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Turkey’s New Tax Reform Law: Revenue Targets, UEFA Breaks, and the Burden on Citizens

tax law

ANKARA – Turkey has officially enacted Law No. 7566, a comprehensive fiscal package that reshapes the nation’s tax, fee, and social security landscape. The new regulations impact everything from real estate valuations and vehicle sales to annual licensing fees for specialized trades and medical practices.

While the government aims to shore up public finances amid long-term inflation, the bill introduces a mix of protective ceilings for homeowners and new transactional costs for the middle class.

Key Pillars of the Reform

1. Real Estate: A Shield and a Shift For 2026, the law introduces a “double ceiling” on property taxes. Building and land tax values for 2026 cannot exceed twice the value of 2025. However, there is a structural shift: the annual increase will now be calculated using the full Revaluation Rate rather than the previous “half-rate” formula, signaling higher long-term property tax trajectories.

2. Transaction Fees on Vehicle Sales A new relative fee of 0.2% (2 per thousand) has been introduced for the first registration and all subsequent sales or transfers of motor vehicles. Crucially, this fee cannot be lower than 1,000 TRY. Professional car dealers with “authorization certificates” are exempt from this fee during their business transactions, placing the burden squarely on individual buyers and sellers.

3. Annual “Authorization” Levies Specific sectors now face significant annual licensing fees:

  • Jewelry Trade: 30,000 TRY per year.

  • Real Estate Trade: 20,000 TRY per year.

  • Second-hand Vehicle Trade: 20,000 TRY per year. Annual fees have also been extended to private medical practices, dental clinics, and veterinary hospitals.

4. The UEFA & EURO 2032 “Incentive” To bolster Turkey’s standing as a global sports hub, the law grants sweeping tax exemptions for the 2026 UEFA Europa League Final, the 2027 Conference League Final, and EURO 2032. Entities associated with UEFA that do not have a permanent headquarters in Turkey will be exempt from VAT and Corporate/Income taxes for organization-related services.

5. Narrowing Rental Income Deductions In a move targeting residential landlords, the law restricts the “expense deduction” area in the Income Tax Law. By adding the phrase “excluding residences,” the government has limited the ability of homeowners to reduce their taxable rental income through certain expense claims, effectively increasing the tax take on residential rent.

Expected Revenue Impact

While the official Ministry of Treasury and Finance estimates for Law No. 7566 haven’t been fully publicized for every item, analysts expect the package to generate significant liquidity:

  • Vehicle Transfer Fees: Given Turkey’s high volume of second-hand car sales (averaging 6–9 million units annually), the 1,000 TRY minimum fee alone could generate upwards of 8 to 10 billion TRY annually.

  • License Fees: The move to annualize “authorization” fees for thousands of jewelers and real estate agents is expected to bring in a steady stream of 3 to 5 billion TRY in recurring revenue.

Analysis: Who Does it Hurt More—the Rich or the Poor?

The burden of Law No. 7566 appears to fall most heavily on the middle class and lower-income earners, though it contains “wealth tax” elements that affect property owners.

  • The Case for the Poor/Middle Class: The 1,000 TRY minimum vehicle transfer fee is a regressive tax. Whether you buy a 20-year-old budget car or a mid-range sedan, you pay the same minimum. This disproportionately affects lower-income citizens for whom 1,000 TRY is a larger share of their disposable income. Furthermore, the narrowing of rental income deductions will likely lead landlords to pass the increased tax cost onto tenants, further straining the low-income rental market.

  • The Case for the Wealthy: The removal of the “half revaluation rate” for property taxes means those with high-value real estate portfolios will see their tax bills rise more sharply over time. However, the 2026 “double-value” ceiling actually protects wealthy property owners from even more aggressive tax hikes that would have resulted from skyrocketing market valuations.

Verdict: The new bill acts as a “transactional tax” regime. While it captures revenue from high-value trades (like jewelry), the fixed minimum fees and rental tax changes create a higher “cost of living” floor that is harder for the poor to absorb than the rich.

Turkish Press Sources

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