Turkey's parliament commission has approved sweeping tax reforms that would slash corporate tax rates for manufacturers and agricultural producers to 12.5%, in a move aimed at boosting domestic production. The legislation now heads to the General Assembly for final approval.
Turkey’s Planning and Budget Commission of the Grand National Assembly has approved a draft omnibus law that would establish a significantly reduced corporate tax rate for domestic manufacturing and agricultural producers, marking a major shift in the country’s tax policy. The legislation proposes amendments to several key statutes, including the Corporate Income Tax Law.
New corporate tax rate for production activities
The approved legislation introduces a 12.5% corporate income tax rate for companies engaged exclusively in production activities. To qualify, businesses must hold an industrial registry certificate and be actively involved in manufacturing operations. The same reduced rate will apply to companies conducting agricultural production activities.
This provision represents a new addition made during the Commission stage, as it was not included in the original version of the draft omnibus law. The Commission approved the remaining provisions without material changes.
Export incentive adjustment
The amendment clarifies that companies benefiting from the new 12.5% rate will not be eligible for the existing five-point corporate tax reduction on export income. This prevents double tax relief on the same earnings and ensures the new preferential rate serves as the primary incentive for domestic production activities.
Implementation timeline and next steps
If enacted, the reduced rate will apply to earnings obtained in the 2027 taxation period and subsequent tax periods. For companies operating on a special accounting period, it will take effect for periods beginning in the 2027 calendar year and thereafter
The draft also amends the Domestic Minimum Corporate Tax provisions within the Corporate Income Tax Law. Deductions for transit trade, qualified service centres, and financial services exports under the Istanbul Financial Centre Law will be excluded from the minimum tax calculation base. This particular change takes effect from declarations submitted from 1 July 2026, applying to corporate earnings for the taxation period beginning 1 January 2026.
Following approval by the Planning and Budget Commission, the draft law now advances to the General Assembly of the Grand National Assembly of Turkey for debate and voting.
Following parliamentary approval, the legislation requires presidential endorsement and publication in the Official Gazette before entering into force.
