A company that buys goods abroad and sells them abroad without bringing them into Turkey can deduct 95% of that income from its corporate tax base under Law No. 7582; for companies operating in the Istanbul Finance Center (IFC), the rate is 100%. The regulation was published in Official Gazette No. 33270 dated 4 June 2026 and applies to income of tax periods starting on or after 1 January 2026. This article explains how the reduction works, the conditions attached to it, and where mistakes can be made in practice, step by step, for companies planning to run international trade from Turkey, particularly those with Russian and other foreign capital.
What has changed?
Turkey has opened the tax advantage it grants to transit trade income to all corporate income tax payers. Law No. 7582 (the “Law Amending Certain Laws”) restructured sub-paragraph 10/1-i of Corporate Income Tax Law No. 5520.
Before the amendment, this reduction was largely available only to participants of the Istanbul Finance Center (IFC). Under the new system, a standard company established anywhere in Turkey outside the IFC can also deduct 95% for the same activity. The rate is 100% for companies operating in the IFC with a participation certificate and in industrial zones approved by the President.
The practical result: when an enterprise that is currently managed from another country runs the same business through a Turkish company, only 5% of the income is subject to corporate income tax. In addition, because the goods never enter Turkey, the transaction falls outside the scope of VAT.
The effective date also matters. The provision starts with returns filed from 1 July 2026 and applies to income of periods starting on or after 1 January 2026. For calendar-year taxpayers this means the reduction can first be used in the third provisional tax period of 2026, that is, on nine-month income.
The implementation rules were explained in the Corporate Income Tax General Communiqué (Serial No: 26), published in Official Gazette No. 33300 dated 4 July 2026. The Communiqué shows with examples which transactions are covered, and this article is prepared within that framework.
Which transactions are covered?
The reduction covers two types of income: transit trade and intermediation in purchases and sales taking place abroad. What they have in common is that the trade actually takes place outside Turkey.
Transit trade. The Turkish company buys goods from a seller abroad and sells them to a buyer abroad without bringing them into Turkey. The goods are shipped directly from the seller’s country to the buyer’s country; Turkey is merely the centre where the trade is managed, invoiced and financed. The sale of marble blocks bought in Italy to a customer in Nigeria is a typical example.
Intermediation abroad. The company does not own the goods; it acts as an intermediary, for a commission, in a purchase and sale taking place abroad. In this case both the seller and the buyer of the goods must be resident outside Turkey. If one of the parties is in Turkey, the intermediation income is not covered.
The difference between the two models is reflected in accounting too. In transit trade the company shows the purchase cost and the sales revenue in its books, and the income is the margin in between. In intermediation there is only commission income.
The scope is not limited to physical goods. According to the Communiqué, game, licence, activation and subscription codes purchased from abroad, as well as intangible rights such as copyrights, trademarks and patents, are covered if they are sold abroad without altering their nature and without being used in Turkey; for intangible rights, the company must retain no right of disposal after the sale. Cards and balances that do not represent a right of access to a specific product or service and merely function as a means of payment fall outside the scope.
How is the reduction calculated?
The reduction is not an exemption but an income deduction: the net income of the activity is determined first, and then 95% of it is deducted from the tax base. The income is found by deducting the costs and expenses of that activity from the revenue of the covered activity. If the activity results in a loss, no reduction arises.
An illustrative example in which marble blocks bought in Italy are sold to a buyer in Nigeria without being brought to Turkey (general corporate tax rate 25%):
| Item | Without reduction | With 95% reduction |
|---|---|---|
| Sales revenue (TRY) | 3,000,000 | 3,000,000 |
| Purchase cost of goods (TRY) | (2,500,000) | (2,500,000) |
| Selling expenses (TRY) | (60,000) | (60,000) |
| Operating income (TRY) | 440,000 | 440,000 |
| 95% income reduction (TRY) | – | (418,000) |
| Corporate tax base (TRY) | 440,000 | 22,000 |
| Corporate income tax, 25% (TRY) | 110,000 | 5,500 |
| Effective tax burden on income | 25% | 1.25% |
In this calculation the tax burden falls from TRY 110,000 to TRY 5,500. The amounts are illustrative only; the actual result depends on the company’s other income and expenses, any prior-year losses and the legislation in force for the relevant period.
Sources such as KPMG Vergi consider that the 5-point reduced rate in Article 32/7 of the Corporate Income Tax Law can also be applied to the remaining base; the fact that the goods do not physically leave Turkey is not treated as an obstacle in this approach. Since the subject is new, different views may emerge. Under this approach the remaining TRY 22,000 is taxed at 20% instead of 25%; in the example the tax falls to TRY 4,400 and the effective burden to 1%. How this is reflected in the return should be confirmed separately for each company.
Conditions for benefiting from the reduction
The reduction is not applied automatically; each condition must be met and be documentable both at the time of the transaction and at the return stage. The checklist for a standard company is as follows:
- A corporate income taxpayer company in Turkey. A capital company (limited or joint stock) whose legal or business centre is in Turkey must be established.
- Goods not being brought into Turkey. The goods must be bought abroad and sold abroad without being brought to Turkey. In intermediation, the transaction must be a purchase and sale taking place abroad.
- Residence of the parties. In intermediation, the buyer and the seller of the goods must be outside Turkey.
- Transfer of the income to Turkey. The income subject to the reduction must be transferred to Turkey by the filing deadline of the annual corporate income tax return for the relevant accounting period. We discuss this condition separately in the next section.
- Separate disclosure in the return. The reduction amount must be shown in the section “Exemptions and Reductions Deductible if There Is Income” of the corporate income tax return.
- Existence of corporate income. The reduction applies if there is income. The portion that cannot be used because of other reductions and exemptions or prior-year losses is not carried forward to the following periods.
- Separate accounting. Revenues, costs and expenses within and outside the scope of the reduction must be tracked separately.
For the 100% rate in the IFC, a participation certificate under the IFC Law is additionally required; in industrial zones, the zone must have been approved by the President on the basis of foreign investment density.
The transfer condition
The most critical condition of the reduction is bringing the income to Turkey on time. The deadline is the filing date of the annual corporate income tax return of the accounting period to which the income belongs. For calendar-year taxpayers the return period is April; in the Revenue Administration’s practice this period has been set in recent years as 1-30 April.
The reduction can also be used in provisional tax periods; however, the transfer condition is tested against the annual return deadline. The reduction used during the year must be supported by a transfer made before the annual return deadline expires.
The amount that must be transferred is not the sales price but the income subject to the reduction. If goods bought for EUR 8 million are sold for EUR 10 million, it is sufficient to bring the EUR 2 million income to Turkey. The transfer can be made through a bank; physical bringing is also possible, but in that case substantiation with customs documents is required.
On partial transfer, the text and the examples do not fully coincide. The Communiqué states that the reduction cannot be benefited from for the portion not transferred to Turkey within the period; this wording can be read as allowing the reduction for the portion brought in. On the other hand, in the Communiqué’s examples, the reduction of TRY 950,000 on TRY 1,000,000 of income is made conditional on the transfer of the entire income. Income not brought in within the period cannot benefit from the reduction even if it is brought in later.
Therefore the prudent course is to bring the whole of the income to Turkey before the return deadline expires. Structuring collections into the Turkish bank account at the contract stage, and comparing “income subject to the reduction versus the amount that came to Turkey” at the end of each period, reduces the risk. Transfer receipts and foreign exchange records form the basis of the reduction in a possible audit.
VAT, minimum corporate tax and other tax aspects
The corporate income tax reduction works together with several other provisions that complete the picture.
VAT. Because the goods do not enter Turkey and the transaction does not take place in Turkey, transit trade falls outside the scope of VAT; no VAT is calculated on invoices. According to the Revenue Administration’s ruling, these transactions are not included in VAT return No. 1; the Ba-Bs reporting obligation should be checked separately. VAT on the company’s other activities and on services purchased domestically is also assessed separately.
Minimum corporate tax. Article 9 of Law No. 7582 amended Article 32/C of the Corporate Income Tax Law and included this reduction among those deductible in the domestic minimum corporate tax calculation. Therefore the reduction is effective not only on the general base but also in the minimum tax calculation.
Related-party transactions. If the buyer or seller abroad is a group company, the income must be determined in line with the arm’s length principle and transfer pricing obligations must be complied with. This topic should be considered from the outset when trade between group companies is structured.
Profit distribution. The reduction lowers corporate income tax at the company level. The distribution of income to shareholders and taxation in the shareholder’s country of residence is a separate planning matter and should be addressed together when the structure is set up.
The difference from operating in the IFC
A company outside the IFC reaches 95% and an IFC participant 100%, but the difference is not limited to the rate. A comparison of the two structures in terms of transit trade:
| Topic | IFC participant | Standard company outside the IFC |
|---|---|---|
| Transit trade income reduction | 100% | 95% |
| Currency of official books | Participants whose activity is exclusively transit trade may keep books in foreign currency | TRY is the rule (except within the scope of Article 215 of the Tax Procedure Law) |
| Income tax advantage on salaries of qualified personnel from abroad | Yes: 60% for at least 5 years of experience abroad, 80% for at least 10 years | No |
| Prerequisite | Participation certificate under the IFC Law | None |
If only transit trade will be carried out and personnel needs are limited, the difference between 95% and 100% corresponds to a tax burden of about 1.25% of the income. This difference should be assessed according to the profit volume of the business and the company’s need to keep books in foreign currency. As volume grows, qualified personnel are employed and exchange rate risk gains weight, the IFC structure becomes more attractive.
Points to watch
Situations that put the reduction at risk usually arise not from the condition itself but from shortcomings in implementation. The prominent mistakes are:
- Income remaining abroad. If the income is not brought to Turkey within the period, the reduction is lost and cannot be made up later.
- Goods entering Turkey. If the goods are released for free circulation or sold to a buyer in Turkey, the transaction ceases to be transit trade.
- Failure to track separately. If covered and non-covered revenues and expenses are combined in a single account, the reduction amount cannot be determined correctly.
- Including out-of-scope income in the reduction. Deposit interest, exchange differences from the valuation of foreign currency held in cash, and gains from the sale of assets are not covered.
- Leaving out activity-related exchange differences. Exchange differences on the period-end valuation of foreign-currency receivables arising from transit trade, however, should be treated as part of the income.
- Overlooking the location of the parties in intermediation. If either the buyer or the seller is in Turkey, the intermediation income cannot benefit from the reduction.
- Expecting the reduction in a loss-making period. If the activity closes with a loss, no reduction arises.
Because this is a new regulation, some issues are debatable or open to interpretation. As of the date of this article they are as follows:
- Customs warehouse. According to the example in the Communiqué, the reduction can be applied if goods are placed in a customs warehouse in Turkey and sold to a buyer abroad without being released for free circulation. In sales made by delivery to a warehouse or to a buyer in a free zone, however, the administration’s approach appears negative. In models where goods are shipped directly from abroad to abroad, this uncertainty does not exist.
- Determining the income. Neither the Law nor the Communiqué elaborates on how the income is to be found. From the administration’s rulings on similar matters, it appears that the commercial balance sheet profit is taken as the basis; in that case, where there is a commercial loss, the reduction cannot be applied even if a tax base arises because of non-deductible expenses.
- Possibility of rate changes. The President is authorised to reduce the rates in the sub-paragraph down to zero or increase them up to 100%. This authority should be taken into account in long-term plans.
Frequently asked questions
Is the reduction 95% or 100%?
95% for companies outside the IFC. 100% for companies operating in the IFC with a participation certificate and in industrial zones approved by the President.
Must the company only engage in transit trade?
No. The company can carry out other activities as well; however, the reduction applies only to the income of the covered activity, and the income and expenses of the other activities must be tracked separately.
Must the goods never enter Turkey?
If the goods are brought to Turkey and released for free circulation or sold to a buyer in Turkey, no reduction applies. The Communiqué contains a favourable example for goods that wait in a customs warehouse without being released for free circulation and are sold abroad; the simplest model, however, is for the goods to be shipped directly from abroad to abroad.
Do I have to bring all the income to Turkey?
The amount to be brought is not the sales price but the income subject to the reduction. Since there is uncertainty regarding partial transfer, the prudent course is to bring the whole of the income before the return deadline expires.
Are these transactions subject to VAT?
No. Since the goods do not enter Turkey and the transaction does not take place in Turkey, transit trade falls outside the scope of VAT; no VAT is calculated on invoices.
In which period can the reduction first be used?
On income of periods starting on or after 1 January 2026; for calendar-year taxpayers, in the third provisional tax period of 2026, on nine-month income.
Can a company with foreign shareholders benefit?
The reduction depends not on the shareholding structure but on the nature of the activity and the conditions above.
How does Yeşil Outsourcing help?
The value of the transit trade reduction depends on the conditions being structured correctly from the outset. At Yeşil Outsourcing we support foreign-capital enterprises in the following areas:
- Company formation and tax structuring
- Bank account opening and compliance documents
- A chart of accounts that allows income and expenses within and outside the scope of the reduction to be tracked separately
- Monitoring and documenting the transfer of collections to Turkey
- Correct disclosure of the reduction in provisional tax and corporate income tax returns
- Information documents in Turkish, Russian and English
For an assessment specific to your company’s structure, you can reach us at www.yesiloutsourcing.com or at umit@yesiloutsourcing.com.
This article is for general information purposes and does not replace accounting or legal advice specific to your company. As the legislation is new, we recommend checking the practice for changes after the publication date.
Sources
Legislation: Law No. 7582 (Official Gazette, 4 June 2026, No. 33270), Article 10/1-i of the Corporate Income Tax Law, and Corporate Income Tax General Communiqué Serial No: 26 (Official Gazette, 4 July 2026, No. 33300). The following pages were reviewed while preparing this article (in Turkish):
- TÜRMOB circular: Changes made to the Corporate Income Tax General Communiqué, 8 July 2026
- KPMG Vergi: A New Era in Transit Trade for Corporate Income Taxpayers, 7 July 2026
- Özbek CPA: Transit Trade Income Reduction Introduced by Law No. 7582, 23 June 2026
- Ekonomi Gazetesi: Corporate tax incentive for transit trade begins, 17 June 2026
- Revenue Administration ruling: VAT return and Ba-Bs treatment of transit trade
