Erdoğan is attracting investors with tax exemptions
Turkey aims to attract international investors with far-reaching tax incentives. On April 24, President Recep Tayyip Erdoğan unveiled a package designed to grant foreign investors and high-net-worth individuals tax exemptions of up to 20 years if they relocate to Turkey under certain conditions.
The Turkish government is thus seeking to position the country more strongly as a regional hub for capital, trade, and skilled workers. Particular focus is on investors who might be looking for alternative locations given the uncertainty in the Middle East. At the same time, Turkey itself remains confronted with structural challenges: the confidence of many international investors in the rule of law, the judiciary, and economic stability is still considered limited.
Erdoğan presented the program at the Dolmabahçe Office in Istanbul under the title “Türkiye Century Strong Center for Investment Program.” He promised to make Turkey a global hub for international capital, trade, and talent.
Tax Exemption for New Residents
At the heart of the package is a new regulation for people moving to Turkey. Those who have not been tax residents of Turkey in the past three years will not have to pay Turkish taxes on foreign income and capital gains for 20 years after moving to the country. Only income earned within Turkey would be taxed.
The government also plans significant tax breaks for inheritance and gift taxes. For this group, the rate is to be capped at 1 percent.
In addition, the program is expected to allow Turkish citizens and companies to repatriate assets held abroad to Turkey at a reduced tax rate.
Erdoğan stated that Turkey is now more than just a traditional bridge between East and West. Rather, the country is a central hub for energy and trade corridors in the region. Ankara aims to leverage this position to gain a stronger economic foothold.
Benefits for Exporters and Transit Businesses
The package also provides relief for companies. Exporting manufacturing firms are set to pay significantly less corporate income tax in the future. The rate would drop from 25 percent to 9 percent. Other exporting companies are to be taxed at 14 percent.
Currently, exporters receive only a 5-percentage-point reduction, with manufacturers receiving an additional percentage point.
The government also plans stronger incentives for transit trade. Profits from transit traffic and cross-border trade brokerage are to be fully exempt from corporate income tax in the Istanbul Financial Center. Currently, a 50 percent deduction applies there. For companies outside the financial center, 95 percent of profits from transit transactions are to remain tax-free.
The Istanbul Financial Center on the Asian side of the city opened in 2023. It is home to the Central Bank, the Borsa Istanbul stock exchange, and several regulatory agencies, among others. The government aims to establish the IFC in the long term as a competitor to financial centers such as Dubai, London, and other international locations.
Turkey is also capitalizing on its geographic location. The country is situated at a central point between Europe, the South Caucasus, Central Asia, and China. At the same time, Ankara is investing in the expansion of its rail infrastructure to significantly increase freight transport capacity across the Bosphorus.
It remains to be seen whether the new tax incentives will be sufficient to attract major international investors on a large scale. The financial benefits are substantial. However, the decisive factor will be whether Turkey can also demonstrate legal certainty, currency stability, and institutional trust.
