Reduced Corporate Tax in Turkey 2026-2027: 12.5% on Manufacturing, 20% on Exports — Who, When and How?

A manufacturer-exporter sat down at my table last month and said: “My manufacturing is at 12.5% now, my exports get 5 points, so adding them up I pay 7.5%.” The figures looked cheerful at first glance; the problem was that all three of them were wrong.

Reduced corporate tax is an area where taxpayers look hardest at “which rate is lowest”, while the real decision is which earnings go into which paragraph, from when the paragraph applies, and how it collides with the floor. Below I do more than list the rates — I take apart the three misconceptions that leave the advantage on paper.

Regulatory note. This article is based, as at 10.07.2026, on: Article 32 of the Corporate Tax Code No. 5520 (the standard rate as set by Law No. 7394 Art. 25; the first public offering by Law No. 7256 Art. 35; the export and manufacturing deductions and the ordering rule by Law No. 7351 Art. 15; intermediated exports by Law No. 7491 Art. 62); Law No. 7582 Art. 8 (21.05.2026), which amended Art. 32/8; Art. 32/A (Law No. 7555 Art. 18); Art. 32/C (Law No. 7524 Art. 36) governing the domestic minimum corporate tax; Article 1 of the Industrial Registry Law No. 6948; and rulings of the Revenue Administration. ⚠️ The commencement timing of the 12.5% rate (2026 or 2027) depends on the commencement provision of Law No. 7582 and is discussed separately below. Always assess the concrete case with your adviser.

In 60 Seconds

• There are four separate regimes. Standard corporate tax is 25% (30% for banks and financial institutions and certain BOT/PPP contracts). Earnings derived exclusively from exports get a 5-point deduction (→20%). A first public offering on Borsa İstanbul (at least 20%) gets 2 points (→23%) for five accounting periods. Manufacturing earnings covered by an industrial registry certificate, and agricultural production, get 12.5% (CTC Art. 32/8, as amended by Law No. 7582 Art. 8).
• The timing of the 12.5% is critical. The prevailing view and practice are that the 12.5% rate applies to earnings of 2027 and following periods, while for 2026 earnings the manufacturing deduction continues as 1 point (an effective 24%). The commencement provision of Law No. 7582 draws that line.
• There is an anti-stacking rule. The manufacturing rate (12.5%) and the export deduction (5 points) are not applied together to the same earnings (final sentence of Art. 32/8). The arithmetic “12.5% + 5 points = 7.5%” is wrong.
• 12.5% is not necessarily the rate you will pay. Under Art. 32/9 the reduced rates work on the rate remaining after the other deductions; and there is a 10% domestic minimum corporate tax floor. Art. 32/C-3, however, credits the tax not collected because of the reduced rate against the minimum, preserving the manufacturing, export and public-offering advantage.
• For software and games the axis is the industrial registry certificate. A business producing software can be entered in the industrial registry; earnings from licensing or granting the use of the software it produces count as manufacturing earnings (Revenue Administration ruling). On the games side there is a gap in numbered rulings specific to Art. 32/8 — applying for a ruling is advisable.

The Anatomy of the Reduced Rate: a Point Deduction or a Rate?

Let us settle the concept first, because most of the confusion starts here. Article 32 of the CTC does not define a single “reduced rate”; it brings together several mechanisms that work independently of one another, some built as a point deduction and some as a direct rate. The distinction is not a trivial matter of wording; it determines how the computation is set up.

• Exports (Art. 32/7): corporate tax is applied to earnings derived exclusively from exports with a 5-point deduction. If the standard rate is 25%, the result is 20%. The quantity here is “5 points”; if the general rate changes, the deduction keeps the same number of points.
• First public offering (Art. 32/6): companies whose shares are offered to the public on Borsa İstanbul for the first time at a rate of at least 20% get a 2-point deduction (→23%) for five accounting periods, starting with the period of the first offering.
• Manufacturing and agricultural production (Art. 32/8): in the text as amended by Law No. 7582 this is no longer a “point” deduction but a direct rate of 12.5%. For companies holding an industrial registry certificate and actually engaged in manufacturing, the rate on earnings derived exclusively from manufacturing — and, for companies engaged in agricultural production, on earnings derived exclusively from that production — is applied as 12.5%.
• Investment incentive (Art. 32/A): earnings from an investment covered by an incentive certificate are taxed at a rate reduced by 60%, for at most ten accounting periods, until the contribution amount is reached.

The practical consequence of the “point or rate” distinction is this: so long as the general rate is 25%, “a 12.5% rate” and “a 12.5-point deduction” give the same answer. Where the general rate departs from that — 30% for financial institutions, for instance — the two diverge. The statute says “rate”, so that is what governs; return software, though, often works on point logic. The contradiction does not affect most manufacturers today, but it is worth knowing about.

The second decisive word is “exclusively”. The deduction applies not to all the company’s earnings but only to the earnings derived from the relevant activity (manufacturing, exporting). Where a company holding an industrial registry certificate also has earnings from non-manufacturing activities, the base for the deduction is found by proportioning the earnings actually derived from manufacturing to the commercial balance-sheet profit. A firm that does not separate manufacturing earnings in its accounts cannot defend the deduction even with the certificate in hand.

”12.5% Has Arrived” — But From When? The 2026/2027 Divide

This is the point most often set up wrongly. Law No. 7582 Art. 8 amended CTC Art. 32/8 and raised the relief on manufacturing and agricultural production earnings from 1 point to a rate of 12.5% — exactly half of the standard 25%, and so a far stronger advantage than the previous regime. The law’s adoption and publication details are dated 21.05.2026.

But the question of which earnings a change in a tax rate applies to is settled by the commencement provision of the law making the change. The commencement rule in Law No. 7582, and the prevailing reading of it, are that the 12.5% rate applies to earnings of 2027 and following taxation periods, while in the 2026 taxation period manufacturing earnings continue to attract the 1-point deduction (an effective 24%) as under the previous regime. For companies with a special accounting period, the measure is the special period beginning in calendar year 2027.

⚠️ Transparency note. That CTC Art. 32/8 sets 12.5% as a rate is beyond doubt in the primary text. The boundary between 2026 and 2027, by contrast, rests on the commencement provision of Law No. 7582 and carries a small doctrinal debate (because the amended paragraph entered into force in 2026 and replaced the earlier text, the question “which rate in 2026” has been argued). Practice and the prevailing view accept 1 point for 2026 and 12.5% from 2027. This article does not repeat the numbered “general communiqué” reference circulating in secondary sources, because it could not be verified in the official legislation database.

Why does this timing matter so much? Because it is not merely a question of dates; as we shall see, it directly changes which deduction a manufacturer-exporter should choose. The choice that makes sense in 2026 reverses in 2027.

A Scenario Comparison: Who Pays What, and in Which Period?

The table below puts side by side the effective rate the same profiles will meet on their 2026 and 2027 earnings. The standard rate is assumed to be 25%.

The most instructive line is the third. When a manufacturer-exporter exports the product it has made, those earnings carry both a “manufacturing” and an “export” character; but because of the anti-stacking rule only one may be chosen:

• In 2026: the manufacturing deduction is 1 point (→24%) and the export deduction is 5 points (→20%). Exports are the better deal, so the manufacturer-exporter prefers to assess the earnings under the export paragraph.
• In 2027 and after: the manufacturing rate falls to 12.5% while exports remain at 20%. This time the manufacturing rate is far better. The preference reverses.

So 2027 is the year in which filing strategy changes decisively for producer-exporters. Whether the same earnings of the same firm are taxed at 20% or at 12.5% now depends on the calendar year as well as on the paragraph chosen.

The next layer is ordering. Art. 32/9 provides that the reduced rates in Art. 32/7 and 32/8 work on the rate remaining after the other deductions within the article have been applied. For a company benefiting from the public-offering deduction (2 points) that also has manufacturing earnings in 2027, the computation is:

• Public offering + exports (2027): 25% − 2 − 5 = 18%
• Public offering + manufacturing (2027): 25% − 2 − 12.5 = 10.5%

Note that manufacturing works here not as “a 12.5% rate” but, within the ordering logic, as an effect of 12.5 points; because the general rate is 25% the result is consistent. Applying the reduced rate directly to the gross 25% and forgetting the other deductions is the third most common mistake.

A Risk Filter: Who Should Aim at Which Rate?

The right rate is not “the lowest one” but the one that fits the taxpayer’s structure. The matrix below sets your priority according to the row you see yourself in.

Read the matrix this way: in most rows the advantage comes not from the rate itself but from establishing the precondition. Without an industrial registry certificate, or without manufacturing earnings separated in the accounts from exempt and other earnings, 12.5% stays on paper. For the manufacturer-exporter the advantage lies in choosing the right paragraph; the wrong choice means sitting at 20% in 2027 instead of 12.5%.

The axis for software and game companies deserves separate emphasis. Article 1 of the Industrial Registry Law No. 6948 counts businesses producing information technology and software as industrialists, so a software firm can obtain an industrial registry certificate.

The Revenue Administration treats the earnings that a company holding an industrial registry certificate derives from licensing or granting the use — in Turkey or abroad — of the software program it has produced as earnings derived, in essence, from a manufacturing activity, and accepts that they may be made subject to the reduced rate (Istanbul Tax Office Directorate, ruling E-62030549-120-264050 dated 01.03.2023).

Game development has likewise been assessed in administrative practice within the software-production category, as “production of game program software”. However, no numbered ruling specific to games under the Art. 32/8 manufacturing deduction could be identified in the official database. That gap makes the hesitation real for game companies, and makes applying for a ruling on the concrete structure a sensible step.

The final layer is the minimum corporate tax. Art. 32/C sets a floor: the corporate tax computed cannot be less than 10% of the corporate earnings before deductions and exemptions. Two things need to be kept apart here:

• For a manufacturer brought down to 12.5% by the manufacturing deduction alone, the floor is usually not binding: 12.5% is already above 10%.
• The floor bites mainly on companies whose earnings are largely exempt (those operating in a technopark, for example) or whose effective rate falls below 10% through an incentive.

The key provision is Art. 32/C-3: tax not collected because of the reduced rate under the sixth, seventh and eighth paragraphs of Art. 32 is credited against the minimum corporate tax. Manufacturing, export and public-offering deductions therefore do not in practice pierce the floor; the advantage is preserved. By contrast, under the Art. 32/A investment incentive, the contribution amount of certificates obtained after 02.08.2024 cannot be deducted from the minimum tax — a difference that calls for a separate computation where an investor uses the incentive and a reduced rate together.

Gökay Gül’s Tip

Gökay Gül’s note. My clearest observation from the field is that taxpayers think of the reduced rate as an addition — manufacturing deduction plus export deduction plus public-offering deduction, all stacked up. But Art. 32 is not a menu; it is an ordering-and-selection mechanism. With one manufacturer-exporter client we always set the work up like this: first we split the earnings into three buckets — those arising exclusively from manufacturing, those arising exclusively from exports, and those falling outside any deduction. Without an industrial registry certificate and actual manufacturing, the manufacturing bucket is empty from the start. Then we remember the anti-stacking rule: the export of a manufactured product is a single set of earnings and two deductions cannot both be taken; whichever is better is chosen. For 2026 that is usually exports (20%); from 2027 manufacturing (12.5%) moves ahead, which is why we are building the accounting infrastructure today so that manufacturing earnings separate cleanly. On the software side my first question is always the same: “Do you have an industrial registry certificate, and do your manufacturing earnings include a part that falls outside the technopark exemption?” Because if the earnings are already exempt, the practical benefit of 12.5% is limited to the part outside the exemption. The rate is exciting; what earns it is the certificate and the separation underneath.

An Anonymised Field Case

A mid-sized manufacturer-exporter holding an industrial registry certificate came to see me. It exported a substantial part of what it produced, and had set its own filing up like this: “12.5% on my manufacturing earnings, plus 5 points for exports; my effective rate comes down to 7.5%.” It had planned on that assumption and had even built its cash flow around it.

There were mistakes in two separate places. The first was timing: the earnings in question belonged to the 2026 period, in which the manufacturing deduction was not yet 12.5% but 1 point (an effective 24%). The second, and more critical, was the anti-stacking rule: the final sentence of CTC Art. 32/8 says expressly that the export deduction is not additionally applied to earnings benefiting from the reduced rate under that paragraph. A combination of “12.5% + 5 points” was not possible in any period. On top of that, because manufacturing earnings had not been separated in the accounts from other activity earnings, the “exclusively manufacturing” base was not defensible either.

Once the filing was set up correctly the picture became clear: for the 2026 earnings the best route was to assess the earnings from the export of the manufactured product under the export paragraph and aim at 20%; for the part of the manufacturing earnings outside any exemption, the plan for moving to 12.5% from 2027 was made there and then. The lesson here is not that “12.5% is a bad rate” — on the contrary it is a strong one. The lesson is that reduced rates are not added together; they are selected, ordered, and separated with the certificate that earns them. The wrong pairing leaves even the most attractive rate on paper.

Frequently Asked Questions

1. What corporate tax rate applies to a certificated manufacturer in 2026? Law No. 7582 Art. 8 amended CTC Art. 32/8 and reduced the rate on manufacturing and agricultural production earnings to 12.5%. But the prevailing view and practice are that the 12.5% applies to earnings of 2027 and following periods, while for 2026 earnings the 1-point manufacturing deduction (an effective 24%) continues. The commencement provision of Law No. 7582 draws the line; confirm the concrete period with your adviser.

2. Can the export and manufacturing deductions be taken together on the same earnings? No. The final sentence of CTC Art. 32/8 provides that the Art. 32/7 export deduction is not additionally applied to earnings benefiting from the reduced rate under that paragraph. For earnings from the export of a manufactured product, only one of the manufacturing and export deductions is chosen. In 2026 exports (20%) are generally better; from 2027 manufacturing (12.5%) is.

3. Will I still pay the 10% minimum corporate tax despite the 12.5% rate? For a company brought down to 12.5% by the manufacturing deduction alone the floor is mostly not binding, because 12.5% is already above 10%. The minimum corporate tax bites mainly where earnings are predominantly exempt or where an incentive pushes the effective rate below 10%. Art. 32/C-3 preserves the manufacturing, export and public-offering advantage by crediting against the minimum the tax not collected because of the reduced rate under paragraphs 6, 7 and 8 of Art. 32.

4. Can I take the manufacturing rate (12.5%) without an industrial registry certificate? You cannot. Two conditions are required together for the Art. 32/8 relief: holding an industrial registry certificate and actually being engaged in manufacturing. A company that holds the certificate but does not actually manufacture, or that manufactures but has no certificate, cannot use the paragraph. Businesses producing software can obtain the certificate too, since Art. 1 of Law No. 6948 counts them as industrialists.

5. How does the reduced rate work alongside the investment incentive rate (Art. 32/A)? The Art. 32/A incentive is a separate regime subject to its own contribution-amount limit. The Art. 32/9 ordering rule and the Art. 32/C minimum corporate tax interaction have to be set up together. The critical difference: tax not collected because of the Art. 32/6-7-8 deductions is credited against the minimum, whereas the contribution amount of incentive certificates obtained after 02.08.2024 cannot be deducted from the minimum tax. For an investor using the incentive and the manufacturing or export deduction together, a simulation is essential.

What to Do? Action List

1. Check your industrial registry certificate. The manufacturing rate (12.5%) requires the certificate and actual manufacturing together. If you are a software firm, assess whether a certificate can be obtained under Law No. 6948.
2. Separate exclusively-manufacturing earnings in your accounts. Where you have non-manufacturing activities, the base for the deduction is found by proportioning manufacturing earnings to the commercial balance-sheet profit. Without that separation the deduction is refused.
3. If you are a manufacturer-exporter, plan the paragraph choice by period. For 2026 earnings exports (20%) are generally better; from 2027 manufacturing (12.5%) is. Because of the anti-stacking rule only one may be chosen.
4. Run a minimum corporate tax simulation. Especially in exemption-heavy (technopark) or incentive-certificated structures, compute the 10% floor and the Art. 32/C-3 credit together.
5. If you are a game company, consider applying for a ruling. As no numbered games ruling specific to Art. 32/8 exists, obtaining the administration’s view on your concrete structure lowers your risk.

If you would like to work through which paragraph your own earnings belong in, and what that means for 2026 and 2027, you can get in touch; the SME tax guide sets out the wider picture.

Sources

• Corporate Tax Code No. 5520, Art. 32/1, 32/6, 32/7, 32/8, 32/9 (Law No. 7394 Art. 25; Law No. 7256 Art. 35; Law No. 7351 Art. 15; Law No. 7491 Art. 62)
• Corporate Tax Code No. 5520, Art. 32/8 (as amended by Law No. 7582 Art. 8, 21.05.2026) — the 12.5% rate on manufacturing and agricultural production earnings, and the anti-stacking rule
• Corporate Tax Code No. 5520, Art. 32/A (Law No. 7555 Art. 18) — the reduced rate under the investment incentive
• Corporate Tax Code No. 5520, Art. 32/C (Law No. 7524 Art. 36) — the domestic minimum corporate tax and the Art. 32/C-3 credit
• Industrial Registry Law No. 6948, Art. 1 — businesses producing software and information technology counted as industrialists
• Revenue Administration ruling E-62030549-120-264050 (01.03.2023) — earnings from licensing or granting the use of software produced by a certificated company counted as manufacturing earnings