02.05.2026/4
Amendments to the Conditions Governing the Exemption of Foreign Subsidiary Income and Increase of the Corporate Tax Exemption Rate to 80%
Under Article 22/4 of the Income Tax Law, 50% of the dividends obtained from corporations in the form of joint-stock or limited liability companies whose legal and business centers are not located in Türkiye is exempt from income tax, provided that at least 50% of the paid-in capital of such corporations is owned and the dividend is transferred to Türkiye by the deadline for filing the annual income tax return for the relevant calendar year.
Similarly, pursuant to Article 5/1-b of the Corporate Tax Law, for corporations participating in the capital of foreign entities in the form of joint-stock or limited liability companies whose legal and business centers are not located in Türkiye, the exemption rate for participation income derived from such subsidiaries is applied as 50%, provided that the participating company holds at least 50% of the paid-in capital of the foreign subsidiary and the income is transferred to Türkiye by the deadline for filing the corporate tax return for the relevant fiscal period.
Pursuant to the authority vested in the President under the aforementioned provisions, the minimum participation ratio has been reduced to 20% by virtue of Presidential Decree No. 11257, as published in the Official Gazette No. 33239 dated April 30, 2026.
In addition, for corporate taxpayers, the exemption rate has been increased to 80%.
You may access the relevant Decree here.
Best Regards,
BİLGENER
