Erdoğan is attracting investors with tax exemptions
Foreign investors who relocate to Turkey are set to receive a tax exemption of up to 20 years as part of a new incentive package. President Recep Tayyip Erdoğan unveiled the program on April 24 in Istanbul.
The Turkish government aims to make the country more attractive to international capital. The focus is particularly on investors, wealthy individuals, and skilled workers who might be looking for alternative locations given the tense situation in the Gulf region. At the same time, Turkey itself continues to face challenges: many investors’ confidence in the rule of law, the judiciary, and economic stability remains limited.
At the “Türkiye Century Strong Center for Investment Program” event at the Dolmabahçe Office, Erdoğan promised to make Turkey a global hub for capital, trade, and talent. The announced package is set to be submitted to Parliament shortly.
“All sectors of the economy are trying to find their way through a thick fog,” Turkiye Today quoted Erdoğan as saying. He was referring to the impact of regional uncertainties on energy, production, trade, tourism, and transportation.
Tax Exemption for New Residents
Erdoğan emphasized that the traditional description of Turkey as a bridge between East and West no longer suffices. The country is not merely a corridor but a central hub for energy and trade routes in the region.
At the heart of the package is a far-reaching tax regulation for individuals moving to Turkey. Those who have not been tax residents of Turkey in the past three years will be exempt from paying Turkish taxes on foreign income and capital gains for 20 years. Only income earned within Turkey would be taxed.
Relief is also planned for inheritance and gift taxes. For this group, the tax rate is to be capped at 1 percent.
The program is also expected to allow Turkish citizens and companies to repatriate assets held abroad to Turkey at a reduced tax rate.
Benefits for Exporters and Transit Businesses
Erdoğan’s financial package also provides for a significant reduction in the corporate income tax rate for exporting manufacturing companies. The rate is set to drop from 25 percent to 9 percent. Other exporting companies would be taxed at 14 percent.
Currently, exporters receive only a 5-percentage-point reduction. Manufacturers receive an additional 1-percentage-point discount.
The government also plans stronger incentives for transit trade. Profits from transit traffic and cross-border trade brokerage are to be fully exempt from corporate income tax in the Istanbul Financial Center. Currently, a 50 percent deduction applies there.
For companies outside the financial center, 95 percent of profits from transit transactions are to remain tax-free.
The Istanbul Financial Center on the Asian side of the city opened in 2023. It is home to the Central Bank, Borsa Istanbul, and several regulatory agencies, among others. The government aims to establish the IFC in the long term as a competitor to financial centers such as Dubai, London, and other international locations.
Turkey is also capitalizing on its geographic location. The country is situated at a key junction between Europe, the South Caucasus, Central Asia, and China. At the same time, Ankara is investing heavily in expanding its rail network to significantly increase freight transport capacity across the Bosphorus.
Whether the new tax incentives will actually attract major international investors on a large scale remains to be seen. The financial benefits are considerable. However, the decisive factor is likely to be whether Turkey can also demonstrate legal certainty, currency stability, and institutional trust.
