The 2026 100% Earnings Deduction for Game and App Developers: Sole Proprietorship or Limited Company on the Steam, App Store and Google Play Front?

Regulatory note. This article is based on: Article 89/1-13 of the Income Tax Code No. 193 and the mobile application developer withholding exemption sub-paragraph; Articles 10/1-(ğ), 32/(7) and 32/C of the Corporate Tax Code No. 5520; Presidential Decision No. 11257 (Official Gazette 30/4/2026-33239); Articles 7, 8 and 9 of Law No. 7582 (Official Gazette 04.06.2026-33270); sections 10.5, 32.1.2.9.1 and 32.5.6 of Corporate Tax General Communiqué No. 1 as revised by Communiqué No. 23; General Communiqué No. 49 on the Law on Independent Accountancy, Certified Public Accountancy and Sworn-in Certified Public Accountancy (Official Gazette 30/12/2025-33123); the Istanbul Revenue Office ruling E-62030549-125[32/2024]-143061 (30.01.2026); and decisions E:2022/3559 K:2025/4071 (21/10/2025) and E:2023/5968 K:2024/129 (29.01.2024) of the 3rd Chamber of the Council of State. Legislation changes; confirm the current text and the specifics of your own file before acting.

Presidential Decision No. 11257 raised the earnings deduction rate on service exports from 80% to 100%, but that does not mean every developer’s profit falls to zero. CTC Art. 32/C creates a separate minimum-tax test for companies, while ruling No. 143061 rejected the deduction on the mixed-sale facts it examined. Steam and app-store income must therefore be classified and evidenced before the entity question is answered.

1. Why it is being asked now: the rate rose to 100% and the equation got harder

Presidential Decision No. 11257 (Official Gazette 30/4/2026-33239) set the deduction rate to be applied under CTC Art. 10/1-(ğ) and ITC Art. 89/1-(13) at 100%. Under Article 3 of the Decision the change applies to the income and earnings of taxation periods beginning on or after 1/1/2026; it is in force as of the date of publication (30/4/2026).

Two months before that Decision, however, ruling No. 143061 of 30.01.2026 (Istanbul Revenue Office, Revenue Laws Income and Corporate Taxes Group Directorate) gave a categorical refusal to an artificial-intelligence and mobile-game company earning in-app purchase and subscription income on Google Play and the App Store: because the applications were directed at the domestic market as well as abroad, “since they do not meet the condition of relating to software services performed exclusively for customers abroad”, the Art. 10/1-(ğ) deduction cannot be applied.

So the rate went from 80% to 100%, but for many developers the deduction does not work at all; it stays on paper.

The next layer is Law No. 7582. Article 9 of the law published in the Official Gazette of 04.06.2026 added the transit-trade (CTC 10/1-i) and qualified-service-centre (CTC 10/1-j) earnings deductions to the list of deductible items for the domestic minimum corporate tax in CTC Art. 32/C. But 10/1-(ğ) was not added. A company using the service-export deduction therefore still performs a separate Art. 32/C test; the actual liability is calculated from all of the company’s tax-base components, not one headline rate.

CTC Art. 32/C does not apply to a sole proprietorship because it is a corporate-tax rule. That does not mean a sole proprietorship is always superior. The repeated Art. 20/B classification of mobile-app income, interaction with other income, personal liability, ownership and investment plans, distributions and social-security costs must all be tested. The first-three-accounting-period exclusion for newly commencing companies also makes the formation date part of the model.

2. The short answer: classify the income before choosing the entity

A game or app developer has three axes to decide together on the 100% service export earnings deduction in 2026.

First: can the exclusive-benefit-abroad test be met technically (region lock, sales panel, VAT invoice arrangement)? If not, the administrative stance of ruling No. 143061 is risky; the route of dispute is open, but the time and cost of litigation are real.

Second: does the income fall within repeated Art. 20/B for mobile applications, or within ITC Art. 89/1-(13) / CTC Art. 10/1-(ğ) for foreign services? If qualifying Art. 20/B income exceeds TRY 5.3 million in 2026, the exemption does not end; an annual return is filed and the bank withholding is credited. The same income does not automatically use both regimes.

Third: does the Art. 10/1-(ğ) or Art. 89/1-(13) deduction exceed the current YMM certification threshold? TRY 500,000 is definitive for 2025; approximately TRY 560,000 for 2026 is a computation under the communiqué formula and must be confirmed before filing. Above the threshold, a subject-specific report is required; no separate report is needed where the return is already covered by full certification. The notification and completion procedure in repeated Art. 227 of the Tax Procedure Code also matters if a report is late.

The short frame is to test the customer, place of benefit, documentation and transfer conditions for each income stream first. Then determine which of repeated Art. 20/B, ITC 89/1-(13) or CTC 10/1-(ğ) can apply and build the entity choice on that result together with non-tax factors. A region lock is not by itself a formula confirmed by the Revenue Administration; each case turns on its own evidence.

3. The architecture of the deduction: CTC 10/1-(ğ) ↔ ITC 89/1-13, one doctrine through two channels

Article 10/1-(ğ) of the Corporate Tax Code No. 5520 provides that a certain proportion (100% from 2026) of the earnings derived by service businesses operating in the fields of architecture, engineering, design, software, medical reporting, bookkeeping, call centres, product testing, certification, data storage, data processing, data analysis and vocational training areas determined by the Ministry of Finance after taking the views of the relevant ministries — services supplied in Turkey to persons not resident in Turkey and to those whose place of business, registered office and place of management are abroad, and the benefit of which is enjoyed exclusively abroad — is deductible in determining corporate earnings.

The same sub-paragraph contains the rule that “in order to benefit from this deduction the invoice or similar document must be issued in the name of the customer abroad”, and the rule requiring “the whole of it to be transferred to Turkey by the date on which the corporate tax return for the accounting period in which it is derived is due”.

For an income tax payer (a sole proprietorship) the counterpart is ITC Art. 89/1-(13). The wording is identical to CTC 10/1-(ğ); the list of services, the definition of customer status, the exclusivity test, the invoice arrangement and the timely transfer condition are the same. Article 1/(2) of Decision No. 11257 set the deduction rate at 100% for ITC 89/13 as well. The two channels establish one doctrine; the difference opens only on the minimum tax front (Art. 32/C hits the limited company, not the sole proprietor).

Software is clearly within scope, and game and application development fall in the “software” category. The Ankara Tax Office ruling E-38418978-125[10-24/3]-378244 of 2024 confirms that graphic and animation design services (which can include game assets) are deductible within Art. 10/1-(ğ) where they fall within the main field of activity. So the matter is settled on the statutory-definition side; the main dispute is the administrative stance on mixed sales.

4. The five conditions

For the income stream on which the deduction is claimed, the conditions must be met together. A stream that fails a condition cannot qualify; genuinely separate services and revenue streams must be documented separately.

The third condition is the heart of the subject; we open it separately in section 5.

The first and second conditions are usually not a problem in game and app practice. The trap in the fourth condition is the bulk invoice question — a bulk invoice issued without Revenue Administration approval makes the basis of the deduction questionable. The trap in the fifth is the discipline of timing: Google and Apple payments must reach Turkey in full by the April filing deadline; balances left in intermediate layers such as PayPal, Stripe or Wise count as “not arrived”.

5. The platform side: Steam, App Store, Google Play — what ruling No. 143061 says

The module here is a decision matrix: platform × customer profile × decision. Each cell shows whether the relevant rule “applies / does not apply / depends” in that scenario.

The critical sentences of ruling No. 143061 read as follows.

For CTC Art. 10/1-(ğ): “…since they relate to earnings in the nature of in-app purchase income and since, moreover, the applications in question are directed at the domestic market as well as abroad and therefore do not meet the condition of relating to software services performed exclusively for customers abroad, it is not possible for the earnings derived within these activities to be deducted in determining corporate earnings under sub-paragraph (ğ) of the first paragraph of Article 10 of the Corporate Tax Code.”

For CTC Art. 32/(7) it uses a different formula: “Where the artificial intelligence and mobile games developed by your company are made exclusively for the use of customers abroad, they will be assessed within the scope of service exports and the corporate tax rate will be applied to those earnings with a 5-point reduction.”

So the ruling applies two different tests: for 10/1-(ğ), mixed use is entirely closed; for CTC 32/(7), the ruling says literally that “the rate is applied with a 5-point reduction” for the part that is exclusively foreign.

But there is an express CONFLICT here with Corporate Tax General Communiqué No. 1: the computation example in section 32.1.2.9.1 shows that the software service export earnings within CTC 10/1-(ğ) are first SUBTRACTED from the export earnings base and that the 5-point reduction applies only to the REMAINING GOODS export earnings base — so service export earnings fall outside the 5-point reduction. Because a game or app developer typically exports no goods, applying the computation example in the Communiqué leaves no residual base for the 5 points to engage on.

The literal wording of the ruling and the computation example in the Communiqué do not read the same way at this point; an expectation of 5 points is an application risk. And Art. 32/(7) requires exclusivity too.

For mixed sales, section 10.5 of Corporate Tax General Communiqué No. 1 opens an apportionment methodology: revenue, cost and expenses are tracked separately, and common general expenses are apportioned by the revenue ratio.

That says the deduction can be applied to the foreign part on the ground of the Communiqué. But ruling No. 143061 made no reference to that section of the Communiqué and applied a categorical refusal. This contradiction between the Communiqué and the ruling is a real source of risk for the taxpayer: a taxpayer who apportions and files may meet the administrative stance of the ruling on audit.

6. The 3rd Chamber case law is about VAT: can it be carried across to the earnings deduction?

Two recent decisions of the 3rd Chamber of the Council of State give a strong signal, for VAT service exports, that accessibility from Turkey does not by itself defeat the foreign-benefit condition. E:2023/5968 K:2024/129 (29.01.2024) concerns translation and subtitling services supplied to a foreign broadcaster and does not treat access by users in Turkey as conclusive against the condition.

E:2022/3559 K:2025/4071 (21.10.2025) concerns a developer offering a smartphone application through Google Play. It likewise does not treat access by users in Turkey as an obstacle by itself and reverses the Regional Administrative Court decision.

The decisions favour the taxpayers, but there are two critical limits. First, they concern the service export exemption in VAT Art. 11/1-a; they are not direct precedent for the earnings deduction in CTC 10/1-(ğ). Second, their procedural effect and impact on the particular files must be read with the full decision texts; no decision fixing the same approach at the level of the Plenary Session of Tax Chambers or the Chamber for the Unification of Case Law was verified in this review.

The conceptual analogy argument runs like this: the legislature used the same concept of “exclusive benefit abroad” in both institutions. VAT Art. 12/2 (“the service being benefited from abroad”) and CTC 10/1-(ğ) (“services the benefit of which is enjoyed exclusively abroad”) are the counterparts of the same concept in two different rules.

The Council of State’s interpretation on the VAT side can be advanced on the earnings deduction side as an argument from consistency. But this is a HYPOTHESIS — the court may not accept it, and the ruling may be treated as binding. It should not be presented as settled case law.

The Istanbul 2nd Tax Court decision E:2023/1083 K:2024/1029 (29.05.2024) is likewise in the taxpayer’s favour at local court level, but the appeal route is open and it is not final. It should not be presented as settled case law either.

7. A new layer in the sole proprietorship ↔ limited company equation: CTC Art. 32/C

The “domestic minimum corporate tax” in CTC Art. 32/C was introduced in mid-2024 (added by Law No. 7524 Art. 36 of 28/7/2024; Official Gazette 2/8/2024). In essence it provides: “the corporate tax computed having regard to the provisions of Articles 32 and 32/A cannot be less than 10% of the corporate earnings before deductions and exemptions.” So the tax remaining after the deductions and exemptions on the return cannot fall below 10% of the pre-deduction earnings.

Paragraph 2 sets up a limited list — the deductions on that list can be subtracted from the minimum tax base. Law No. 7582 Art. 9 (Official Gazette 04.06.2026-33270) updated the list: the sub-paragraphs in CTC 32/C(2)(b) are now listed as “(g), (h), (i) and (j)”. 10/1-(ğ) is NOT on that list — so the service export earnings deduction does not prevent the tax from being held at 10% of the pre-deduction earnings.

A concrete computation module:

Example — TRY 1,000,000 of foreign service export earnings, all within scope, exclusivity satisfied:

Limited company (CTC 10/1-(ğ)):

• Corporate earnings before the deduction: TRY 1,000,000
• CTC 10/1-(ğ) deduction at 100%: TRY 1,000,000
• Base after the deduction: TRY 0
• Corporate tax computed at the general rate: TRY 0
• CTC 32/C minimum check: 10% of the pre-deduction earnings = a minimum tax base of TRY 100,000
• The Art. 32/C(3) credit: the “tax not collected” credit for the 5-point reduced rate in CTC 32/(7); but under the computation example in section 32.1.2.9.1 of Corporate Tax General Communiqué No. 1 the service export earnings are first subtracted from the export earnings base and the 5 points apply only to the remaining goods-export earnings — with no goods-export residue for a game or app developer, the amount separately credited by 32/(7) is 0
• Corporate tax payable: TRY 100,000 (the minimum tax)

Sole proprietorship (ITC 89/1-13):

• Annual commercial earnings: TRY 1,000,000
• ITC 89/1-13 deduction at 100%: TRY 1,000,000
• Remaining income tax base: TRY 0
• Application of the income tax tariff: TRY 0
• The CTC 32/C counterpart: NONE (an income tax payer; Art. 32/C sits in the Corporate Tax Code)
• Income tax payable: TRY 0

This simplified example isolates the minimum-tax layer that CTC Art. 32/C can add to a limited-company computation; it does not by itself establish that a sole proprietorship is superior. Liability, the shareholder and investment plan, distributions, social-security costs, other income and actual satisfaction of every deduction condition must be modelled together. The first-three-accounting-period exception under Art. 32/C for newly incorporated entities must also be checked against the incorporation date.

Warning: the example is built on the assumption that exclusivity is satisfied. If the deduction is refused entirely on mixed sales under the logic of No. 143061, a limited company faces the minimum tax plus general corporate tax while a sole proprietor faces the top bracket of the income tax tariff — in those conditions a limited company can often be the better structure. So the decision also depends on whether exclusivity can be achieved technically.

8. The YMM certification requirement: Communiqué No. 49 and the discipline of time

General Communiqué No. 49 on the Law on Independent Accountancy, Certified Public Accountancy and Sworn-in Certified Public Accountancy (Official Gazette 30/12/2025-33123) requires a subject-specific YMM certification report when the threshold for each exemption or deduction on the return is exceeded. No separate subject report is required where the return is already covered by a full YMM certification report. The Communiqué applies for the 2025 accounting period and following periods. The threshold is not based on a single customer or total turnover; it is applied to the amount deducted under CTC 10/1-(ğ). The definitive 2025 amount is TRY 500,000. The formula in the Communiqué produces a computed 2026 amount of approximately TRY 560,000.

⚠️ The Revenue Administration has no separate announcement for the 2026 threshold; until one is published, the computed approximation of TRY 560,000 is used as a prudent figure. If the Ministry determines a different figure, that figure prevails.

The timing is critical: the subject report must be submitted within two months of the filing period. A late report does not automatically destroy the right immediately; the notice-and-cure procedure under repeated Art. 227 of the Tax Procedure Code applies. The right is lost if the report is not supplied within that additional period. The YMM calendar should therefore be established during the year.

9. Repeated Art. 20/B: the TRY 5.3 million threshold does not end the exemption

Income and revenues within repeated Art. 20/B must flow through a bank account opened in Turkey, and the bank withholds income tax at 15%. The fourth bracket of the 2026 income-tax tariff is TRY 5,300,000.

Exceeding that threshold does not terminate the exemption. An annual income-tax return is filed and the tax withheld by the bank is credited against the income tax computed on the return. The threshold does not automatically move the taxpayer to ITC 89/1-13, and the two advantages cannot be assumed to stack on the same income.

Steam and PC-game income should likewise not be declared automatically in or out of scope. The “applications for mobile devices” limb does not literally cover a PC game, but the current provision’s other limbs extending to services supplied electronically and the actual income flow still require review. No firm conclusion should be reached before examining the platform contract, the legal character of the income and how the activity is actually performed.

10. Risks

Evidence of user geography: the countries in which the app is listed, the geography from which revenue arises and the person benefiting from the service are distinct facts. Closing Turkey in the store panel may strengthen the position but is not a safe harbour on its own. Retain the store geography reports, contract, invoices and payment flow together.

Timely transfer of the earnings: the transfer to Turkey by the filing deadline of earnings within ITC 89/1-13 and CTC 10/1-(ğ) must be monitored separately. Platform deductions, residual balances with payment providers and year-end timing should be documented. Each income stream is assessed through its own contract and collection chain.

The deadline for submitting the YMM certification: once the threshold is exceeded, a subject-specific YMM report is required unless the return is already fully certified. If the two-month period is missed, the notice-and-cure procedure under repeated Art. 227 of the Tax Procedure Code must be considered. Prepare the file during the year.

Sub-processor and indirect access: reaching the end user through Google or Apple is treated by the administration as an element weakening exclusivity. That is another face of the mixed-sales argument: if the platform itself is open to Turkish users, how will the developer construct the “exclusively foreign” claim?

The invoice arrangement: the addressee and transaction type follow the platform contract and the legal customer relationship; the platform is not automatically the customer in every case. On bulk “miscellaneous customers” documentation, ruling No. 143061 points to assessment by the Revenue Administration and the relevant Ministry. Confirm any transaction code against the current e-document guide.

VAT service export is a separate test: CTC 10/1-(ğ) and VAT Art. 11/1-a are subject to different tests; one may be satisfied while the other is not. Ruling No. 143061 draws exactly that distinction. The mechanics of the earnings deduction do not by themselves guarantee the VAT exemption.

11. Gökay’s note

Gökay Gül’s note. For a game or app developer, map the income before selecting the entity: who pays, who is the legal customer, where is the user, who receives the invoice and through which chain does the money reach Turkey? Decision No. 11257 changed the rate only; it did not remove these underlying conditions. Ruling No. 143061 shows the administration’s approach to mixed use and platform income on its own facts and should not be treated as an automatic result for every developer.

A region lock may be useful evidence but does not determine the tax outcome by itself. Exceeding the repeated Art. 20/B threshold does not end the exemption either. A sole proprietorship, limited company or joint stock company comparison becomes meaningful only when tax, liability, the shareholder and investment plan, and cash distributions are modelled on the same income scenario.

The platform name does not determine Steam or PC income either. First classify the income under the statute; then test service export and geographical benefit conditions.

12. Action guide

• A newly formed studio: map each product and income channel; compare sole proprietorship, limited company and joint stock company on the same revenue and profit scenario.
• An existing company with mixed sales: track domestic and foreign revenue, costs and expenses separately; retain the contract, user-geography and collection evidence.
• A Steam or PC developer: do not assume the repeated Art. 20/B result; review the income type, electronic-service scope and ITC 89/1-13 conditions together.
• A developer using repeated Art. 20/B: monitor the Turkish bank account and 15% withholding; move to the annual-return and credit calendar if TRY 5.3 million is exceeded.
• YMM and document discipline: monitor the deduction amount during the year; keep the required YMM report, store geography reports, invoices and bank records ready for the return file.

This article is for general information; it does not replace a conclusion or report specific to any taxpayer’s own file. Before acting, confirm the current text of the legislation and the pattern of your own facts with your accountant or lawyer.

Official sources

• Presidential Decision No. 11257 — Revenue Administration PDF
• Law No. 7582 — Revenue Administration PDF
• Corporate Tax General Communiqué No. 1 — current consolidated text
• Istanbul Revenue Office ruling No. 143061 dated 30 January 2026
• General Communiqué No. 49 — Revenue Administration notice
• Annex to General Communiqué No. 49 — Revenue Administration PDF
• 2026 Tax Guide for Taxpayers Earning Commercial Income — Revenue Administration
• Council of State decision search