the very moment of company formation in Türkiye.

Here are the seven essential tax planning strategies your newly formed Turkish company must implement to maximize profitability and ensure robust compliance.

1. The Foundational Choice: LLC vs. JSC and Their Tax Ramifications

The strategic importance of choosing the correct legal entity cannot be overstated, as the initial decision dictates future liabilities and shareholder exit strategies.

A. Share Transfer Taxation: The Decisive Factor

This is often the most significant tax differentiator. For founders, the ability to transfer equity tax-efficiently is key:

• Joint Stock Company (Anonim Şirket – A.Ş.): Gains derived by individual shareholders from the sale of shares held for more than two years are fully exempt from personal income tax. This makes the A.Ş. the preferred vehicle for startups and companies seeking future investment, M&A, or IPOs. For corporate shareholders, 75% of the gain from the sale of shares held for at least two years can be exempt from corporate tax. If you plan for external investment or an eventual exit, exploring joint stock company formation is highly advisable.
• Limited Liability Company (Limited Şirket – Ltd. Şti.): Gains realized by individuals from the sale of LLC shares are subject to personal income tax as “capital gains,” regardless of the holding period. This crucial difference makes limited liability company formation generally more suitable for stable, family-owned, or small-to-medium enterprises (SMEs) with no immediate plans for capital market involvement or investor exits.

B. Shareholder Liability and Tax Debt

Shareholders of an A.Ş. (who are not board members) are generally not liable for the company’s uncollected public debts, including tax and social security premiums. In contrast, shareholders of an Ltd. Şti. are held liable for such uncollected public debts in proportion to their capital share in the company.

Before moving forward with your registration, securing all required documents for company formation and consulting a lawyer for a structural analysis is the first strategic tax move.

2. Leveraging Türkiye’s Powerful Tax Incentives and Zones

The Turkish corporate tax code provides generous, targeted incentives to encourage investment in specific sectors, particularly technology, R&D, and export. A newly formed company must determine its eligibility from day one.

A. Technology Development Zones (Technoparks)

Companies operating within designated Technology Development Zones (TDZs) can benefit from some of the most attractive incentives in the region:

• Corporate Tax Exemption: Profits derived from software development, R&D, and design activities carried out within a TDZ are often exempt from Corporate Income Tax (CIT) until the end of 2028.
• Personnel Income Tax Exemption: Salaries of R&D, software, and design personnel working in the TDZ are exempt from income tax, providing a substantial reduction in labor costs.
• Social Security & VAT Exemptions: Other benefits often include exemptions from social security employer’s share and VAT exemptions on certain services and goods.

B. Export Income Tax Reduction

In a clear bid to boost foreign currency earnings, Türkiye offers a significant CIT reduction for export-oriented businesses. Corporate taxpayers deriving income exclusively from exportation activities benefit from a five-point reduction in the standard CIT rate. This means, if the standard rate is 25%, export earnings are taxed at 20%. For international firms and trading companies, structuring operations to maximize export income is a fundamental tax strategy.

3. Navigating the Domestic Minimum Corporate Tax Regime

Effective from January 1, 2025, Türkiye introduced a domestic minimum tax designed to ensure a floor for corporate tax liability, irrespective of extensive exemptions and deductions.

• The 10% Floor: The new regime calculates a second tax base, generally requiring the tax to be no less than 10% of the commercial income before certain exemptions and deductions.
• New Company Exemption: Critically for newly formed entities, the minimum corporate tax does not apply for the first three fiscal years following the company’s establishment. For a company formed in 2026, this offers a three-year window to fully utilize all available deductions and incentives without being constrained by the minimum tax floor. This temporary relief is a major strategic advantage that must be exploited through accelerated investment and R&D activities during the initial phase.

4. Meticulous Expense and Deduction Management

Aggressive and legally compliant expense management is the bedrock of tax planning. The key is to transform operational spending into legitimate, tax-deductible costs.

• R&D Deductions: Beyond the TDZ exemption, companies engaged in qualifying R&D and innovation activities outside a zone can deduct an additional portion of their R&D expenditure from their corporate tax base.
• Depreciation: Utilizing legally permitted accelerated depreciation methods for tangible fixed assets can shift taxable income to later years, improving immediate cash flow.
• Qualified Donations & Sponsorships: Certain philanthropic contributions and, notably, sponsorship payments for amateur sports activities are fully tax-deductible, allowing companies to fulfill corporate social responsibility goals while legally reducing their tax burden.
• Cash Capital Deduction: A deduction is available for the interest calculated on the cash capital injected into the company. This provides a clear incentive for businesses to capitalize with cash rather than debt.

5. Prudence in International Dealings: The Transfer Pricing Imperative

For multinational groups or companies with foreign shareholders, a single strategy reigns supreme: the Arm’s Length Principle in Transfer Pricing (TP).

• The Principle: Transactions between related parties (e.g., a Turkish subsidiary and its foreign parent) must be executed at prices that would be agreed upon between unrelated parties in similar circumstances. Non-compliance is viewed as a “disguised profit distribution,” which is non-deductible and subject to additional taxes (like dividend withholding tax).
• Documentation: Newly established international companies must immediately focus on TP documentation. While documentation thresholds apply, preparing an Annual Transfer Pricing Report is a crucial defensive measure. Compliance in this area is a significant focal point during tax inspections in Türkiye.

6. Ensuring Timely Compliance and Utilizing the 5% Discount

Compliance is not just about avoiding penalties; it is a strategy for securing financial rewards.

• The 5% Tax Discount: Turkish law rewards compliant taxpayers. Companies that meet specific criteria—such as timely payment of taxes and fulfillment of all obligations—are entitled to a 5% reduction on the final calculated corporate tax amount. This is a direct saving that should be targeted every year.
• Initial Compliance: The very first step, tax registration, sets the precedent for all future compliance. From VAT declarations (standard 20%) to quarterly provisional CIT payments, adherence to strict deadlines prevents crippling late-payment penalties and interest. A clean compliance record is non-negotiable for maximizing the 5% discount.

7. Strategic Dividend Repatriation and Withholding Tax

The tax on corporate profits does not end with the 25% CIT. Shareholders face a secondary level of taxation upon dividend distribution.

• Standard Withholding: Dividends paid by Turkish corporations to non-resident entities or individuals are typically subject to a 10% withholding tax (WHT).
• Double Taxation Treaties (DTTs): This 10% rate is frequently reduced or, in rare cases, eliminated entirely under Türkiye’s extensive network of Double Taxation Treaties. Strategic tax planning involves reviewing the DTT between Türkiye and the shareholder’s country of residence before distribution to confirm the lowest legally applicable WHT rate. Planning the timing and volume of dividend distribution is therefore a key element of cash flow management and tax minimization.

Contact us for Tax Planning Strategies in Türkiye

Successfully navigating the intricacies of the Turkish tax planning requires more than just reading the law—it demands interpretation, foresight, and experience. Akkas CPA & Turkish Accounting Firm, as experienced Turkish company formation lawyers, ensures that your company tax planning, capital strategy, and operational models are perfectly aligned with current tax legislation to minimize liability and maximize returns. From the choice of legal entity to implementing complex transfer pricing policies, our team is your partner in corporate governance.

Do not leave your company’s financial health to chance. Contact Akkas CPA & Turkish Accounting Firm today to schedule a comprehensive consultation. Let our three years of experience in Istanbul safeguard your investment and establish robust tax planning for your company’s growth in Türkiye.