Software Export Profit Deduction in Turkey: Eligibility Evidence for 2026

A Turkish software company may deduct qualifying profit earned from specified services supplied to foreign customers. For tax periods beginning on or after 1 January 2026, Presidential Decision No. 11257 set the deduction rate under Article 10/1-ğ of the Turkish Corporate Tax Law at 100%. The headline rate is valuable, but it does not make every foreign software invoice tax-free. The activity, customer, place of use, invoice, remittance and profit calculation must all withstand review.

What changed for the service export deduction in 2026?

The Turkish Revenue Administration's explanatory note for Presidential Decision No. 11257 states that the deduction rate under Corporate Tax Law Article 10/1-ğ and Income Tax Law Article 89/13 is 100%. The change applies to income and profits of tax periods beginning on or after 1 January 2026 and entered into force when the decision was published on 30 April 2026.

The decision changed the percentage, not the underlying eligibility architecture. A business should therefore avoid treating the new rate as a substitute for classification and evidence. Software, engineering, design, medical reporting, accounting record-keeping, call-centre, product testing, certification, data storage, data processing and data analysis are among the listed activities. Education and health services have additional statutory conditions.

2026 eligibility test for a Turkish software exporter

A reliable review uses a pass-or-escalate test for every project rather than one company-wide conclusion. One contract may qualify while another contract of the same company does not. Mixed projects may need to be separated into eligible and non-eligible components.

1. Classify the service before relying on the invoice description

Software development can include custom coding, system integration, mobile or game development, data-processing functionality and other technical work that falls within the statutory list. Classification becomes harder when the contract combines development with intellectual-property rights, a ready-made licence, hosting, hardware, advertising, implementation, support or general consultancy.

The commercial agreement should separate materially different deliverables and pricing where possible. A perpetual licence or transfer of exploitation rights may require a different tax analysis from a development service. A reseller margin, marketplace commission or advertising income does not become software-service profit merely because the underlying product is digital.

Evidence file for service classification

• master services agreement, statement of work and change orders;

• technical specification, sprint plan and project milestones;

• repository history, issue tracker, test results and release notes;

• acceptance certificate, deployment record or customer sign-off;

• licence and intellectual-property clauses showing what is retained or transferred;

• separate pricing for development, licence, hosting, support and non-software elements.

2. Prove that the customer is genuinely outside Turkey

A foreign currency, overseas bank account or non-Turkish email domain does not by itself establish customer eligibility. For a foreign company, the contract file should identify its legal seat, business centre and relevant workplace. The customer named in the contract, invoice, acceptance record and payment trail should be consistent.

Group transactions deserve extra care. If a foreign parent signs the agreement but the Turkish subsidiary receives the benefit, uses the software or directs the work, the exclusive-use-abroad condition may fail even though the invoice is addressed abroad. The operational beneficiary matters.

Customer due-diligence pack

• recent company registry extract or equivalent incorporation record;

• foreign tax identification number and registered address;

• contracting entity and authorised signatory;

• group chart where the payer, customer and user are different entities;

• written description of the foreign business process that uses the deliverable;

• screening for a Turkish branch, workplace or operational beneficiary.

3. Build a chain of evidence for exclusive use abroad

This is often the most disputed factual condition. The evidence should answer a practical question: which business, users, market or operation obtained the benefit, and where was that benefit used? A clause stating “used abroad” helps, but it is stronger when operational records independently support it.

Evidence should be retained as an ordinary part of project operations. Reconstructing user location or deployment facts months after the annual return is less reliable than archiving the data at acceptance and year-end.

4. Match the contract, invoice and delivery record

The invoice or equivalent document must be issued to the eligible foreign customer. The description should identify the actual service, period and project instead of using a generic phrase such as “IT service.” The currency and amount should reconcile to the agreement, milestones, credit notes and customer acceptance.

Where a platform or payment processor collects the fee, the business should retain the platform agreement and settlement statement. The fact that the payer shown on the bank statement is an intermediary should be explained through a complete customer-to-platform-to-bank trail.

5. Track the transfer of qualifying earnings to Turkey

The statutory transfer condition must be satisfied by the deadline for filing the annual income or corporate tax return. A balance visible in Stripe, Wise, Payoneer or another foreign payment account should not automatically be treated as transferred to Turkey. The taxpayer needs a documented path from the invoice to the processor settlement and the Turkish bank entry.

Processor commissions, bank fees, refunds and chargebacks can explain why the amount credited differs from gross invoices. Those differences should be scheduled rather than ignored. Partial receipts, customer offsets, intercompany netting and amounts retained abroad require case-specific review before the return is filed.

6. Calculate qualifying profit—not qualifying revenue

The deduction is applied to profit from the qualifying activity. Direct payroll, freelancer or subcontractor costs, cloud infrastructure, software tools and other project-specific expenses must be matched to eligible revenue. Shared costs should be allocated under a consistent and supportable method.

A company with domestic work, non-qualifying consultancy, licence income or mixed SaaS users should not use one undifferentiated margin. The tax file should reconcile the project schedule to the trial balance and annual return.

Illustrative calculation

Assume an eligible project produces TRY 8,000,000 of revenue, TRY 3,000,000 of directly attributable cost and TRY 800,000 of allocated common cost. The qualifying profit is TRY 4,200,000. Subject to all conditions, the 2026 ordinary deduction is 100% of that profit—not TRY 8,000,000. Foreign-exchange effects, refunds, other tax adjustments and minimum tax may change the final return.

Domestic minimum corporate tax can preserve a tax liability

The Turkish Revenue Administration's 2026 Domestic Minimum Corporate Tax Guide explains that corporate tax generally cannot be lower than 10% of profit before specified exemptions and deductions. The guide lists the Article 10/1-ğ service export profit deduction among the deductions that are not subtracted when the minimum-tax base is calculated.

A Turkish company should therefore prepare two computations: the ordinary corporate tax calculation using the 100% deduction and the domestic minimum corporate tax calculation. Newly commencing corporate taxpayers are outside the domestic minimum tax for their first three accounting periods under the current rules, but mergers, transfers, type conversions and divisions are not automatically treated as first commencement. The entity's history must be checked.

VAT export treatment is a separate test

The service export exemption under the Turkish VAT Law and the profit deduction under the Corporate Tax Law are not the same relief. VAT concerns whether Turkish VAT is charged and, where relevant, refunded. The profit deduction concerns the income or corporate tax base. Similar foreign-customer and use-abroad facts may matter, but each regime has its own legal and evidence test.

A project should therefore have separate VAT and income-tax review columns. Passing one column does not automatically prove the other. The transaction may also raise withholding, transfer-pricing, permanent-establishment or foreign-country tax questions that sit outside this deduction.

Common high-risk scenarios

• Foreign invoice, Turkish beneficiary: the overseas parent pays for software used by its Turkish subsidiary.

• Mixed SaaS geography: one platform has both Turkish and foreign users without reliable country-level revenue and cost data.

• Generic consultancy contract: the business calls the work software development, but the scope and deliverables do not support that classification.

• Licence and development bundled: intellectual-property rights, hosting, support and coding are priced in one line.

• Foreign wallet balance: customer funds remain with a processor beyond the annual return deadline.

• Gross-revenue deduction: the calculation ignores project and shared costs.

• Invoice-party mismatch: the invoice, payer, contracting customer and actual user are different entities with no documented explanation.

• Minimum tax omitted: the ordinary computation is treated as the final corporate tax result.

Year-end evidence pack for the 2026 return

1. Eligibility matrix: one row per contract or project covering service, customer, use abroad, invoice, remittance and profit.

2. Customer file: registry, tax and address records, agreement, signatory and group relationship.

3. Delivery file: statement of work, repository, test, release and acceptance evidence.

4. Use-abroad file: deployment, tenant, user geography, target market and beneficiary records.

5. Invoice file: invoice, credit notes, platform statements and contract reconciliation.

6. Collection file: invoice-to-cash schedule, processor movement, SWIFT and Turkish bank proof.

7. Profit schedule: eligible revenue, direct costs, common-cost allocation and trial-balance bridge.

8. Tax computation: ordinary corporate tax, domestic minimum corporate tax and return-line reconciliation.

9. VAT memorandum: separate service-export VAT analysis and, where relevant, refund evidence.

10. Management approval: documented review of open conditions, exclusions and final amount claimed.

For an English-language eligibility memo and implementation plan, see the verified strategic tax planning service in Turkey. Recurring project accounting, invoice-to-bank reconciliation and return support can be coordinated through the site's tax, bookkeeping and accounting service.

Official sources

• Turkish Revenue Administration: Explanatory Note for Presidential Decision No. 11257

• Turkish Revenue Administration: Corporate Tax Law No. 5520

• Turkish Revenue Administration: Income Tax Law No. 193

• Turkish Revenue Administration: 2026 Domestic Minimum Corporate Tax Guide

• Turkish Revenue Administration ruling: VAT service export and receipt of consideration in Turkey

• Turkish Revenue Administration ruling: mobile application and platform software income

Sources and legislation checked on 16 October 2026. This article provides general information. Eligibility depends on the taxpayer, contract, actual service, customer, place of use, accounting records and rules applicable to the relevant period. Private rulings state the administration's view for the applicant's own facts and are not a substitute for reviewing another taxpayer's arrangement.