According to the Turkish Corporate Tax Law No. 5520 (Article 10/ğ), companies established in Turkey that derive income exclusively from exporting specific services—such as architecture, engineering, design, software Development, and data processing—to non-resident clients are eligible for an 80% deduction on their taxable profit. This incentive, coupled with Turkey’s skilled workforce and strategic location, makes it a prime hub for global service providers in 2026.
80% Service Export Profit Exemption Overview 2026
Criterion
Requirement / Benefit
Tax Deduction Rate
80% of eligible profit
Eligible Services
Software, Design, Data Processing, Architecture, Engineering, Call Center
Client Requirement
Must be non-resident (outside Turkey)
Invoicing Requirement
Must be issued to the non-resident client
Benefit Utilization
Applied in the annual corporate tax return
What is the 80% Service Export Profit Exemption?
The 80% service export profit exemption is a strategic tax incentive designed to boost Turkey’s service export sector. It allows eligible companies to deduct 80% of the profit derived solely from exporting qualified services from their corporate tax base. For income earned in 2025, this deduction is claimed in the annual corporate tax return filed in April 2026. This means that if a company has a taxable profit of 1,000,000 TL from eligible service exports, only 200,000 TL is subject to the corporate tax rate.
💡 Critical Information: This exemption applies to the profit, not the gross revenue. Companies must maintain separate accounting records for eligible service export income and any other income to accurately calculate the deductible portion.
Which Companies Can Benefit?
To qualify for the 80% deduction in 2026, a company established in Turkey (including 100% foreign-owned entities) must meet the following conditions:
Eligible Service Sectors: The company must operate in the fields of architecture, engineering, design, software development, medical reporting, bookkeeping, data storage, or call center services.
Non-Resident Clients: The services must be provided exclusively to clients (individuals or entities) whose place of residence, legal center, or business center is located outside of Turkey.
Service Utilization: The benefit of the service must be derived outside of Turkey.
Risk of Incentive Loss
Companies that provide eligible services but fail to meet the client residency or service utilization requirements risk losing the entire deduction and facing tax penalties.
How to Claim the Exemption? Step-by-Step Process
To utilize the 80% profit exemption, eligible companies must follow these steps:
Establish a Qualified Company: Incorporate a Limited (LTD) or Joint Stock (A.Ş.) company with the appropriate eligible service sectors listed in its articles of association (MERSİS).
Maintain Separate Accounting: Implement robust accounting practices to segregate income and expenses related to eligible service exports from any other business activities.
Document the Export: Ensure all eligible service export transactions are supported by contracts, invoices issued to non-resident clients, and proof of payment received in Turkey.
Calculate Taxable Profit: Determine the company’s total taxable profit for the fiscal year.
Claim the Deduction: In the annual corporate tax return (filed in April for the preceding year), claim the 80% deduction on the portion of profit derived from eligible service exports.
Calculation Examples and Financial Impact
The financial impact of this exemption is significant, especially for high-profit service companies. The corporate tax rate in Turkey for 2026 is 25% (subject to change; verify). By utilizing the 80% deduction, the effective tax rate on eligible profit is reduced to 5%.
Calculation Example
A foreign-owned software company (LTD) in Turkey has a total taxable profit of 2,000,000 TL in 2025, all derived from software Development services exported to a European client:
While highly beneficial, this exemption carries risks if not managed correctly. Companies must ensure their primary business activity as registered with GİB (Revenue Administration) matches the eligible services. During a tax audit (yoklama), the tax authority will verify the nature of the services provided, the residency of the clients, and the accounting separation. Improper documentation or commingling of income can lead to the rejection of the deduction and penalties.
Frequently Asked Questions
Can a 100% foreign-owned Turkish company utilize the 80% service export exemption?
Yes. Turkey’s Foreign Direct Investment Law provides national treatment to foreign investors. Any company established under Turkish law, regardless of shareholder nationality, can utilize this incentive if it meets the eligibility criteria.
Which services are eligible for the 80% tax deduction in Turkey?
Eligible services include software development, data processing, design, architecture, engineering, call center, bookkeeping, and medical reporting, provided they are exported to non-resident clients.
How is the effective tax rate calculated with this exemption?
With an 80% deduction on taxable profit, only 20% of the profit is taxed at the corporate tax rate (e.g., 25%). This results in an effective tax rate of 5% on the total eligible profit.
Professional Support
Navigating Turkey’s tax incentives, particularly the complex requirements for service export exemptions, requires expert guidance. Errors in company formation, accounting separation, or documentation can lead to the loss of benefits and significant penalties. For accurate calculation, compliance, and process management, you can receive support from the expertise of Vergi Merkezi | Mali Müşavirlik.
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⚠️ Legal Disclaimer: This content has been prepared based on the current legislation in effect as of its publication date. Tax and commercial legislation change frequently; for definitive results, obtain information and support from Vergi Merkezi | Mali Müşavirlik.
📚 Sources and References
Primary Sources
T.C. Resmi Gazete Title: Corporate Tax Law (Article 10/ğ) Date: 2025/2026 Mevzuat Güncellemeleri
Revenue Administration (GİB) Document: Corporate Tax General Communiqués and Related Tax Incentive Guides
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