Tax System in Türkiye: Key Points for Entrepreneurs in 2025

Türkiye offers a dynamic and supportive tax framework designed to encourage entrepreneurship and investment. In 2025, several updates and incentives have been introduced to support both domestic and international entrepreneurs throughout the process of starting and expanding their businesses.

Support Programs for Young Entrepreneurs

Türkiye provides extensive support for entrepreneurs under the age of 29. To qualify for these incentives, individuals must be between 18 and 29 years old and should not have been previously registered as a taxpayer.

Income Tax Exemption

As of 2025, eligible young entrepreneurs benefit from a three-year income tax exemption on annual earnings up to 330,000 TL. This exemption covers income from both commercial enterprises and self-employment activities. The exemption limits are subject to annual revision in line with economic changes such as inflation adjustments.

Bağ-Kur Premium Support

Entrepreneurs who qualify for this support also receive free social security coverage for their first year of operation. In 2025, the monthly Bağ-Kur premium contribution is 5,009.74 TL (including a 5% reduction), resulting in a total annual contribution support of approximately 70,808.88 TL provided by the state.

This initiative aims to reduce startup costs and improve the financial stability of new business owners during their initial growth period.

Double Taxation Relief for International Entrepreneurs

International investors benefit from Türkiye’s broad network of double taxation agreements (DTAs), which help prevent being taxed twice on the same income.

Scope of Agreements

By 2025, Türkiye has signed DTAs with over 80 countries. These agreements cover a wide range of income types, including dividends, interest, royalties, commercial profits, and independent personal services.

Application Methods

Türkiye applies two primary methods to eliminate double taxation:

• Tax credit method: foreign taxes paid can be credited against the Turkish tax due, up to the amount calculated on that income in Türkiye.
• Exemption method: certain income types are fully exempted from Turkish taxation under the relevant treaty.

Recent Developments in 2025

Türkiye has strengthened its Mutual Agreement Procedure (MAP) system to prevent international tax disputes, in alignment with OECD standards. This mechanism allows multinational companies to resolve conflicts through diplomatic negotiations.

Additionally, Türkiye initiated DTA negotiations with El Salvador in 2025 and is in talks with several countries in Africa and Latin America to expand its treaty network.

Taxation Based on Company Type

Entrepreneurs setting up a business in Türkiye should carefully choose the company structure, as taxation varies by type:

• Sole proprietorships: subject to personal income tax.
• Limited and joint-stock (anonim) companies: subject to corporate income tax.

Each legal form offers different advantages in terms of liability, capital requirements, and reporting obligations. Consulting a local tax advisor before company formation is strongly advised.

Incentives for Foreign and International Investors

Türkiye actively promotes foreign investments through fiscal incentives including:

• Customs duty exemptions
• Value Added Tax (VAT) refunds
• Corporate tax reductions for large-scale investments

These incentives are available depending on the region, sector, and investment amount. Detailed information can be found through the Investment Office of the Presidency of the Republic of Türkiye.

Digitalization and Tax Compliance

In 2025, Türkiye has intensified digital tax compliance, particularly concerning cross-border digital platform revenues. The Revenue Administration introduced advanced systems for monitoring and verifying tax declarations made by entrepreneurs operating online.

Foreign-tax credits in Türkiye require submission of certified documentation from the foreign tax authority proving tax payment. Turkish tax offices have also tightened control procedures to prevent misuse of this mechanism.

Conclusion

For entrepreneurs aiming to maximize their benefits in 2025, staying informed about the latest tax incentives and compliance requirements in Türkiye is essential. Collaborating with professional accountants and legal consultants ensures adherence to regulations while optimizing tax efficiency.

For those engaged in international operations, understanding Türkiye’s double taxation agreements and incentive schemes plays a strategic role in minimizing overall tax liabilities and enhancing the business growth potential.