Turkey: Grand National Assembly to review draft omnibus bill with wide tax, social security changes

The bill proposes major amendments to income tax, social security, fees, and sector-specific regulations.

Regfollower Desk 

Turkey presented a draft omnibus bill on 17 October 2025 to the Grand National Assembly, containing several proposed amendments:

The proposal includes sweeping changes across income, social security, fees, and major economic sectors.

 Key Tax and Revenue Increases

• Residential rental income exemption abolished: The general income tax exemption for residential rental income is removed. However, the existing income tax exemption is preserved for individuals receiving retirement, disability, widow’s, or orphan’s pensions from legally established social security institutions, regarding rental income from properties within Turkey.
• Rental debt interest deduction removed: Taxpayers will no longer be able to deduct interest paid on credits used to purchase rental real estate when declaring rental income. This aims to prevent tax base erosion resulting from deducting debt expenses incurred for wealth acquisition and to eliminate the tax burden difference between credit-funded and cash-funded property owners. (Effective: Applicable to 2025 income and earnings) [69, b].
• Title deed fee (Tapu Harcı) penalty increased: To combat unregistered activity and ensure the declaration of the true sale price, the penalty for under-declaring real estate purchase/sale prices is dramatically increased from 25% of the tax loss to one fold (bir kat) of the difference.
• Provisional tax period reintroduced: The proposal ensures that taxpayers subject to provisional tax will determine their earnings over 3, 6, 9, and 12-month periods, thereby reintroducing the requirement for a fourth provisional tax declaration. (Effective: Applicable to 2025 income and earnings) [69, b].
• New annual fees on licenses: Annual fees (harç) are introduced for authorisation certificates in several high-value sectors, including jewelry trade, second-hand motor vehicle trade, and real estate trade. These fees are set at 30,000 TL or 20,000 TL, respectively, and are generally doubled in major metropolitan cities (excluding smaller districts). Fees are also imposed on licenses for private health facilities (outpatient, oral/dental), veterinary clinics/hospitals, precious metals institutions, and commercial/general aviation operating licenses. (Effective: 1/1/2026) [69, a].
• Notarial fee on vehicle sales: A proportional notarial fee (Binde 2 or 0.2%), with a minimum fixed fee of 1,000 TL, will be charged on the sale and transfer price of both new (zero) vehicle first registration processes and the sale and transfer of registered (second-hand) vehicles. The existing fee exemption for notary-conducted registered vehicle sales is removed. (Effective: Beginning of the month following publication) [69, c].
• Investment fund exemption tightened: The income tax exemption for investment fund participation shares held for over one year is narrowed. The exemption will not apply to funds that are sold only to qualified investors, are not traded on the Turkey Electronic Fund Trading Platform (TEFAS), and are not subject to proportional limitations on portfolio assets.

Social Security and Fiscal Stability Adjustments

• Net borrowing limit boosted: The 2025 Budget Law’s net borrowing limit is increased by TRY 595 billion. This aims to meet the additional financing needs arising from expenditures related to the 2023 Kahramanmaraş earthquake disaster and 2025 budget developments, while also maintaining the Treasury’s cash reserve.
• Premium earning ceiling raised: The upper limit for earnings subject to premium payments is increased from 7.5 times the minimum wage to 9 times. This is intended to improve retirement pensions and social security rights and contribute to the system’s actuarial balance. (Effective: 1/1/2026) [69, a].
• Borrowing Premium Rate Hiked: The general premium rate for debt restructuring (borçlanma), excluding birth debt, is increased from 32% to 45% to aid the sustainability of the social security system. This 45% rate also applies to the cost of reviving suspended BAĞKUR insurance periods and military service debt premiums. (Effective: 1/1/2026) [69, a].
• Employer premium incentives reduced/terminated:

    ◦ The four-point premium reduction incentive provided to employers in sectors other than manufacturing is reduced to two points.

    ◦ The employer’s share of the retirement premium rate is increased by 1 point.

    ◦ The one-year premium support provided to young entrepreneurs by the Treasury is terminated, as follow-up studies failed to confirm a positive impact. (Effective: Beginning of January 2026) [69, ç].

• Premium debt Collection from pensions: The Social Security Institution is authorised to collect outstanding premiums (including general health insurance premiums) and associated late fees/penalties from the income or pensions (aylık) paid to beneficiaries, provided the deduction rate does not exceed 25% of the income/pension. (Effective: 1/1/2026) [69, a].
• BES state contribution adjustment: The President is granted the authority to increase the state contribution rate in the Individual Pension System (BES) up to 50% or reduce it to zero, aiming to increase savings and ensure balanced growth of funds.
• Public university hospitals support: Payment amounts for services provided by public university hospitals under 2025 fixed-price contracts that fall below the contract amount will be terminated (terkin edilir) and covered by funds from the Ministry of Labour and Social Security’s budget, aiming to support the financial sustainability of these health providers.

Extended Deadlines and Special Exemptions

• Check Law Extension: The temporary provision that invalidates a check if presented to the bank for payment before the date written on it is extended from 31/12/2025 to 31/12/2028. This extension is crucial for enabling check account holders to plan their cash flow and mitigate market disruption risks.
• Urban Transformation Funding: The duration of the Special Account for Transformation Projects (Dönüşüm Projeleri Özel Hesabı) is extended until the end of 2027. Furthermore, the Urban Transformation Presidency is authorised until 31/12/2029 to engage in domestic borrowing from banks primarily owned by the public sector, using assets as collateral, to secure funds for urgent transformation needs.
• General Illumination Contribution Extended: The central government contribution to general illumination expenses is extended until 31/12/2030. Simultaneously, the cut-off rates applied to municipalities’ general budget tax revenue shares for these expenses are significantly raised (e.g., from 10% to 30% for metropolitan municipalities).
• UEFA Tournament Exemptions: Temporary tax exemptions from VAT, Income Tax, and Corporate Tax (including withholding taxes) are granted to UEFA, participating teams, and organizational entities whose place of business is outside Turkey, for income obtained in Turkey related to the 2026 UEFA Europa League Final, 2027 UEFA Conference League Final, and 2032 UEFA European Football Championship.
• Local Administration Units (YİKOBs) Exempted: Investment Monitoring and Coordination Directorates (YİKOBs) are newly exempted from Motorised Vehicle Tax and tapu harçları (title deed fees) during property acquisition and sales. Additionally, the sales and transfers of properties owned by YİKOBs are exempted from VAT. (YİKOB Tax/VAT exemptions effective: Beginning of the month following publication) [69, c].
• Foundation University Fees: Educational fees for students at foundation higher education institutions (excluding the placement year) must be determined based on principles set by the Higher Education Council (YÖK), considering the average annual increase of the Producer Price Index (PPI) and Consumer Price Index (CPI) for June of the current year.