Service exports: the VAT exemption and the income deduction raised to 100% in 2026
The conditions of the VAT exemption for service exports, the "used abroad" criterion, the service export income deduction in income and corporate tax, its scope, conditions, calculation, documentation and common mistakes.
For businesses developing software, doing design work or providing remote services to companies abroad, Türkiye offers two important incentives: a VAT exemption and an income deduction. By Presidential Decree dated 30 April 2026, the income deduction rate was raised from 80% to 100%.
1. VAT exemption
For a service to count as an export, two conditions must both be met:
- The service must be provided for a customer abroad.
- The service must be used abroad.
"Used abroad" means that the result of the service is used abroad. For example, developing a mobile app used by a foreign company only abroad is within the exemption; work done for the foreign company's branch in Türkiye is not.
| Example | Exempt? |
|---|---|
| Developing software for a German company for its products in Germany | Yes |
| An architectural project for a US client to be implemented in the USA | Yes |
| Engineering services for a foreign company's factory in Türkiye | No |
| Accommodation provided in Türkiye to a person from abroad | No (used in Türkiye) |
The invoice is issued without VAT; VAT that cannot be deducted because of the exemption can be refunded: VAT exemption and refund for exports
2. Income deduction
Scope
Income from the following services provided to persons resident abroad and used only abroad:
- Architecture, engineering, design, software,
- Medical reporting, bookkeeping, call centres,
- Product testing, certification, data processing, data analysis, data storage,
- Education and health services provided to persons resident abroad with the permission or supervision of the relevant ministries.
Rate
100% for income for 2026 and later accounting periods (80% in earlier periods). The deduction is applied on the return under the Corporate Tax Law for corporate taxpayers and under the Income Tax Law for sole proprietorships and self-employed professionals.
Conditions
- The service must be provided to persons or entities not resident in Türkiye; services provided to companies in free zones are outside the scope.
- The service must be used only abroad.
- The income must be brought into Türkiye by the filing deadline.
- Income from service exports must be tracked separately from other activities.
Calculation
The deduction applies to the income found by deducting related expenses from service export revenue, not to the whole revenue. It cannot exceed the total income declared; any amount that cannot be deducted is not carried forward to the next year.
| Amount | |
|---|---|
| Service export revenue | TRY 5,000,000 |
| Related expenses | TRY 3,000,000 |
| Service export income | TRY 2,000,000 |
| Deduction (100%) | TRY 2,000,000 |
| Taxable income from this activity | TRY 0 |
The position under the minimum corporate tax must be checked separately: Domestic minimum corporate tax · Corporate tax calculator
3. Documentation
- A written contract with the customer abroad, stating clearly the subject of the service, the method of delivery and where it is used,
- Invoices in foreign currency and bank records,
- Correspondence, reports and delivery documents relating to the delivery of the service,
- Receipts showing that the payment arrived in a bank account in Türkiye.
Exchange differences on foreign currency collections are tracked separately: Foreign currency transactions and exchange differences · Currency converter
4. Common mistakes
- Applying the exemption to a service provided for the foreign customer's activity in Türkiye,
- Applying the deduction to the whole revenue,
- Leaving the payment in an account abroad,
- Not keeping contracts and delivery documents.
For our support for businesses exporting services: Service exports
Legal basis: VAT Law No. 3065 arts. 11 and 12/2; Income Tax Law No. 193 art. 89/1-13; Corporate Tax Law No. 5520 art. 10/1-ğ; Presidential Decree No. 11257 (Official Gazette 30.04.2026).