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10 November 2023
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Turkey Reduces CIT Rate to 5% for Transit Trade
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Turkey Reduces Corporate Income Tax Rate to 5% for Transit Trade Activities
Turkey has introduced a significant tax incentive for companies engaged in transit trade activities by reducing the effective corporate tax rate to 5% under certain conditions. The new regulation aims to strengthen Turkey’s position as a regional trade hub and encourage international companies to conduct global trading operations through Turkish entities.
For foreign investors, exporters, and international trading companies, this development creates an attractive opportunity to benefit from a substantially lower tax burden while leveraging Turkey’s strategic location between Europe, Asia, the Middle East, and Africa.
Table of Content
What Is Transit Trade?
Transit trade in Turkey refers to an international trading activity where goods are purchased from one foreign country and sold to another foreign country without entering Turkey’s customs territory or domestic market.
In a typical transit trade transaction, a Turkish company acts as an intermediary between the supplier and the buyer. The goods are shipped directly from the exporting country to the importing country, while the commercial transaction, invoicing, and profit generation are managed through the Turkish company.
Example of Transit Trade
A company registered in Turkey purchases electronic products from a manufacturer in China and sells them to a customer in Germany.
Goods are shipped directly from China to Germany.
The products do not enter Turkey.
The Turkish company issues the sales invoice and earns the profit margin from the transaction.
This type of operation is considered transit trade under Turkish regulations.
Key Features of Transit Trade in Turkey
Transit trade has become an increasingly attractive business model for international companies operating through Turkey. Below are the key features that distinguish transit trade from traditional import-export activities.
Goods Do Not Enter Turkey
The most important characteristic of transit trade is that the goods are shipped directly from the supplier’s country to the buyer’s country without entering Turkey’s customs territory.
No Turkish Customs Procedures
Since the goods do not physically enter Turkey, import and export customs procedures in Turkey are generally not required. This reduces administrative burdens and simplifies international trade operations.
Turkish Company Acts as an Intermediary
A Turkish company purchases goods from a foreign supplier and sells them to a foreign customer, earning a profit margin on the transaction while managing contracts, invoicing, and payments.
International Payments Are Processed Through Turkey
Payments for transit trade transactions are typically received and made through the Turkish company’s bank accounts, allowing profits to be recorded in Turkey.
Foreign Suppliers and Buyers
Both the supplier and the customer are located outside Turkey. The Turkish company serves as the commercial intermediary between the two parties.
No Physical Storage in Turkey
The products are not stored, processed, or distributed within Turkey. They are transported directly from the country of origin to the destination country.
Corporate Tax Advantages
Recent tax regulations provide significant incentives for qualifying transit trade income, including a reduced effective corporate tax rate under certain conditions, making Turkey an attractive jurisdiction for international trading companies.
Suitable for Global Trading Businesses
Transit trade is particularly beneficial for:
- International trading companies
- Wholesale distributors
- E-commerce sourcing businesses
- Supply chain management firms
- Commodity traders
- Multinational corporations managing regional trade operations
Full Foreign Ownership Available
Foreign investors can establish and fully own a Turkish company that conducts transit trade activities, without requiring a local shareholder.
Strategic Access to Global Markets
Turkey’s location between Europe, Asia, the Middle East, and Africa makes it an ideal base for managing international trade flows across multiple regions.
Advantages of Transit Trade in Turkey
Turkey has become an increasingly attractive destination for international trading companies seeking a strategic location, competitive operating environment, and favorable tax framework. Transit trade offers numerous advantages for both local and foreign investors engaged in global commerce.
1. Significant Tax Benefits
One of the most important advantages of transit trade in Turkey is the availability of tax incentives for qualifying activities. Recent regulations have reduced the effective corporate tax rate to 5% for eligible transit trade income, creating substantial tax savings for international businesses.
This reduced tax burden can significantly improve profitability and enhance global competitiveness.
2. Strategic Geographic Location
Turkey is uniquely positioned at the crossroads of Europe, Asia, the Middle East, and Africa. This strategic location allows companies to efficiently manage trade flows between major international markets.
Businesses operating through Turkey can access more than 1.5 billion consumers within a relatively short flight distance.
3. No Physical Importation into Turkey
In transit trade transactions, goods are shipped directly from the supplier’s country to the buyer’s country without entering Turkey.
As a result:
- No import customs clearance is required in Turkey.
- Goods are not subject to domestic distribution procedures.
- Administrative processes are simplified.
- Logistics operations become more efficient.
4. Full Foreign Ownership
Foreign investors can establish and fully own a Turkish company without the need for a local shareholder.
This provides international businesses with complete control over their operations while benefiting from Turkey’s business-friendly investment environment.
5. Advanced Banking and Financial Infrastructure
Turkey has a well-developed banking sector capable of supporting international trade operations.
Companies can benefit from:
- Multi-currency bank accounts
- International payment services
- Trade finance solutions
- Foreign exchange transactions
- Digital banking platforms
These services facilitate smooth and efficient cross-border transactions.
6. Access to Double Taxation Treaties
Turkey has signed numerous Double Taxation Agreements (DTAs) with countries around the world.
These treaties may help businesses:
- Reduce withholding taxes.
- Avoid double taxation.
- Improve international tax planning.
- Increase tax efficiency in cross-border transactions.
7. Cost-Effective Business Operations
Compared to many European jurisdictions, Turkey offers relatively competitive costs for:
- Company formation
- Office rentals
- Professional services
- Accounting and compliance
- Skilled labor
This allows companies to maintain efficient operations while controlling overhead expenses.
8. Strong Logistics and Transportation Network
Turkey possesses a modern transportation infrastructure that supports international trade through:
- Major seaports
- International airports
- Extensive highway networks
- Rail transportation corridors
These logistics capabilities facilitate efficient movement of goods between global markets.
9. Flexible Corporate Structures
Foreign investors can choose from various legal structures, including:
- Limited Liability Companies (Ltd. Şti.)
- Joint Stock Companies (A.Ş.)
- Branch Offices
This flexibility allows businesses to select the most suitable structure for their commercial objectives and tax planning strategies.
10. Gateway to Regional Markets
A Turkish trading company can serve as a central hub for managing commercial activities across:
- European Union countries
- Central Asia
- The Middle East
- North Africa
- The Caucasus region
This regional reach makes Turkey an ideal location for multinational trading operations.
New Corporate Tax Advantage for Transit Trade
Turkey has introduced a significant tax incentive aimed at strengthening its position as a global trading hub. Under the new regulations, companies engaged in qualifying transit trade activities may benefit from a reduced effective corporate tax rate of 5%, offering substantial tax savings compared to the standard corporate tax regime.
This incentive is designed to encourage international businesses to establish trading operations in Turkey and manage cross-border transactions through Turkish companies.
Breakdown of the New 2026 Tax Regime
Previously, income from transit trade was subject to the standard corporate tax rate (currently 25%). Law No. 7582 amends the Corporate Tax Law (Article 10) to introduce a massive deduction
Here is the comparison of the new rates:
| Structure | Tax Deduction | Effective Corporate Tax Rate* | Based In |
| Standard Turkish Company | 95% Deduction | 5% | Mainland |
| IFC Participant Company | 100% Deduction | 0% | Istanbul Financial Center |
* The standard corporate tax rate is 25%
What Has Changed?
Traditionally, profits generated from transit trade activities were subject to the general corporate tax rules applicable in Turkey. With the introduction of the new incentive, eligible transit trade income may qualify for a significantly reduced effective tax burden.
The measure is expected to:
- Increase Turkey’s competitiveness in international trade.
- Attract foreign direct investment.
- Encourage multinational companies to establish trading entities in Turkey.
- Support export-oriented and global supply chain businesses.
- Promote Turkey as a regional headquarters for international commerce.
Why Is This Incentive Important?
A lower corporate tax rate directly improves profitability for businesses engaged in international trading activities. Companies can retain a larger portion of their earnings while benefiting from Turkey’s strategic geographic location and developed business infrastructure.
For high-volume trading operations, the reduction to an effective 5% corporate tax rate can create a considerable competitive advantage.
The incentive is particularly relevant for:
- International trading companies
- Global sourcing businesses
- Import-export intermediaries
- Commodity traders
- E-commerce wholesalers
- Multinational groups managing regional trade operations
Foreign investors who establish a Turkish company may also be eligible to benefit from the incentive, provided they meet the applicable legal and tax requirements.
Strategic Benefits Beyond Tax Savings
In addition to the reduced corporate tax rate, companies operating transit trade activities through Turkey may benefit from:
- Access to European, Asian, Middle Eastern, and African markets
- Advanced banking and financial infrastructure
- A skilled workforce
- A broad network of double taxation treaties
- Full foreign ownership of Turkish companies
- Competitive operational costs
These advantages make Turkey an increasingly attractive jurisdiction for international trade and supply chain management.
Key Requirements to Benefit from the 5% Tax Incentive for Transit Trade Activities
Turkey’s reduced 5% effective corporate tax rate for qualifying transit trade activities presents a valuable opportunity for international trading companies. However, businesses must meet certain requirements to benefit from this incentive.
1. Conduct Qualifying Transit Trade Activities
The company must engage in genuine transit trade transactions involving:
- A foreign supplier and a foreign customer.
- Goods shipped directly from one country to another.
- No physical entry of the goods into Turkey.
The transactions must satisfy the legal definition of transit trade under Turkish regulations.
2. Operate Through a Turkish Tax Resident Company
To benefit from the incentive, the business must operate through a company incorporated and tax resident in Turkey, such as:
- Limited Liability Company (Ltd. Şti.)
- Joint Stock Company (A.Ş.)
The company must be registered with the Turkish Trade Registry and Tax Office.
3. Generate Eligible Transit Trade Income
The tax incentive generally applies only to profits derived from qualifying transit trade activities. Income from other business operations may remain subject to the standard corporate tax rate.
4. Maintain Proper Commercial Documentation
Companies should retain sufficient documentation to support the nature of the transactions, including:
- Purchase and sales agreements
- Commercial invoices
- Shipping and logistics documents
- Payment records
- Bank statements
- Accounting records
Proper documentation is essential in demonstrating eligibility during a tax audit.
5. Comply with Turkish Accounting and Tax Regulations
Businesses must maintain accurate bookkeeping and fulfill all reporting obligations, including:
- Monthly accounting records
- Annual corporate tax returns
- Financial statements
- Statutory compliance requirements
6. Process Transactions Through Corporate Bank Accounts
All payments related to transit trade activities should be conducted through the company’s official bank accounts to ensure transparency and traceability.
7. Demonstrate Commercial Substance
The company should have genuine business operations and management functions in Turkey. Tax authorities may evaluate whether the company has sufficient economic substance to support its activities.
8. Fulfill All Legal and Regulatory Requirements
Companies must comply with all applicable Turkish tax, commercial, foreign exchange, and anti-money laundering regulations to maintain eligibility for the incentive.
Establishing a Transit Trade Company in Turkey
Turkey offers a business-friendly environment for foreign investors seeking to conduct international trading operations. Establishing a transit trade company in Turkey is a straightforward process and can provide access to significant tax advantages, strategic market access, and a well-developed financial infrastructure.
Whether you are an entrepreneur, trading company, or multinational corporation, setting up a Turkish entity can be an effective way to manage global trade activities.
Step 1: Choose the Appropriate Company Structure
Foreign investors typically establish one of the following legal entities:
Limited Liability Company (Ltd. Şti.)
The Limited Liability Company is the most popular structure for small and medium-sized businesses engaged in transit trade.
Key features include:
- Minimum one shareholder
- 100% foreign ownership permitted
- Simple management structure
- Relatively low incorporation costs
Joint Stock Company (A.Ş.)
A Joint Stock Company may be more suitable for larger businesses and multinational groups.
Advantages include:
- Greater flexibility for investment and expansion
- Enhanced corporate governance structure
- Suitable for future public offerings or strategic investments
Step 2: Prepare Incorporation Documents
The company formation process requires the preparation of various documents, including:
- Articles of Association
- Shareholder information
- Passport copies of foreign shareholders
- Proof of address documents
- Power of Attorney (if representatives are used)
Additional documents may be required depending on the ownership structure and business activities.
Step 3: Register with the Turkish Trade Registry
The company must be registered with the relevant Trade Registry Office.
Upon successful registration:
- The company obtains legal personality.
- Registration details are published in the Turkish Trade Registry Gazette.
- The company becomes authorized to conduct business activities in Turkey.
Step 4: Obtain Tax ID Number
Following incorporation, the company must register with the Turkish Tax Office.
This process includes:
- Obtaining a Tax Identification Number (TIN)
- Registering for corporate tax obligations
- Completing any required notifications to the tax authorities
Proper tax registration is essential for companies intending to benefit from transit trade incentives.
Step 5: Open a Corporate Bank Account
A Turkish corporate bank account is generally required for:
- Receiving customer payments
- Paying foreign suppliers
- Managing international transactions
- Meeting accounting and compliance requirements
Turkey’s banking system supports multiple currencies and international payment operations, making it well-suited for transit trade businesses.
Step 6: Establish Accounting and Compliance Procedures
All Turkish companies must maintain accounting records and comply with local tax regulations.
Key obligations include:
- Monthly bookkeeping
- Tax declarations
- Financial reporting
- Corporate compliance procedures
Professional accounting support is highly recommended to ensure compliance and maximize available tax benefits.
Step 7: Conduct Transit Trade Activities
Once the company is established, it can engage in transit trade transactions by:
- Purchasing goods from a foreign supplier.
- Selling goods to a foreign customer.
- Arranging direct shipment between the two countries.
- Recording profits through the Turkish company.
The goods do not need to enter Turkey, making transit trade an efficient and flexible international business model.
Contact Us For Tax Planning of Your Transit Trade Activities in Turkey
Turkey’s decision to reduce the effective corporate tax rate to 5% for qualifying transit trade activities marks a significant step toward strengthening its position as a leading international trade hub. For global trading companies, this incentive creates an opportunity to optimize tax efficiency while benefiting from Turkey’s strategic location and business-friendly environment.
As discussed throughout this guide, understanding What Transit Trade in Turkey Is is the first step for businesses seeking to take advantage of this model. By facilitating transactions between foreign suppliers and foreign customers without goods entering Turkey, transit trade offers a flexible and efficient framework for international commerce.
The Advantages of Transit Trade in Turkey extend far beyond tax savings. Companies can benefit from a strategic geographic location connecting Europe, Asia, the Middle East, and Africa, as well as a modern banking system, competitive operating costs, and an extensive network of double taxation treaties.
These benefits help explain Why Turkey Is Becoming a Preferred Transit Trade Hub for multinational corporations, sourcing companies, and international traders looking for a reliable base to manage global operations.
For investors interested in entering the Turkish market, understanding How to Establish a Transit Trading Company in Turkey is essential. The incorporation process is relatively straightforward, with options for full foreign ownership and flexible corporate structures tailored to international business needs.
Finally, Establishing a Transit Trade Company in Turkey can provide long-term commercial and tax advantages for businesses involved in cross-border trade. With the introduction of the new 5% corporate tax incentive, Turkey has further enhanced its attractiveness as a destination for international trading activities.
For foreign investors, entrepreneurs, and multinational groups, now may be an ideal time to evaluate Turkey as a strategic base for transit trade operations and global business expansion.
How A&M Consulting Co. Supports Your Expansion
A&M Consulting Co. is a specialized investment and business advisory firm, focused on helping foreign entrepreneurs, and international companies establish and scale service transit trade activities in Turkey.
We provide end-to-end solutions, including:
- Company formation and optimal structuring
- Tax planning aligned with the 100% exemption framework
- Compliance and accounting management
- Banking, licensing, and operational setup
- Ongoing advisory for scaling and international expansion
Our goal is to deliver cost-efficient, fully compliant, and scalable business solutions, enabling our clients to seamlessly enter the Turkish market while maximizing available tax advantages.
Whether you are an individual entrepreneur or a global company, we ensure that your operations in Turkey are strategically structured, legally compliant, and financially optimized from day one.
DISCOVER OUR SERVICES:
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You can reach out to our experienced consultans via email or by filling out the Contact Form on our website’s contact page
FAQs About Turkey's 5% Corporate Income Tax Incentive for Transit Trade
Transit trade refers to the purchase of goods from one foreign country and their sale to another foreign country through a Turkish company, without the goods physically entering Turkey. The Turkish company manages the commercial transaction, invoicing, and profit generation.
The new incentive allows qualifying transit trade income to benefit from a significantly reduced effective corporate tax rate of 5%, helping companies lower their tax burden and increase profitability.
Turkey offers a strategic location between Europe, Asia, the Middle East, and Africa, combined with modern infrastructure, a strong banking system, foreign investment opportunities, and attractive tax incentives for international businesses.
Yes. Foreign investors can establish and fully own a Turkish company without requiring a local shareholder, making Turkey an attractive destination for international trading operations.
Transit trade is commonly used by:
- International trading companies
- Import-export businesses
- Global sourcing firms
- E-commerce wholesalers
- Commodity traders
- Multinational corporations
No. One of the key features of transit trade is that the goods are shipped directly from the supplier’s country to the buyer’s country without entering Turkey.
The primary advantages include:
- Reduced effective corporate tax rate
- Strategic geographic location
- No Turkish customs procedures for the goods
- Full foreign ownership rights
- Advanced banking infrastructure
- Access to double taxation treaties
- Competitive operating costs
The process generally involves:
- Choosing a legal entity.
- Preparing incorporation documents.
- Registering with the Turkish Trade Registry.
- Obtaining tax registration.
- Opening a corporate bank account.
- Establishing accounting and compliance procedures.
Foreign investors typically choose between:
- Limited Liability Company (Ltd. Şti.)
- Joint Stock Company (A.Ş.)
The most suitable structure depends on the company’s size, investment plans, and operational needs.
The minimum capital requirement depends on the chosen company type and current Turkish corporate regulations. Professional advice should be obtained to determine the latest requirements.
Yes. Turkish banks generally offer multi-currency corporate accounts, allowing companies to conduct international transactions efficiently.
Yes. Turkey has an extensive network of Double Taxation Agreements (DTAs) that may help reduce international tax burdens and prevent double taxation.
Companies must maintain proper accounting records, invoices, contracts, shipping documents, and other supporting evidence demonstrating that transactions qualify as transit trade activities.
The incorporation process is generally completed within a few days to a few weeks, depending on the company structure, documentation, and administrative procedures.
To qualify for the 5% tax incentive, a company must conduct eligible transit trade transactions through a Turkish tax-resident entity. The goods must be purchased from a foreign supplier and sold to a foreign customer without entering Turkey. Additionally, the company must maintain proper accounting records, retain supporting commercial documentation, comply with Turkish tax and reporting obligations, and ensure that the income claimed under the incentive is derived from qualifying transit trade activities. Failure to meet these requirements may result in the loss of the tax benefit.
No. Simply being located in the Istanbul Financial Center does not automatically grant access to the exemption. Companies must meet the legal requirements and conduct qualifying activities specified in the applicable regulations.
Qualifying activities generally include financial services provided to non-residents and services that generate export income in accordance with the relevant legal framework.
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