Foreign companies are only taxed on earnings generated within Türkiye, providing a streamlined fiscal environment for international operations in 2026.
Türkiye has long been a magnet for multinational corporations due to its strategic geography, but in 2026, it is the nation’s sophisticated tax framework that is increasingly taking center stage. One of the most significant draws for global firms is Türkiye’s application of the principle of territoriality in corporate taxation. Under this rule, a clear distinction is made between “full liability” and “limited liability” taxpayers. While Turkish companies (full taxpayers) are taxed on their worldwide income, foreign companies (limited taxpayers) are only taxed on profits specifically generated by the business entities or permanent establishments they operate within the country.
This means that earnings generated by a multinational’s operations in other countries remain entirely non-taxable in Türkiye, regardless of whether those global operations are run as a subsidiary, a branch, or a permanent establishment. This fiscal “clean lane” ensures that Türkiye does not become a tax burden for a firm’s global footprint, allowing it to serve as a low-friction regional headquarters for the EMEA (Europe, Middle East, and Africa) region.
For investors initially exploring the market without the intent of immediate commercial sales, Türkiye offers a strategic, low-entry option: the Liaison Office. These offices represent the parent company without engaging in commercial transactions and are entirely exempt from corporate and income taxes, provided their activities remain limited to market research, promotion, and technical support. A major benefit of this structure is that the salaries of employees working in these offices are also exempt from personal income tax, provided they are paid from the parent company’s foreign-sourced funds. This allows global brands to build a presence, develop an advertising strategy, and vet suppliers before committing to full-scale investment.
As we enter 2026, the Turkish Revenue Administration (GİB) has further refined these rules to accommodate the digital economy. While the territorial principle remains the bedrock, the introduction of the Domestic Minimum Tax (10%) in 2025 ensures that multinational operations within Türkiye contribute a fair share while maintaining their competitive edge. For the global executive, this means a predictable, transparent, and law-protected environment where domestic profits are taxed fairly, but global success is respected and left untouched.
Citations & Sources:
- Official Data: Paldimoglu Law – Tax Law and Taxation System in Turkey for Foreign Investors
- Tax Summary: PwC Worldwide Tax Summaries – Turkey Corporate Income Tax 2026
- Investment Guide: Invest in Türkiye – Why Invest? Tax Environment
