Turkey's 100% Service-Export Earnings Deduction: ITC 89/13 and CTC 10/1-ğ (2026)

Regulatory note: This guide was checked on 22 October 2026 against Article 89/1-13 of Income Tax Code No. 193, Article 10/1-ğ of Corporate Tax Code No. 5520, Presidential Decree No. 11257 (Official Gazette 30/4/2026-33239), Articles 11/1-a and 12/2 of VAT Law No. 3065, section II/A-2 of the VAT General Application Communiqué, and section 10.5 of Corporate Tax General Communiqué No. 1. Rates, thresholds and procedures must be checked again if the legislation changes.

60-second answer: The 2026 rate is 100%, but it applies to qualifying net earnings, not turnover. First identify the taxpayer route (ITC 89/13 for individuals, CTC 10/1-ğ for corporations), then the service route. The two statutes use parallel vocational-training wording; corporate-tax administrative practice adds the section 10.5.2.5 explanation for a non-resident beneficiary where the service is physically performed in Turkey. Licensed education and health have their own conditions. The invoice, full-repatriation and VAT tests are separate.

First calculation warning: A 100% deduction does not mean that revenue or every tax liability disappears. Direct and shared costs must first be allocated to the qualifying activity. For companies, the domestic minimum corporate tax computation may still produce tax.

1. What is the service-export earnings deduction?

The deduction allows a taxpayer to subtract qualifying earnings from specified services supplied from Turkey to foreign customers. It operates through two parallel provisions:

• ITC Article 89/1-13 for individual income-tax taxpayers, including qualifying sole proprietorships and self-employed persons;
• CTC Article 10/1-ğ for corporate-tax taxpayers, including limited and joint-stock companies.

The customer-location wording is parallel in the Revenue Administration’s current 2026 quotation of ITC 89/13 and in CTC 10/1-ğ. An individual customer must not be resident in Turkey; an entity customer’s place of business, registered office and place of management must be abroad. The taxpayer route still determines the return, deadline and tax-base computation.

The business records the service revenue and related expenditure in the ordinary way. The advantage arises on the annual tax return: qualifying net earnings are shown separately and deducted from the tax base. It is not a tax credit and it is not an exemption of gross turnover.

2. What is the applicable rate in 2026?

The regime began at 50% in 2012. The statutory provisions now state 80%. Presidential Decree No. 11257 uses the statutory authority to set the applicable rate at 100%:

• Article 1/2 of the Decree for ITC Article 89/13;
• Article 2/2 for CTC Article 10/1-ğ;
• Article 3/1 for the effective period.

The Decree applies to income and earnings of tax periods beginning on or after 1 January 2026. For calendar-year taxpayers this means the 2026 year. A company with a special accounting period must test the start date of its own period; the fact that part of the period falls in 2026 is not enough.

The Decree changes the rate only. It does not remove the service-scope, foreign-customer, invoicing or full-repatriation conditions.

3. Who uses ITC 89/13?

ITC Article 89/13 is the route for an individual income-tax taxpayer reporting qualifying service-business earnings on an annual income-tax return. The provision does not itself state a separate “full tax liability” condition for the service provider. Residence status alone therefore does not settle eligibility: taxpayer status, income character, annual-return treatment and the other ITC rules must be checked together.

The taxpayer first determines whether the activity is business or professional income and whether an annual return is required. Customer location alone does not create the deduction. The service category, actual performance, correct recipient, invoice and repatriation evidence must all align.

4. Who uses CTC 10/1-ğ?

CTC Article 10/1-ğ is the corporate route. A Turkish limited company, joint-stock company or other corporate-tax payer may deduct qualifying net earnings on its corporate tax return.

Corporate Tax General Communiqué No. 1 adds operational detail. The qualifying activity should appear among the company’s stated principal activities; qualifying and non-qualifying revenue, expenses and costs must be tracked separately; unallocated shared expenses follow the revenue-ratio rule; and jointly used fixed assets follow the usage-day rule where that information exists.

An activity loss creates no deduction. If qualifying positive earnings cannot be used because other deductions, exemptions or carried losses have already exhausted the tax base, the unused amount is not carried to a later year.

5. Which services are within scope?

The law lists architecture, engineering, design, software, medical reporting, bookkeeping, call-centre, product-testing, certification, data-storage, data-processing and data-analysis services. It also covers vocational-training fields determined by the Ministry after consulting the relevant ministries, and licensed and supervised education or health businesses serving persons not resident in Turkey.

The application should be separated into three test routes:

Law No. 6728 Article 58 added product testing, certification, data processing, data analysis and the Ministry-determined vocational-training wording while retaining data storage. The category list is restrictive: a contract label does not bring an unrelated advisory service into scope. For licensed education and health, the relevant ministry licence and supervision conditions are tested for both taxpayer groups. The notification and supporting-document rule in CTC section 10.5.3.3 applies to corporations; any separate procedure applicable to individuals must be verified independently.

SaaS requires an extra classification step. An arrangement may be a software service, a grant of intellectual-property rights, or a mixed supply. The statute’s use of the word “software” does not automatically include or exclude every licence payment. Where service and licence or rights elements are supplied together, qualifying earnings must be determined from the substance of the supply, rights granted, delivery and use evidence, and a documented calculation. If the qualifying earnings cannot be determined reliably, the deduction amount remains data missing.

6. How are the foreign-customer and foreign-use tests applied?

For general listed services, the earnings deduction and the VAT service-export exemption both look at a foreign customer and use abroad, but their legal tests are not identical.

Under the earnings-deduction rules:

• The Revenue Administration’s current 2026 quotation of ITC Article 89/13 and CTC Article 10/1-ğ refer to persons not resident in Turkey and to entities whose place of business, registered office and place of management are abroad.
• Corporate Tax General Communiqué section 10.5.2.4 requires the general listed service to relate to the customer’s foreign business, transactions and activities—not its activities in Turkey.

The statutory wording is parallel for individuals and corporations. For corporations, section 10.5.2.5 additionally explains that vocational training is physically delivered in Turkey and that the beneficiary must not be resident in Turkey; beneficiary residence does not by itself replace the other statutory conditions. For individuals, that corporate Communiqué explanation is not imported automatically without a separate applicable basis. Licensed education and health carry their own foreign-beneficiary, permit and reporting requirements.

For VAT, Article 12/2 defines a customer abroad by reference to residence, place of business, registered office and place of management. It can also include an independently operating foreign branch of a Turkish business. That branch treatment does not automatically transfer to ITC 89/13 or CTC 10/1-ğ.

For SaaS, cloud hosting and online services, one IP address or a foreign invoice is not enough. The contract, account ownership, user and operation locations, acceptance records, access logs and the customer’s Turkish operations should be assessed together.

7. How are qualifying net earnings calculated?

The deduction applies to net earnings, not gross revenue. The calculation has two stages.

Stage 1 — Direct-cost matching. Payroll allocated to a foreign project, ancillary project-specific contractors, dedicated software or hardware rental and other direct costs are charged to that contract. Booking a contractor cost does not itself establish eligibility: if the whole service was outsourced or the taxpayer only provided assistance, advice or intermediation, the actual-supply condition in Communiqué section 10.5.2.2 must be tested separately.

Stage 2 — Shared-cost allocation. Under Communiqué section 10.5.3.2, shared general costs that cannot be directly identified are allocated by the ratio of current-year qualifying activity revenue to total revenue. Depreciation on machinery, installations or vehicles jointly used in several activities follows days of use; where the period cannot be identified, that depreciation is allocated with shared general expenses.

Worked example

Assume a software company has a qualifying foreign custom-development segment and a domestic SaaS segment in 2026:

The foreign segment produces TRY 8,000,000 of net earnings. At the 2026 100% rate, TRY 8,000,000 is the deduction, assuming all other conditions are met. The TRY 4,000,000 domestic segment remains in the ordinary tax base.

This is a model, not a taxpayer result. Actual ledgers and supporting documents control the calculation.

8. How does the full-repatriation condition work?

The entire qualifying earnings amount must be transferred to Turkey by the date on which the annual return for the relevant year or accounting period is legally due. The condition was added by Law No. 7491 dated 27/12/2023 and applies to earnings derived from 1 January 2023.

Three distinctions matter:

1. Deadline. A corporate taxpayer follows the statutory corporate-tax return deadline for its accounting period; an individual follows the annual income-tax return deadline. If a return is filed early and the transfer is completed later but still within the legal period, the procedure for reflecting that transfer on the return should be assessed separately.
2. Amount. The transfer test applies to qualifying earnings, not gross turnover. If qualifying net earnings are TRY 10,000,000, all TRY 10,000,000 must meet the deadline.
3. Payment made in Turkey. For corporations, Communiqué section 10.5.2.6 says that payment made in Turkey by the statutory corporate-return deadline needs no separate transfer. The same result should not be assumed for an individual without a separate ITC basis.

The statutory wording requires transfer of “the whole” of the earnings. It does not provide a proportional deduction for a partially transferred amount. The invoice does not prove the transfer: bank statements, SWIFT records, card receipts and invoice-to-payment reconciliations should be retained.

9. What should the evidence file contain?

The supporting file should be built around each legal test:

These records are not a universal statutory checklist. Their job is to produce a coherent, period-specific evidence trail for the actual transaction.

10. CPA (YMM) attestation and the current official thresholds

General Communiqué No. 49 on the SMMM and YMM Law (Official Gazette 30/12/2025-33123) introduced mandatory YMM attestation for specified return exemptions, deductions and applications.

The Revenue Administration’s official “Amounts Applicable for 2026” table applies when TRY 500,000 is exceeded for each exemption or deduction shown on its own line and TRY 1,000,000 is exceeded for the aggregate and relevant “Other” line tests. These amounts apply to returns relating to the 2025 accounting period.

Returns for the 2026 accounting period will be filed in 2027. The applicable thresholds must be determined by checking the automatic increase and rounding rule in Articles 4(4) and 8(4) of Communiqué No. 49, the correct return period, the Revenue Administration’s period table and any different Ministry determination. A derived amount should not be presented as final until those checks are complete. The test is not confined to the service-export deduction: other exemptions and deductions on the same return enter the aggregate test.

The report is filed electronically with the annual return or within two months after the end of the filing period. Under Tax Procedure Code Article 353/11, missing the initial deadline triggers a special irregularity penalty equal to 5% of the amount subject to attestation, within the lower and upper limits applicable to the period. The taxpayer is then given a notified 60-day period; filing within that period preserves the deduction, while missing it also forfeits the right. Where a timely full-attestation agreement exists and the Communiqué’s matters are covered in a separate section of the full-attestation report, a separate income/corporate-tax exemption and deduction report is not required. VAT-refund attestation remains separate.

11. How is this different from the VAT service-export exemption?

The earnings deduction and the VAT exemption may apply to the same invoice, but they are separate regimes.

For a VAT refund, the consideration must be shown to have reached Turkey. Where the invoice states a Turkish-lira equivalent, evidence that the consideration reached Turkey in Turkish lira may also satisfy the Communiqué. This is a refund condition; the VAT exemption itself does not impose the earnings-repatriation rule in ITC/CTC.

12. Domestic minimum corporate tax and other regimes

CTC Article 32/C creates a separate domestic minimum corporate tax computation. Article 32/C(2) lists the exemptions and deductions that may be removed from the minimum-tax base. CTC Article 10/1-ğ is not on that list; the current list includes Article 10/1-(g), (h), (i) and (j). Law No. 7582 Article 9 added (i) and (j) but did not add (ğ).

The practical consequence is that earnings deducted at 100% in the ordinary computation may remain in the minimum-tax base. The final liability depends on the taxpayer’s full Article 32/C computation and any other permitted items. An individual using ITC 89/13 is outside the corporate Article 32/C regime.

Under CTC Article 32/C(5), the regime does not apply to a newly established corporation for the accounting period in which it begins operations and the following two accounting periods. Administrative guidance does not treat a company formed through merger, transfer, change of legal form, partial division or full division as newly established for this purpose.

The Article 10/1-i transit-trade and Article 10/1-j qualified-service-centre regimes introduced or explained in 2026 are independent from Article 10/1-ğ. Each must be tested under its own text.

13. Common scenarios

Foreign-only B2B SaaS. A Turkish company sells only to foreign entities. That fact is not enough. The arrangement must be classified as software service, intellectual-property licence or mixed supply; actual foreign use, the correct invoice recipient and full repatriation must be evidenced.

Mixed-customer SaaS. The same platform serves Turkish and foreign customers. Qualifying foreign net earnings must be segregated through direct costs and a defensible shared-cost allocation. The domestic segment remains in the ordinary base.

Game or app sold through a store. The legal customer may be the store, distributor or end user depending on the contract. The software-service/licence question, domestic availability, store commission and payment chain should be assessed together.

Freelance platform or escrow. Before issuing an invoice, determine whether the platform acts as principal, customer, disclosed agent or payment processor. A “merchant of record” label or a payment from the platform does not by itself identify the legal customer.

14. Decision table

15. Filing checklist

1. Number each foreign-customer contract and identify the service, period and consideration.
2. Keep period-specific customer registry or residence evidence.
3. For a corporation, confirm that the service appears among the principal activities in the articles of association valid for the period.
4. Assign the service to the correct route: general listed service, Ministry-determined vocational training, or licensed education/health.
5. Keep the right evidence: place of performance and foreign use under the statutory route; for CTC vocational training, also the section 10.5.2.5 non-resident-beneficiary evidence; for education/health, the route-specific beneficiary, licence and applicable notification records.
6. Issue the invoice or equivalent document to the correct foreign customer.
7. Match direct costs and document the shared-cost allocation.
8. Reconcile each receipt to the relevant invoice and the qualifying net-earnings calculation.
9. Test the YMM attestation thresholds and start the reporting process before the annual return deadline.

16. Frequently asked questions

What is the 2026 deduction rate?
The rate is 100% for tax periods beginning on or after 1 January 2026. The statutory rate is 80%; Presidential Decree No. 11257 sets the applicable rate.

Does a foreign invoice prove eligibility?
No. Service scope, the correct foreign customer, the taxpayer-specific performance/use test, the invoice recipient and full repatriation must all be supported. ITC and CTC vocational-training tests are not identical.

When must the earnings reach Turkey?
By the statutory due date of the annual return for the year or accounting period. The whole qualifying earnings amount must meet the deadline; partial transfer does not create a proportional deduction.

Is the VAT exemption automatic?
No. VAT Articles 11/1-a and 12/2 are tested separately. A VAT refund also requires evidence that the consideration reached Turkey, including qualifying Turkish-lira receipt where the invoice states a lira equivalent.

Which YMM attestation thresholds are currently official?
The Revenue Administration’s 2026 table applies where TRY 500,000 is exceeded for each separate return-line item and TRY 1,000,000 is exceeded for the aggregate and relevant “Other” tests for returns relating to the 2025 accounting period. The official table for the 2026 accounting period should be checked before filing in 2027.

Official sources

• Income Tax Code No. 193, Article 89/1-13
• Corporate Tax Code No. 5520, Article 10/1-ğ
• Presidential Decree No. 11257, Official Gazette 30/4/2026-33239
• VAT Law No. 3065, Articles 11 and 12
• VAT General Application Communiqué, section II/A-2
• Corporate Tax General Communiqué No. 1, official Revenue Administration page
• General Communiqué No. 49 on the SMMM and YMM Law
• Revenue Administration — YMM attestation thresholds applicable for 2026
• Law No. 7582

Compared with the official-source pool on 22 October 2026. The ITC, CTC, VAT Law and VAT General Application Communiqué were readable in live official text; the official links for Corporate Tax General Communiqué No. 1, Decree No. 11257 and Communiqué No. 26 were located, but full live-text extraction was not completed. A concrete result requires the taxpayer’s contracts, accounts, invoices, benefit/use evidence and bank records.