Recent Developments
With Presidential Decree No. 11257, published in the Official Gazette dated 30 April and numbered 33239, certain rates and thresholds set forth under Articles 22 and 89 of the Income Tax Law No. 193 and Articles 5 and 10 of the Corporate Tax Law No. 5520 have been revised in favor of taxpayers.
In this legal alert, we provide an overview of the amendments introduced under Presidential Decree No. 11257 (“Decree“).
What Do the Amendments Introduced by the Decree Mean?
A. Amendments Regarding the Foreign Participation Income Exemption
I. From the Perspective of Individual Shareholders
Pursuant to Article 22 of the Income Tax Law, dividend income derived from foreign participations meeting certain conditions has been subject to a 50% income tax exemption, provided that such income is transferred to Türkiye by the deadline for filing the relevant annual income tax return. In order to benefit from this exemption, it was required that the individual hold a minimum participation interest of 50% in the foreign entity.
With Article 1 of the Decree, the minimum participation threshold required to benefit from the foreign participation income exemption has been reduced from 50% to 20%.
II. From the Perspective of Corporate Taxpayers
Similarly, the minimum participation threshold stipulated under Article 5/1-b of the Corporate Tax Law for the foreign participation income exemption has also been reduced from 50% to 20%. In addition, the portion of participation income that may be taken into account within the scope of the exemption has been increased from 50% to 80%.
Provided that these conditions are met, the obligation to transfer the participation income to Türkiye by the deadline for filing the corporate tax return for the relevant fiscal year continues to apply.
The said amendments entered into force on 30 April 2026, the date of their publication, and shall apply to income and earnings derived in taxation periods beginning on or after 1 January 2026.
B. Increase in the Deduction Rate for Qualified Service Exports
An increase has been introduced in the deduction rate applicable to income derived from services rendered abroad and exclusively utilized outside Türkiye, including architecture, engineering, design, software, medical reporting, bookkeeping, call center services, product testing, certification, data storage, data processing, and data analysis services, as well as education and healthcare services provided to persons not resident in Türkiye.
Accordingly, the deduction rate applied at 80% under Article 89/1-13 of the Income Tax Law and Article 10/1-ğ of the Corporate Tax Law has been increased to 100% pursuant to the Decree.
The said amendment entered into force on 30 April 2026, the date of publication of the Decree, and shall apply to income and earnings derived in taxation periods beginning on or after 1 January 2026.
Conclusion
Through the taxpayer‑favorable amendments introduced under the Decree, the scope of the exemptions applicable to dividend income derived from abroad has been expanded, while at the same time paving the way for the full deduction of income derived from qualified service exports rendered abroad from the income and corporate tax base.
