Law Amending Certain Tax Laws
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This law expands several tax relief measures in Turkey. It gives taxpayers more time to restructure public debts by extending the installment period from 36 to 72 months and raises the threshold for certain guarantees or simplified handling from 50,000 new Turkish lira to 1 million Turkish lira. It also creates a major income tax exemption for individuals who move their tax residence to Turkey after living and being tax-liable abroad for the previous three years. Their foreign-source income and gains can be exempt from Turkish income tax for 20 years. The law also adds targeted tax benefits for inheritance transfers linked to this regime and for certain employees working in qualified service centers.
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Key Changes
- Extends the maximum installment period for restructuring public receivables from 36 months to 72 months.
- Introduces a 20-year Turkish income tax exemption for eligible individuals on foreign-source income and gains after moving tax residence to Turkey.
- Applies a 1% inheritance tax rate to certain inheritance transfers linked to the new foreign-income exemption regime.
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Obligations
What this law requires
Individuals qualifying for the foreign-source income exemption must not file an annual Turkish income tax return for foreign-source gains and revenues covered by the exemption, and must not include those exempt amounts in a return filed for other income.
Taxpayers must not deduct expenses or costs relating to foreign-source gains and revenues exempt under Income Tax Law repeated Article 20/D when determining taxable gains and revenues in Turkey.
Taxpayers must not credit taxes paid in foreign countries on foreign-source gains and revenues exempt under Income Tax Law repeated Article 20/D against Turkish income tax assessed on other income.
Individuals may qualify for the 20-year Turkish income tax exemption on foreign-source gains and revenues only if they had neither Turkish residence nor Turkish tax liability during the last three calendar years before becoming treated as resident in Turkey.
Where it is later determined that the conditions for the foreign-source income exemption were not met, the unassessed taxes must be treated as tax loss.