As of October 2026, a Turkish company’s corporate tax cannot be lower than 10% of its corporate income before deductions and exemptions (commercial balance-sheet profit plus non-deductible expenses), after subtracting only a short list of items the law still allows. If the ordinary corporate tax (general rate 25%) comes out lower, the company pays the difference. The rule is Article 32/C of the Corporate Tax Law, added by Law No. 7524, and it has applied to profits since 1 January 2025.
We first published this guide on 30 December 2024. This update corrects the original where it was wrong (the legal reference, who is subject, prior-year losses) and adds the 2026 changes.
At a glance
| Domestic minimum corporate tax | |
|---|---|
| Legal basis | Corporate Tax Law No. 5520, Article 32/C, added by Law No. 7524 (Official Gazette 2 August 2024, No. 32620) |
| Rate | 10% of corporate income before deductions and exemptions; the President may change it by sector, from zero up to double |
| From | Profits of 2025 and later years; for special accounting periods, periods beginning in 2025 and later |
| Who | All corporate taxpayers, including non-resident companies that must file a Turkish corporate tax return |
| Not applied | Exempt corporations; turnover-based taxpayers; the first three accounting periods of a company starting business |
| Filed | In every provisional corporate tax return (four a year) and in the annual return |
| Not the same as | The 15% global minimum tax (Pillar Two), which applies only to groups above EUR 750 million |
How is the domestic minimum corporate tax calculated?
Three steps, in the same return:
- Ordinary corporate tax. The company computes its tax as usual under Articles 32 and 32/A: profit plus non-deductible expenses, less every exemption and deduction it may use, taxed at 25% or at any reduced rate it qualifies for.
- Minimum tax. Take the commercial balance-sheet profit or loss for the period and add non-deductible expenses. If the total is above zero, subtract only the exemptions and deductions listed in Article 32/C(2) and apply 10%. Then subtract the tax not collected because of certain reduced rates (see below).
- Compare. If the minimum tax is higher than the ordinary tax, the company pays the difference as domestic minimum corporate tax.
Because step 2 starts from profit plus non-deductible expenses, a company with an accounting loss is not automatically outside the rule. If its non-deductible expenses are larger than the loss, the calculation is still made.
Which exemptions and deductions still count?
Most exemptions and deductions are ignored in the minimum-tax base. Article 32/C(2) and the Revenue Administration’s communiqué list the ones that are still subtracted:
| Still subtracted in the 10% base | Not subtracted (selected) |
|---|---|
| Dividends from Turkish resident companies (Corporate Tax Law Art. 5(1)(a)) | Dividends from foreign subsidiaries (Art. 5(1)(b)) and gains on selling them (Art. 5(1)(c)) |
| Share premium on issuing shares (Art. 5(1)(ç)) | Earnings of foreign branches (Art. 5(1)(g)) and from construction and technical services abroad (Art. 5(1)(h)) |
| Exempt earnings of Turkish investment funds and partnerships, except income from real estate they own (Art. 5(1)(d)) | The 80% deduction for software, engineering and other services provided to customers abroad (Art. 10(1)(ğ)) |
| Cooperative refunds, sale-and-leaseback gains and asset-leasing (lease certificate) gains (Art. 5(1)(i), (j), (k)) | The cash capital increase deduction (Art. 10(1)(ı)) |
| Free zone earnings exempt under Law No. 3218; Turkish International Ship Registry earnings | Sponsorship, donation and aid deductions (Art. 10(1)(b) to (f)) |
| Technology development zone exemption (Law No. 4691); R&D and design deductions | Industrial property rights sale exemption (Art. 5/B) |
| Venture capital fund reserve and protected workplace deductions (Art. 10(1)(g), (h)) |
Law No. 7582 added three items to the left-hand column: the 95% deduction for buying and selling goods abroad without bringing them to Türkiye, or intermediating such sales (Art. 10(1)(i)); the 95% deduction for qualified service centres (Art. 10(1)(j)); and the Istanbul Financial Centre deduction (Law No. 7412, Art. 6(1)(a)). They apply to 2026 earnings, starting with returns due on or after 1 July 2026, and Communiqué Serial No. 26 (Official Gazette 4 July 2026) added them to the communiqué’s list. See regional hubs and qualified service centres and, for free zones, Law 7577.
Income that Türkiye may not tax under a double tax treaty, or must exempt under one, also stays outside the minimum-tax base.
Worked example: a Hong Kong-owned company in 2026
Illustrative figures in Turkish lira (TRY). A Turkish limited company owned by a Hong Kong parent started business in 2023, so 2026 is its fourth accounting period. In 2025 the parent made a cash capital increase with money brought from abroad, so the company claims the cash capital deduction: 75% of a notional interest amount based on the central bank’s average rate on commercial loans.
| Ordinary corporate tax | Minimum tax | |
|---|---|---|
| Commercial balance-sheet profit | 6,000,000 | 6,000,000 |
| Non-deductible expenses | 500,000 | 500,000 |
| Cash capital deduction | (4,500,000) | not subtracted |
| Base | 2,000,000 | 6,500,000 |
| Rate | 25% | 10% |
| Tax | 500,000 | 650,000 |
The minimum tax is higher, so the company’s 2026 corporate tax is TRY 650,000: TRY 150,000 more than the ordinary calculation. Provisional tax paid during 2026 is offset against it.
If the same TRY 4,500,000 had instead been exempt technology development zone earnings, the minimum-tax base would be TRY 2,000,000 and the floor TRY 200,000. The ordinary tax of TRY 500,000 would stand, and no minimum tax would be due.
Reduced rates and incentive certificates
Some reduced rates are protected. Tax not collected because of the following is subtracted from the minimum tax (Article 32/C(3)):
- the 2-point reduction for companies that offer at least 20% of their shares to the public on Borsa Istanbul for the first time;
- the 5-point reduction on export earnings;
- the reduced rate for production earnings of companies holding an industrial registry certificate: a 1-point reduction for 2026 profits, and from 2027 profits a 12.5% rate under Law No. 7582, which also covers agricultural production earnings;
- the reduced rate under investment incentive certificates obtained from the Ministry of Industry and Technology before 2 August 2024.
For those older certificates, only the investment amount registered on the certificate before 2 August 2024 counts; increases from later revisions do not. Communiqué Serial No. 25 (Official Gazette 24 May 2026) lets a company whose older certificate was revised after that date choose between two methods: treat all the tax not collected as coming from the pre-2 August 2024 contribution, or split it in proportion to the contribution before and after the revision.
A certificate obtained on or after 2 August 2024 gets no such credit: the tax it saves is not subtracted from the minimum tax. Under Article 32/A as amended by Law No. 7555, certificates obtained from 24 July 2025 (apart from applications made before 16 June 2025 and not rejected) cut the rate by 60%, which is 10% at the general 25% rate. That matches the floor, so the floor mainly costs a newer certificate holder extra tax when the company also uses exemptions or deductions the minimum tax ignores. Model this before you apply; see investment incentives for manufacturers.
Who pays it, and who does not?
The rule is not limited to limited companies (Ltd. Şti.) and joint-stock companies (A.Ş.). It covers all corporate taxpayers: capital companies, cooperatives, public economic enterprises, economic enterprises of associations and foundations, and joint ventures. A non-resident company that must file a Turkish corporate tax return on its Turkish earnings is also in scope, and so is a non-resident that chooses to file a return for income already taxed by withholding.
It does not apply to:
- corporations exempt from corporate tax;
- companies taxed on a turnover basis under Income Tax Law Article 113;
- companies starting business for the first time, for three accounting periods counting the period in which they start.
| Started business in | No minimum tax for |
|---|---|
| 2023 | 2025 |
| 2024 | 2025 and 2026 |
| 2025 | 2025, 2026 and 2027 |
| 2026 | 2026, 2027 and 2028 |
The first three rows are the communiqué’s own examples (it speaks of the year a company is formed); the 2026 row follows the same rule. A company formed by merger, transfer, change of legal form, or partial or full demerger is not treated as starting business for the first time. In our reading, buying the shares of an existing Turkish company does not start a new count either, because that company has already started business.
Provisional tax: four times a year
Article 32/C(4) applies the rule in provisional tax periods too. Since Law No. 7566 (Official Gazette 19 December 2025), provisional tax covers all four quarters from the 2025 accounting period, so a calendar-year company makes the 10% comparison in four provisional returns and once more in its annual return. For the filing dates, see Turkish taxes for foreign-owned companies.
What can be set against it?
- Corporate tax withheld at source on the company’s income for the period, and provisional tax paid during the year, are offset against the minimum tax.
- A company entitled to the tax-compliance reduction under Income Tax Law repeated Article 121 can use it against the minimum tax as well.
- Returns filed because of liquidation, merger, transfer or full demerger must also include the minimum-tax calculation.
Can prior-year losses reduce the base?
In December 2024 we wrote that prior-year losses cannot be deducted. Today that is disputed.
Article 32/C does not mention carried-forward losses: it defines the base as commercial balance-sheet profit plus non-deductible expenses and lists what may be subtracted. The Revenue Administration’s communiqué of 28 September 2024 added that prior-year losses are not deducted. That passage was challenged before the Council of State (case E.2024/5700), and published tax circulars report that the court suspended it in February 2025 and annulled it on 25 November 2025. We have not confirmed from an official source whether that judgment is final. Until it is settled, we check the position before each return rather than assume either answer.
Why this is not the 15% global minimum tax
| Domestic minimum corporate tax | Global minimum tax (Pillar Two) | |
|---|---|---|
| Rate | 10% | 15% |
| Who | Corporate taxpayers generally, after the start-up period | Only groups whose consolidated revenue exceeded EUR 750 million in at least two of the four preceding years |
| Base | Profit plus non-deductible expenses, less the listed items | Effective tax rate per jurisdiction under the GloBE rules |
| Filing | Inside the provisional and annual corporate tax returns | Separate returns and forms |
Law No. 7524 introduced both. A Turkish company that is not part of a group above the threshold deals only with the 10% rule. For large groups, our article on the global minimum tax for Chinese and Hong Kong groups explains Decision 11511, the domestic top-up tax return and the notification forms.
What this means for you
- Check the year. A company that started business in 2023 comes under the floor in 2026; one that started in 2024, in 2027.
- Check your deductions. The cash capital and services export deductions and the foreign dividend exemption lower ordinary tax, not the minimum-tax base.
- Check your certificate. Was it obtained before 2 August 2024, and revised since?
The minimum-tax calculation is part of the provisional and annual corporate tax returns in both of our annual packages, with bookkeeping by a licensed Turkish CPA (SMMM). Basic, for companies that already exist in Türkiye, is USD 3,750 per year; Professional is USD 4,950 per year plus government fees and adds company formation without a power of attorney. See bookkeeping and tax filing and pricing.
- Planning an investment with a certificate: our investment incentives service estimates the tax effect, including the 10% floor; the fee is quoted per project.
- Part of a group above EUR 750 million: global minimum tax notification, USD 750.
- Closing a Turkish company: the liquidation returns include the calculation; our dissolution service is USD 3,000, including a liquidator resident in Türkiye.
Prices exclude VAT. No VAT is charged to clients invoiced outside Türkiye; 20% VAT is added for companies in Türkiye. This article is general information, not tax advice. You can write to us in Chinese or English: WeChat ID etitax or info@etitax.com.
