Turkey’s Latest Tax & Military Levy Reforms: What You Need to Know
Over the past month, Turkey has enacted two substantial tax‐policy changes via official announcements from the Gelir İdaresi Başkanlığı and the Resmi Gazete that directly affect foreign income tax, military levy collections, and excise rate adjustments. These changes are especially relevant for expatriates, digital nomads, and businesses with cross-border revenue.
1. Foreign-Earned Income Tax Exemption (New Residency Test)
What’s changed:
- A new “yurt dışından elde edilen kazanç ve iratlar için vergi istisnası” (foreign-income tax exemption) has been introduced under the amended law 193 via Law No. 7582.(gib.gov.tr)
- Applies to individuals who become tax resident in Turkey, provided they had no tax residency or domicile in Turkey in the past three calendar years.(gib.gov.tr)
- Exemption window lasts for twenty years from date of acquiring residency.(gib.gov.tr)
- Effective from July 1, 2026 for those considered resident from January 1, 2026. Application requires obtaining an “İstisna Belgesi” (exemption certificate) at local tax offices.(gib.gov.tr)
Why it matters:
- Foreign residents whose income comes from outside Turkey can legally avoid reporting or being taxed on it in Turkey, under the new regime—once they meet the qualification criteria. Great for digital nomads, remote workers, or those with passive income abroad.
Actionable steps:
- Check your tax residency history: did you live or pay taxes in Turkey during the past three years? If yes, you may not qualify.
- Apply for the exemption certificate (İstisna Belgesi) if you will become Turkish resident in 2026 and intend to benefit.
- Keep careful records of foreign income and ensure compliance with foreign source income rules.
2. Military Levy Requisition Accounts Updated
What’s changed:
- Under Ukraine’s Law No. 4908-IX, effective July 1, 2026, military levy revenues must now be paid into new, special-fund accounts of the State Budget.(tax.gov.ua)
- Taxpayers should confirm the updated account numbers via Ukraine’s Electronic Cabinet and the State Tax Service portal before making payments.(tax.gov.ua)
Why it matters:
- If payments are made to old or incorrect accounts, the funds might not reach their intended destination—or your payment might be rejected or delayed.
Actionable steps:
- Log into Ukraine’s Electronic Tax Cabinet before your next military levy payment and verify the account numbers listed under your revenue classification codes (11011000, 11011001, 11011600, etc.).(tax.gov.ua)
- Update any recurring payment instruction (e-banking, payroll deduction) to reflect the new accounts.
3. Earlier Notable Changes: Excise Rates & VAT Administration in Turkey
- Turkey’s CB Decision No. 11489 (03.07.2026) redefined special consumption tax rates (ÖTV) for cigarettes—lowering rates and fixing base amounts without applying producer-price index updates.(gib.gov.tr)
- Also, via VAT Circular 71 of the VAT Law No. 3065, deadlines for special auditor reports (yeminli mali müşavirlik raporu) for VAT non-deductibility were extended.(gib.gov.tr)
What Foreign Residents & Digital Nomads Should Do Now
| Step | Why It Matters | Practical Example |
|---|---|---|
| Confirm eligibility for Turkey’s income exemption | To avoid surprises with tax liabilities on foreign income | Remote worker who moved to Istanbul Jan 2026 and had no prior exposure in Turkey may apply and avoid declaring prior global income |
| Inform your accountant or tax advisor about the new residencies and exemption law | Prevent double taxation, ensure institutional compliance | A freelancer freelancing from Kyiv who relocates to Antalya might want to shift tax base accordingly |
| Update payment details for Ukrainian military levy & check unchanged obligation counts | To avoid misallocation of payments and possible penalties | Ukrainian physical persons engaged in service must use new budget account codes when settling military levy due in August payments |
| Review receipt/invoice/reporting processes | New thresholds and non-deductibility rules may trigger changed reporting needs | VAT-applicable entities should note new inspector report deadlines |
Conclusion: These changes represent opportunity—especially Turkey’s foreign income exemption—but also risk if ignored. Anyone with cross-border income, remote work arrangements, or living in or moving to Turkey or Ukraine should audit their tax status, payment channels, and reporting methods immediately.