President Recep Tayyip Erdogan on Friday announced a fiscal incentive package that would, among other measures, grant incoming foreign residents a 20-year exemption from Turkish tax on foreign-source income and capital gains. The proposal still requires parliamentary approval, and Erdogan did not specify a date for submission of the legislative package.
Speaking at the Dolmabahce Working Office in Istanbul during the “Turkey Century Strong Center for Investment Program” event, Erdogan described the measures as a “radical step” and said his government was “determined to make Turkey a global center of attraction.”
Zero tax on foreign income for two decades
Individuals who have not been Turkish tax residents for at least three years could, under the proposed rules, relocate to Turkey and pay no Turkish tax on their foreign-source income for 20 years. Only domestically earned income would fall within the Turkish tax net.
Inheritance and gift tax for qualifying individuals would drop to a flat 1%. Turkey’s standard rates currently range from 1% to 30%.
Every European equivalent is shorter and more expensive
Italy’s lump sum program runs 15 years, and Greece’s non-dom regime covers the same duration. Portugal’s successor to the Non-Habitual Resident (NHR) regime, the Tax Incentive for Scientific Research and Innovation (IFICI), offers just ten years. Turkey’s proposal would double Portugal’s and outlast all of them.
The European regimes also charge for the privilege. Italy raised its lump sum tax to €300,000 per year in its 2026 Budget Law, and Greece sets its own at €100,000. Turkey’s proposal, as described, would impose no flat charge at all on foreign-source earnings.
A missing piece for Turkey’s CBI program
A 20-year foreign-income exemption layered on top of citizenship would add a fiscal dimension Turkey’s citizenship by investment (CBI) program has lacked. CBI holders who become tax residents currently face progressive income tax rates of 15% to 40% on worldwide income, with double-taxation treaties providing partial relief.
The proposed holiday would eliminate that exposure entirely for qualifying newcomers. Under the proposal as described, CBI holders who have never been tax residents in Turkey could qualify, but the final draft of the bill and its approved form will determine whether that reading holds.
Taymour Polding of CIP Turkey called the announcement a potential turning point. “This move will undoubtedly elevate Turkey’s status from a Eurasian hub to a major global powerhouse,” he said. “Given the country’s diverse economy and strategic location, this feels like the final piece of the puzzle.”
Corporate tax slashed for exporters
The personal tax holiday formed one part of a broader package. Erdogan announced cuts to corporate tax rates for exporters: from the standard 25% to 9% for manufacturing exporters and 14% for other exporting companies.
Transit trade income would become fully exempt from corporate tax for companies operating within the Istanbul Finance Centre (IFC), up from a 50% deduction under the existing framework. Companies outside the IFC would receive a 95% exemption on transit trade profits. Regional headquarters managed from Turkey would benefit from the same 95-to-100% exemption structure for 20 years.
Erdogan also signaled plans to allow Turkish citizens and companies to repatriate assets held abroad, including cash, gold, and securities, at a reduced tax rate.
The Iran war opened a window
Ankara’s timing is not coincidental. The Iran war has damaged infrastructure in the UAE, Saudi Arabia, and Qatar, while Turkey, protected by NATO air defenses, has come through largely unscathed. Earlier in April, Erdogan framed the instability as an opening: “Just as in the pandemic period, we wholeheartedly believe that this global crisis, too, will open new doors for our country.”
Treasury and Finance Minister Mehmet Simsek confirmed weeks before Friday’s announcement that the government was preparing “radical” incentives to lure foreign capital. Bloomberg reported on April 8 that the Treasury was drafting legislation to extend Istanbul Finance Centre perks to foreign companies across the country.
The IFC has reported “growing and concrete” engagement from foreign institutions, with a spokesperson telling Al Jazeera of “a particularly strong strategic focus from Far Eastern institutions.” Japan, South Korea, and the United Kingdom were specifically named as active interlocutors.
Guney Yildiz, a senior adviser at Anthesis Group who formerly worked at the Abu Dhabi Global Market (ADGM), described the transit trade incentives as “a direct play for the kind of intermediation business that Dubai has owned for two decades.” The timing, he added, “is obviously shaped by the war.”
101st in the world, and a long way from Dubai
Turkey’s economy still runs on double-digit inflation and a depreciating lira. Istanbul ranks 101st on the latest Global Financial Centres Index; Dubai sits at seventh, Abu Dhabi at 21st, Riyadh at 61st. Closing that gap takes more than tax breaks.
Erdogan rejected the familiar framing of Turkey as a bridge between east and west, calling the country instead “the indispensable base of the energy and trade corridors of the region.” The full legislative package still awaits parliamentary submission.
“Every business and economic circle is trying to find its way and direction through a thick fog,” he observed Friday. The proposed tax holiday, if parliament passes it, would offer one direction.
