Simplified method: who qualifies, the income exemption and the 2026 change

The simplified method is a way of lightening the tax and record-keeping burden of small tradespeople. The business income of tradespeople taxed under this method is exempt from income tax; keeping documents is enough instead of a business ledger. However, from 2026 the scope has narrowed significantly.

Who can be under the simplified method?

Under articles 47 and 48 of the Income Tax Law, the taxpayer must meet all of the following conditions:

1. Carry on the business activity in their own name at a workplace or as a mobile trader,
2. The workplace rent or equivalent rent does not exceed the limit set in the law (different limits inside and outside metropolitan municipality boundaries),
3. Annual purchases, sales or revenue do not exceed the limits set in the law,
4. Not otherwise being taxed under the actual method for another business, agricultural or professional activity.

The limits are updated each year by the revaluation rate. Some activities can be excluded from the simplified method by Presidential decree even if the conditions are met.

What changed in 2026?

Under Presidential Decree No. 10380 (Official Gazette 9 September 2025) and the amendment to it by Decree No. 10679, from 1 January 2026 the following activities in districts with a population above 30,000 in provinces with a metropolitan municipality are taxed under the actual method:

• Manufacturing goods,
• Trade in goods (except retail sales at markets or by mobile traders without a fixed workplace),
• Construction-related work,
• Motor vehicle maintenance and repair,
• Restaurants and similar food and drink establishments,
• Entertainment and leisure venues,
• Urban passenger transport.

In these districts, tradespeople in former villages and towns that became neighbourhoods under Laws No. 5216 and 6360 with a population not exceeding 2,000 can stay under the simplified method, except for urban passenger transport. Population is based on the latest figures announced by TÜİK as at the end of the previous year. The Revenue Administration explained the rules in Income Tax Circular No. 100 dated 29 December 2025; taxpayers moving to the actual method were also asked to obtain an e-Notification address.

Obligations under the simplified method

• Income exemption: business income determined under the simplified method is exempt from income tax. If all income comes from the simplified method, no annual return is filed.
• Documents: purchase documents are kept; for sales a receipt, invoice or cash register document is issued.
• Other taxes: the exemption concerns only income tax. If there are employees, withholding and SGK obligations continue, as do any other taxes.

Moving to the actual method

Tradespeople who lose one of the conditions or fall within the 2026 change are taxed under the actual method. In this case:

1. Books: books are kept on the business ledger basis; if the limits are exceeded, the balance sheet basis applies: Balance sheet or business ledger?
2. Advance tax and annual return: quarterly advance tax is paid and an annual return is filed at the end of the year.
3. e-Notification and e-documents: an e-Notification address becomes compulsory; depending on turnover and sector, e-Invoice and e-Archive obligations may arise: e-Invoice obligation
4. Use of a cash register and POS continues: Cash registers and EFT-POS

For small businesses newly set up under the actual method, options such as the young entrepreneur exemption can be considered: Young entrepreneur income exemption

Returning to the simplified method

If the district population later falls below the threshold, a taxpayer meeting the conditions in the Law for two consecutive periods can apply to the tax office by the end of January to use the simplified method again from the start of that year.

Questions we get

I am a tenant; is the rent limit the gross rent? The limit applies to the annual rent; if the workplace is your own, the equivalent rent is used.

I am a tradesperson under the simplified method and also work for a company. Your wage income does not prevent the simplified method; however, being taxed under the actual method for another business activity ends the simplified method.

Legal basis: Income Tax Law No. 193 arts. 46–51 and repeated art. 20/B; Presidential Decrees No. 10380 and 10679; Revenue Administration Income Tax Circular No. 100.