New Tax Reform Package Targets Fairness and Efficiency Without Burdening Citizens

A comprehensive tax reform package submitted to the Turkish Grand National Assembly (TBMM) seeks to strengthen tax justice, efficiency, and transparency, while combating the informal economy and narrowing overly generous exemptions. According to information obtained by Anadolu Agency from the Revenue Administration (GİB), the proposed regulations do not introduce any new financial burden on citizens.

Core Objectives: Curbing Informality and Enhancing Legal Certainty

The new legislative package, developed with stakeholder input, aims to make Turkey’s tax system more equitable and effective. The proposal focuses on tightening tax exemption practices, ensuring legal clarity, and reinforcing compliance mechanisms—especially in sectors prone to informal transactions.

A key focus is limiting open-ended tax incentives and setting clear rules for corporate tax discounts tied to investment incentives.

Investment Incentive Periods to Be Capped at 10 Years

Under current rules, companies benefiting from investment incentive certificates can apply discounted corporate tax rates to earnings indefinitely. The new proposal introduces a 10-year cap on the use of these incentives for newly issued certificates.

Key changes include:

• A 60% corporate tax discount across all investment types.

• A maximum 50% investment contribution rate.

• Project-based investments will remain exempt from these restrictions.

Limits on R&D Tax Exemptions to Prevent Abuse

To prevent misuse of high-salary exemptions, the bill proposes a new upper limit for income and stamp tax exemptions granted to R&D, design, and support personnel.

In technology development zones, R&D centers, and research infrastructures, exemptions will now be capped at 40 times the gross minimum wage.

Authorities noted that while these exemptions were meant to encourage innovation, they have been disproportionately exploited by a small number of high-paid personnel, undermining fairness in the incentive system.

The reform aims to redistribute these tax benefits more evenly across companies genuinely engaged in R&D and innovation ecosystems.

E-Yoklama Simplified: No More Third-Party Signatures Needed

Changes are also planned for the Electronic Inspection System (Elektronik Yoklama Sistemi). If inspection reports include geolocation data and photographs, the presence or signature of a business owner or local officials like muhtars or police will no longer be mandatory during on-site verifications.

This adjustment is intended to streamline inspections and prevent unnecessary procedural delays.

Summary

The new tax reform package focuses on curbing tax abuses, streamlining incentives, and promoting fiscal fairness without introducing new tax burdens on the public. If enacted, it will significantly reshape investment incentives and R&D tax practices, while modernizing digital oversight tools.