In Turkey, foreign-invested companies are generally subject to the same tax regime as domestic companies. In other words, when a company with foreign shareholders is established, its tax obligations are not different from those of a Turkish-owned company. However, due to certain special regulations and investment incentives, there may be indirect tax advantages. These can be summarized under the following main points:

1. General Tax Regime

• Corporate Tax Rate: As of 2025, the corporate income tax rate in Turkey is 25%. Foreign-invested companies are subject to the same rate as local companies.
• VAT, Special Consumption Tax, Stamp Tax: General rules apply, with no special exemptions for foreign-invested companies.
• Double Taxation Avoidance Agreements (DTAAs): Turkey has signed treaties with more than 80 countries. These agreements prevent double taxation on dividends, interest, and royalty payments, and they often reduce withholding tax rates. This is a significant advantage for foreign shareholders.

2. Investment Incentives and Special Advantages

Foreign-invested companies, like domestic ones, can benefit from investment incentives:

• Tax Reduction / Corporate Tax Discount: The corporate tax rate can be reduced for investments made under an incentive certificate.
• VAT Exemption: Machinery and equipment purchased under an investment incentive certificate are exempt from VAT.
• Customs Duty Exemption: No customs duties are levied on imported investment goods.
• Social Security Premium Support (Employer’s Share): Reduces labor costs.
• Regional Incentives: In less-developed regions such as Eastern and Southeastern Anatolia, foreign-invested companies enjoy greater tax reductions and longer periods of social security premium support.

3. Advantages of Free Zones

One of the most attractive opportunities for foreign-invested companies is operating in free zones:

• Profits earned in free zones are exempt from corporate income tax.
• Wages of employees working in manufacturing companies located in free zones are exempt from income tax.
• Companies are exempt from customs duties, VAT, and similar obligations.

4. Advantages for International Holdings and Regional Centers

• Foreign companies establishing regional management centers or logistics hubs in Turkey may benefit from certain tax and incentive advantages.
• Foreign-invested companies in technology development zones and R&D centers enjoy exemptions from corporate tax, income tax withholding, and VAT, just like domestic companies.

In summary:
There is no direct “special reduced tax rate” for foreign-invested companies in Turkey. However, significant indirect tax advantages can be obtained through:

• Double taxation treaties,
• investment incentives,
• free zones, and
• R&D/technology park benefits.