The 80% income deduction for service exports, introduced in recent years, significantly reduced the effective corporate tax rate for many companies operating in Turkey. Businesses in sectors such as software development, engineering, and digital services particularly benefited from this incentive.
However, as of 2025, the landscape has changed. The introduction of the domestic minimum corporate tax and stricter financial certification requirements have reshaped the real impact of this tax advantage.
This article examines the legal framework of the 80% service export deduction, its application requirements, its interaction with the minimum corporate tax system, and the growing importance of sworn financial certification (YMM).
Legal Basis of the 80% Service Export Deduction
According to Article 10/1-ğ of the Turkish Corporate Tax Law (Law No. 5520), companies may deduct 80% of the income generated from certain services provided abroad when calculating the corporate tax base.
These services must be provided to individuals or companies located outside Turkey and must be used exclusively abroad.
It is important to note that this regulation is not a tax exemption. Instead, it is a deduction applied directly to the corporate tax base and must be declared separately in tax filings.
The Increase from 50% to 80%
The incentive was originally introduced with a deduction rate of 50%. However, starting from January 1, 2023, the deduction rate was increased to 80%.
This increase came with stricter conditions. One of the most important requirements is that the full amount of the export income must be transferred to Turkey before the corporate tax return submission deadline.
In other words, while the deduction rate increased, compliance requirements also became stricter.
Which Services Are Covered?
The regulation does not apply to every type of service. The main eligible service categories include:
- Software development
- Architecture and engineering services
- Design services
- Data processing and data analytics
- Medical reporting services
- Accounting record services
- Call center operations
- Product testing and certification services
In some cases, professional training services and certain approved education and healthcare services may also fall within the scope.
However, services such as consulting, brokerage, or intermediary services are generally excluded from the incentive.
Application Requirements: Technical but Critical
1. Articles of Association Must Match the Activity
The company’s articles of association must include the relevant service activity as its main field of operation. Both the legal framework and the actual business activity must be aligned.
2. The Service Must Be Exported Abroad
The service must be provided to a non-resident entity and must not be used in Turkey.
The key rule is that the economic benefit of the service must occur outside Turkey.
3. Invoice Structure
Invoices must be issued directly to the foreign client receiving the service. Issuing invoices to intermediary platforms or payment providers may create serious risks for the deduction.
4. Income Must Be Transferred to Turkey
This is one of the most critical conditions. The entire income related to the service export must be transferred to Turkey before the corporate tax return submission deadline.
If only part of the income is transferred, the deduction may be rejected entirely.
How Is the Deductible Income Calculated?
The deduction is calculated based on net income, not gross revenue.
The basic formula is:
Service Revenue
− Expenses and costs related to the activity
= Net Profit
80% of the net profit can then be deducted from the corporate tax base.
Accounting records for revenues and expenses related to service exports must be tracked separately. Otherwise, the deduction may be denied.
The Major Change After 2025: Minimum Corporate Tax
Before 2025, the 80% deduction could reduce the effective corporate tax rate to as low as 4–5% for some companies.
However, the introduction of the domestic minimum corporate tax system significantly changed this outcome.
The new system ensures that the corporate tax payable cannot fall below a certain threshold after deductions and incentives are applied.
In general terms, the final corporate tax payable cannot be lower than approximately 10% of the corporate income base before deductions under certain calculation methods.
The critical point is that the service export deduction is not fully protected within the minimum tax calculation framework, which means the final tax liability may be adjusted upward.
Example Simulation
Assumption:
- Service export income: 10,000,000 TL
Normal calculation:
- 80% deduction: 8,000,000 TL
- Taxable income: 2,000,000 TL
- Corporate tax (approx. 20% export rate): 400,000 TL
Minimum tax calculation:
- Minimum base: approximately 10,000,000 TL
- 10% minimum threshold: around 1,000,000 TL
- Adjusted final tax: approximately 900,000 TL
The result shows that while the 80% deduction remains beneficial, it no longer automatically reduces the effective tax burden to extremely low levels.
The Importance of YMM Certification
Another increasingly important element is the certification process performed by Sworn-in Certified Public Accountants (YMM).
If certain thresholds are exceeded, the certification report must be:
- Prepared on time
- Submitted digitally
- Supported with complete documentation
Failure to meet these deadlines may result in the loss of the deduction.
The Reality of the New Tax Planning Era
The tax incentive environment has evolved:
- The deduction rate increased in 2023
- The minimum tax system was introduced in 2025
The correct question is no longer simply whether the 80% deduction exists.
The more relevant question today is: How does this deduction interact with the minimum corporate tax system?
Effective tax planning now requires:
- Separately tracking export revenues
- Ensuring timely income transfer to Turkey
- Maintaining strict contract and invoicing discipline
- Running minimum tax simulations
- Managing YMM certification processes properly
Conclusion
The service export deduction remains a powerful tax incentive in Turkey.
However, after 2025, understanding the deduction rate alone is no longer sufficient. Modern tax planning requires a two-layer evaluation:
- The 80% deduction calculation
- The minimum corporate tax test
Ignoring either of these layers may lead to inaccurate financial projections and unexpected tax liabilities.