Zero tax plan unveiled by Erdoğan
Tax incentives are set to reshape regional competition for investment in Turkey, after President Recep Tayyip Erdoğan unveiled an ambitious proposal offering zero tax on foreign income for up to 20 years.
The announcement was made during a ceremony in Istanbul on April 25, under the initiative titled “Türkiye Century Strong Center for Investment.”
The plan targets individuals who were not tax residents in Turkey over the past three years and choose to relocate, granting full exemption from tax on income and capital gains earned abroad.
Wide-ranging incentives for businesses
The proposed package includes a series of aggressive measures aimed at attracting multinational companies and exporters:
- 1% inheritance tax for new residents
- Corporate tax reduced to 9% for construction exporters and 14% for other exporters
- 100% corporate tax exemption for transit trade firms based at the Istanbul Financial Centre
- 95% exemption for similar firms outside the centre
- Up to 20-year tax breaks for multinationals relocating regional headquarters
- Low-tax repatriation of capital, including cash, gold and securities
- A digital single-stop platform for company registration, licensing and tax processes
Strategic focus on Middle East and Europe
The tax incentives in Turkey are designed to attract investors leaving the Middle East amid rising instability, particularly those reconsidering operations in Dubai.
At the same time, Ankara is targeting European-based professionals and high-income digital nomads, positioning Istanbul as a competitive hub bridging Europe and Asia with strong global connectivity.
The proposal has not yet been enacted into law and requires parliamentary approval, with no confirmed timeline for submission.
Analysts caution that the success of the plan will depend on a clear legal framework and stable implementation, noting Turkey’s track record of sudden fiscal policy changes. Inflation and currency volatility are also seen as potential risks for investors assessing long-term benefits.
Competition with Cyprus regime
The proposed tax incentives in Turkey are expected to compete directly with Cyprus’ non-domicile regime, which offers up to 17 years of tax exemptions on dividends and interest within an EU legal framework.
Turkey’s proposal extends the exemption period to 20 years and introduces more aggressive corporate incentives, potentially shifting the investment landscape in the wider region if fully implemented.
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