Tax Advantages for Foreign-Owned Companies in Türkiye in 2026

For international investors, the Turkish tax regime offers a unique blend of competitive corporate rates and aggressive sector-specific incentives designed to accelerate growth.

At Akkas CPA & Turkish Accounting Firm, we have guided foreign investors through the complexities of the Turkish legal system since 2017. As premier company formation lawyers, we understand that tax optimization is not just about paying less—it is about structuring your business to leverage every available legal benefit.

Whether you are looking into a limited liability company for a boutique agency or a joint-stock company for a large-scale industrial project, understanding the tax landscape is the first step toward a successful entry into the market.

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Türkiye continues to position itself as a strategic gateway between Europe, Asia, and the Middle East. Beyond its geographic advantage, the country offers a highly competitive tax framework designed to attract foreign direct investment. In 2026, tax incentives, exemptions, and international treaty protections make Türkiye particularly appealing for foreign-owned companies seeking operational efficiency and long-term growth.

As Akkas CPA & Turkish Accounting Firm, a full-service company formation and governance firm based in Istanbul and serving international clients since 2017, we regularly advise foreign investors on how to structure their businesses to fully benefit from Türkiye’s tax advantages.

This article provides a comprehensive overview of the key tax benefits available to foreign-owned companies in Türkiye and explains how proper structuring can significantly reduce overall tax exposure.

1. Equal Tax Treatment for Foreign Investors

One of the most fundamental advantages for foreign-owned companies in Türkiye is the principle of equal treatment. Under Turkish law, foreign investors are subject to the same rights and obligations as domestic investors. There is no additional corporate tax, withholding tax, or discriminatory levy imposed solely because of foreign ownership.

This legal certainty allows international entrepreneurs to plan their investments confidently, knowing that their companies will be taxed under the same framework as Turkish-owned entities. For investors seeking legal clarity, working with experienced company formation lawyers ensures compliance while maximizing available tax benefits.

2. Competitive Corporate Income Tax Regime

Türkiye offers a competitive corporate income tax rate when compared to many European jurisdictions. Foreign-owned companies incorporated in Türkiye are subject to corporate income tax only on their worldwide income, provided that they are considered tax residents in Türkiye.

Key points include:

• Corporate income tax applies uniformly to resident companies, regardless of shareholder nationality.
• Losses can generally be carried forward, enabling tax optimization during the initial investment phase.
• Expenses incurred wholly and exclusively for business purposes are deductible, allowing efficient tax planning.

With proper corporate structuring during company formation in Türkiye, foreign investors can lawfully minimize their effective tax burden.

3. Double Taxation Avoidance Agreements (DTAAs)

Türkiye has an extensive network of Double Taxation Avoidance Agreements with more than 90 countries. These treaties are a significant advantage for foreign-owned companies, as they prevent the same income from being taxed both in Türkiye and in the investor’s home country.

Benefits of DTAAs include:

• Reduced withholding tax rates on dividends, interest, and royalties.
• Clear rules for determining tax residency.
• Protection against double taxation of business profits.

For multinational groups, DTAA protection plays a critical role in structuring cross-border investments efficiently and lawfully.

4. Dividend Distribution and Withholding Tax Benefits

Foreign-owned companies in Türkiye can freely distribute profits to their overseas shareholders. Dividend distributions are generally subject to withholding tax; however, this rate may be significantly reduced or eliminated under applicable double taxation treaties.

Additionally:

• There are no restrictions on profit repatriation.
• Dividends can be transferred abroad in foreign currency.
• No additional exit tax applies solely due to foreign ownership.

This flexibility makes Türkiye a favorable jurisdiction for holding and operating companies with international shareholders.

5. VAT Advantages and Refund Mechanisms

Türkiye’s Value Added Tax (VAT) system includes several advantages for foreign-owned companies, particularly those engaged in export-oriented activities.

Key VAT benefits include:

• Exports of goods and services are generally zero-rated.
• Input VAT incurred on export activities is refundable.
• Certain investment incentives provide VAT exemptions on machinery and equipment purchases.

These mechanisms significantly improve cash flow and reduce the overall cost of doing business for foreign investors.

6. Tax Incentives for Strategic Investments

The Turkish government actively supports foreign investment through a comprehensive investment incentive system. Depending on the sector, location, and scale of the investment, foreign-owned companies may benefit from:

• Corporate tax reductions
• Social security premium support
• Customs duty exemptions
• VAT exemptions on investment-related purchases
• Interest rate support for qualifying loans

Strategic and high-value investments may also qualify for enhanced incentives, making Türkiye particularly attractive for manufacturing, technology, energy, and export-driven projects.

7. Free Zones and Technology Development Zones

Foreign-owned companies operating in Free Zones or Technology Development Zones (Technoparks) enjoy some of the most favorable tax regimes in Türkiye.

Advantages may include:

• Exemption from corporate income tax on qualifying activities
• VAT exemptions on certain transactions
• Customs duty exemptions
• Income tax exemptions on R&D personnel salaries (in Technoparks)

These zones are especially attractive for software development, R&D, logistics, and export-focused businesses.

8. Flexible Company Structures with Tax Efficiency

Foreign investors in Türkiye can choose from several corporate structures, each offering specific tax and governance advantages.

The most commonly preferred structures are the joint-stock company and the limited liability company. Both structures allow 100% foreign ownership and offer limited liability protection. With proper planning, these entities can be structured to optimize dividend distribution, management flexibility, and tax efficiency.

Selecting the appropriate structure at the incorporation stage is critical to achieving long-term tax advantages.

9. Transfer Pricing and International Compliance

Türkiye follows OECD-aligned transfer pricing rules, providing clarity and predictability for multinational companies. While compliance is essential, these rules also enable foreign-owned companies to structure intercompany transactions transparently and efficiently.

With accurate documentation and arm’s length pricing, foreign investors can avoid disputes while maintaining operational efficiency across borders.

10. No Wealth Tax or Exit Tax on Foreign Investors

Türkiye does not impose a general wealth tax on corporate assets, nor does it apply a special exit tax solely because shareholders are foreign. This absence of additional capital-based taxation enhances Türkiye’s attractiveness as a long-term investment destination.

Capital gains may be subject to taxation depending on the transaction, but careful planning often allows for exemptions or reduced rates.

Conclusion: Why Türkiye Remains a Tax-Efficient Investment Destination in 2026

In 2026, Türkiye continues to stand out as a tax-efficient, investor-friendly jurisdiction for foreign-owned companies. Equal treatment of foreign investors, a competitive corporate tax system, extensive double taxation treaties, generous incentives, and unrestricted profit repatriation collectively create a compelling environment for international business.

However, the true value of these advantages can only be realized through proper legal structuring, compliance, and strategic planning from the outset.

Contact us for Tax Advantages for Foreign-Owned Companies in Türkiye

If you are considering establishing or restructuring a foreign-owned company in Türkiye, Akkas CPA & Turkish Accounting Firm is ready to assist you. With years of experience in company formation, tax planning, and corporate governance, our multilingual team provides tailored legal solutions to international investors. Contact us today to explore how Türkiye’s tax advantages can support your business objectives.