Turkey has issued Presidential Decree No. 11257, revising participation exemption rules for foreign dividend income by lowering ownership thresholds and increasing exemption rates for corporate taxpayers, while also raising the deduction rate for specified service exports to 100%, effective for tax periods beginning 1 January 2026.
Turkey’s Revenue Administration has announced the publication of Presidential Decision No. 11257 in the Official Gazette on 30 April 2026, introducing amendments to participation exemption rules for foreign earnings and increasing deduction rates for specified service exports under Turkish tax law.
The decree revises provisions under Income Tax Law No. 193 and Corporate Tax Law No. 5520. For foreign dividend income, the participation exemption framework has been adjusted. Under Article 22 of the Income Tax Law, the minimum ownership requirement for paid-in capital is set at least 20%.
For corporate taxpayers, an exemption rate of 80% will apply to foreign subsidiary earnings where at least 20% of the foreign subsidiary’s paid-in capital is owned. For individual taxpayers, while the ownership threshold is also reduced to 20%, the exemption rate remains at 50%.
The decree also increases the tax deduction rate for the export of specified services under Article 89(1)(13) of the Income Tax Law and Article 10(1)(ğ) of the Corporate Tax Law to 100%, up from 80%. This applies to income derived from services provided to non-residents, including architectural, engineering, design, software, medical reporting, accounting, data storage, call centre services, and approved education and health services, provided that the related income is transferred to Turkey by the filing date of the tax return for the relevant period.
These amendments apply retroactively to income and earnings for taxation periods beginning on or after 1 January 2026. The Minister of Treasury and Finance is responsible for implementing the provisions of the decree.
