Pursuant to the Presidential Decision No. 11257, published in the Official Gazette No. 33239 dated April 30, 2025, significant amendments have been made to the rates previously determined by Law No. 7194 regarding foreign participation earnings and service exports.

1. Exemption for Foreign Participation Earnings (Corporate Tax Law, Art. 5/1-b) New conditions and rates have been established to encourage the repatriation of dividend income obtained from foreign subsidiaries:

• Scope: Participation earnings derived from joint-stock and limited liability companies whose legal and business centers are located outside of Türkiye.

• Conditions:

  • The domestic entity must hold at least 50% of the paid-in capital of the foreign subsidiary.

  • The earnings must be transferred to Türkiye by the deadline for filing the corporate tax return for the relevant fiscal period.

• Exemption Rate: 50% of the earnings meeting these criteria are exempt from corporate tax.

2. Deduction for Income from Services Exported Abroad (Corporate Tax Law, Art. 10/1-ğ) The deduction rate applied to earnings derived from specific services provided from Türkiye to foreign clients (such as architecture, engineering, software, design, data storage, and call centers) has been increased:

• Previous Rate: 50%

• New Rate: 80%

• Conditions:

  1. The service must be provided from Türkiye to a client located abroad.

  2. The benefit of the service must be utilized abroad.

  3. New Condition: To benefit from the deduction, the total amount of the income derived from these activities must be brought into Türkiye by the deadline for filing the corporate tax return.

Summary of Enforcement: These regulations significantly reduce the tax burden, provided that the earnings are physically repatriated to Türkiye.