Businesses providing software, design, engineering or consulting services from Türkiye to customers abroad have two separate advantages: the VAT exemption and the income deduction. Their conditions are similar but not identical; one may be met and not the other.
1. VAT exemption (VAT Law arts. 11/1-a, 12/2)
To count as a service export:
- The service is provided to a customer abroad (with domicile, place of business, legal seat or place of management abroad),
- The service is used abroad,
- The invoice is issued to the customer abroad and payment is (usually) collected in foreign currency.
Result: no VAT on the invoice; VAT on purchases for the service can be refunded. VAT and VAT refunds
2. Income deduction (Income Tax Law 89/13, Corporate Tax Law 10/1-ğ)
A set percentage of the profit from certain services provided to non-residents and used only abroad is deducted in the return. Presidential Decision No. 11257 raised the rate to 100% for periods starting 1 January 2026 (previously 80%).
Services covered: architecture, engineering, design, software, medical reporting, accounting, call centre, data storage and processing and other services listed in the law and the decision.
Conditions:
- The service is provided in Türkiye; the customer is non-resident.
- The service is used exclusively abroad and is unrelated to the customer's activity in Türkiye.
- The fee is brought to Türkiye by the annual return deadline of the relevant year.
- The deduction applies to net profit from the service, not turnover; direct costs and allocated overheads must be calculated separately.
- For companies the domestic minimum corporate tax is calculated separately; a 100% deduction does not automatically reduce tax to zero. Corporate tax calculator
Example
Software export revenue TRY 6,000,000, direct cost TRY 2,000,000, share of overheads TRY 500,000 → profit eligible for deduction TRY 3,500,000. The whole profit is deducted; the minimum corporate tax is checked.
Documentation file
| File | Content |
|---|---|
| Customer | Foreign customer's registry, tax and address details, signed contract |
| Service | Scope, technical description, work records, test and acceptance documents |
| Place of use | Country of use, server region, user reports, statement of no link to Türkiye |
| Invoice | Consistent with the contract, clear description (just "software service" is weak) |
| Collection | Bank statements, SWIFT; transfer chain from intermediaries such as Payoneer, Wise or Stripe to an account in Türkiye |
| Profit | Revenue by project, direct and allocated costs, FX differences |
SaaS and platform income
For subscription and platform income with users both in Türkiye and abroad, proving "exclusive use abroad" is difficult; without a country-level split the deduction is risky.
Common mistakes
- Thinking an invoice to a foreign customer is enough by itself.
- Applying the deduction to turnover.
- Leaving collections at a payment institution and not bringing them to Türkiye by the deadline.
- Treating the VAT exemption and income deduction as the same condition.
Sources
VAT Law No. 3065 arts. 11/1-a and 12/2; VAT General Implementation Communiqué (service exports); Income Tax Law No. 193 art. 89/13; Corporate Tax Law No. 5520 arts. 10/1-ğ and 32/C; Presidential Decision No. 11257 (2026); Revenue Administration guide on domestic minimum corporate tax.