In light of recent developments, the global financial system is witnessing the rise of a new institutional powerhouse positioned at the crossroads of Europe, Asia, and the Middle East. The Istanbul Financial Center (“IFC”) is not merely a real estate development project; it is a special economic zone legally fortified under the Istanbul Financial Center Law with numbered 7412 (“IFC Law”) and specifically designed to compete with established financial hubs such as the Dubai International Financial Centre (“DIFC”) and the Singapore Financial Centre.
The IFC Law, which entered into force upon its publication in the Official Gazette on June 28, 2022, aims to enhance the international financial competitiveness of the Republic of Türkiye, strengthen integration into international finance and capital markets, and thereby ensure that the Istanbul Financial Center becomes one of the world’s leading global financial hubs. The IFC Law was recently revised following the publication of the Law on Amending Certain Laws and the Decree-Law No. 375 in the Official Gazette on January 29, 2026. This revision, aimed at adapting to global shifts, re-regulated the IFC area, the provisions regarding the management and operation of the center, and the activities conducted within the zone, along with the incentives, deductions, exemptions, and immunities granted to these activities.
For international investors and legal counsels, the IFC, especially when evaluated in alignment with the Presidential Decree No. 10962, offers a comprehensive suite of fiscal incentives that redefine the costs of doing business in the region.
1. The Legal Architecture of the Istanbul Financial Center
The IFC, established under the IFC Law, offers a sui generis regulatory framework. To benefit from the incentives determined within the IFC, legal entities are required to obtain a "Participation Certificate" pursuant to the IFC Law. This certificate functions as a "golden key" providing financial institutions, insurance companies, and regional management centers with access to statutory advantages.
Although the IFC Law primarily targets financial institutions, the legislation defines a broad spectrum of individuals and companies (participants) that may operate within the office space by obtaining a "participation certificate." The entities falling within this scope include:
- Natural and legal persons,
- Branches, representative offices, and liaison offices of such persons,
- Ordinary partnerships,
- Regional management centers and sovereign wealth funds.
Furthermore, even if they are not direct financial institutions, the regional treasury and financial management centers of companies actively operating in at least three (3) countries are specifically recognized by the Law as participants entitled to benefit from the exemptions, deductions, and employment incentives provided under the IFC legislation.
It should be noted that while being a financial institution is not a prerequisite to merely rent office space and hold "participant" status in the IFC, a dual criterion exists for fiscal benefits: to qualify for the tax exemptions and financial deductions granted by the Law, an entity must either be a financial institution or hold the status of a regional management/treasury center with active operations in at least three countries.
2. Unprecedented Tax Incentives
The primary appeal of the IFC stems from the comprehensive tax deductions and exemptions provided specifically for the export of financial services. Pursuant to the IFC Law, services provided by financial institutions holding a participation certificate to persons residing abroad, provided that these services are ultimately utilized abroad, are classified as "export of financial services”. Earnings derived within the scope of such exports are deductible from the corporate tax base at a rate of 100% until 2031 (and 75% thereafter). Furthermore, transactions related to these activities are exempt from Banking and Insurance Transactions Tax (“BITT”), all types of administrative fees, and stamp duties. Detailed explanations regarding these matters are provided below:
A. Corporate Income Tax (CIT) Deductions
- 100% Deduction: Until the end of the 2031 fiscal year, 100% of the profits derived from the export of financial services can be deducted from the corporate tax base.
- Continuity Post-2031: After 2031, the deduction rate will continue to be applied at 75% to maintain high competitiveness, thereby ensuring long-term fiscal predictability.
B. Transactional Tax Exemptions
- Zero Transaction Costs: Transactions concerning activities within the scope of the Participation Certificate are exempt from all types of stamp duties and administrative fees.
3. Human Capital: Personal Income Tax Exemptions
In order to attract a highly qualified international workforce to the country, significant personal income tax exemptions are provided for the employees of IFC participants. These exemptions are structured as follows:
- 80% Exemption: For employees who possess at least ten (10) years of professional experience abroad.
- 60% Exemption: For employees who possess at least five (5) years of professional experience abroad.
4. Strategic Comparison: IFC – DIFC – Singapore
In a strategic location assessment for capital allocation, institutional investors traditionally compare the IFC with established financial hubs such as the DIFC and the Singapore Financial Centre. While each jurisdiction offers distinct advantages, the IFC provides a noteworthy and differentiating fiscal arbitrage opportunity, particularly within the current economic conjuncture.
First and foremost, the effective tax rate applied to the export of financial services constitutes one of the IFC’s strongest competitive tools. While the Singapore Financial Centre continues to apply a preferential tax rate at approximately 10–13.5%, the DIFC faces a more complex tax environment due to the impact of new regulations introduced under the OECD Global Minimum Tax (Pillar 2) framework (particularly regarding the potential impact on the 0% tax status for large-scale enterprises). In contrast, the IFC guarantees a 0% corporate tax rate for the export of financial services until 2031, providing a level of fiscal predictability that is becoming increasingly rare on a global scale.
Furthermore, the IFC redefines human capital costs. While personal income tax rates in the Singapore Financial Centre can rise up to 24%, and the DIFC—despite its 0% income tax model—is characterized by exceptionally high costs of living, Türkiye offers staggered exemptions of up to 80% on employee income tax for international professionals. bu This allows IFC participants to attract qualified labor at significantly lower gross wage costs compared to its competitors.
Finally, the return on investment (“ROI”) is maximized through optimized operational costs. Dubai and Singapore are classified as high and/or very high-cost jurisdictions in terms of Grade A office rents, high standards of living, and administrative expenses. Conversely, Istanbul provides an "optimized" cost structure that offers world-class infrastructure and a highly skilled workforce at much lower costs compared to the United Arab Emirates or East Asia. In this context, by combining its nature as a bridge market with cost-effectiveness, the IFC positions itself as a primary choice for regional treasury and management centers.
| Feature |
Istanbul Financial Center (IFC) |
Dubai (DIFC) |
Singapore |
|
Effective Tax on Exports |
0% (Until 2031) |
0% (Subject to Pillar 2) |
~10-13.5% |
|
Employee Income Tax |
Up to 80% Exemption |
0% |
Up to 24% |
|
Operational Costs |
Optimized (High ROI) |
High |
Very High |
5. The IFC’s Regional Hub Power and the New Service Export Framework under Decree No. 10962
The new advantages offered by Türkiye within the scope of the IFC focus on financial service exports and value-added service exports (IT, logistics, digital intermediation, etc.) through which companies manage their global operations from Türkiye. This structure is explained below under two (2) distinct pillars: Corporate Tax deductions under the IFC Law and cash-based growth supports under Presidential Decree No. 10962.
A. Pursuant to the IFC Law: Regional treasury and financial management centers established within the IFC by companies actively operating in at least three countries globally are evaluated under the IFC legislation. The earnings of these centers derived from international operations, classified as "export of financial services," are 100% exempt from Corporate Tax until 2031 (75% thereafter).
B. Pursuant to the Transition to Presidential Decree No. 10962: IT, software, logistics, and "digital intermediation" services provided from Türkiye to abroad are supported by the Ministry of Trade under Decree No. 10962. Within this scope, companies do not receive a tax deduction but rather a cash reimbursement (grant) for activities such as international advertising, market research, agency commissions, server/hosting, and office unit expenses, within the upper limits specified in the legislation.
One of the key points that investors should note regarding Presidential Decree No. 10962 is that the complex incentive structure applied in the previous period (including Presidential Decrees No. 5447 and 5448) has been repealed and replaced as of 2026 by a simplified, uniform framework under Presidential Decree No. 10962.
- Double-Benefit Mechanism: IFC participants can cumulatively apply the tax exemptions provided under IFC Law No. 7412 alongside the active incentives offered under Presidential Decree No. 10962. The only restriction to observe is not to utilize the same expenditure item in both systems simultaneously.
- Simplified Support Structure: While Law No. 7412 ensures tax protection, Presidential Decree No. 10962 provides non-refundable financial support of up to 50–70% for items such as platform commissions, software licenses, and cloud server expenses.
6. Entering the IFC via NPartners
As detailed above, the IFC offers significant operational advantages to participants, streamlining bureaucratic processes and facilitating international integration. At the core of these advantages lies the "One-Stop Shop", which ensures that administrative applications, such as permits, licenses, and approvals are required by companies and their employees quickly and effectively from a single central point.
Beyond administrative conveniences, the IFC provides companies with substantial flexibility in operational, fiscal, and legal processes. Participants are granted the opportunity to conduct their activities without being subject to various limitations imposed by the existing general legislation.
NPartners offers end-to-end legal and strategic consultancy services in the following areas:
- Participation Certificate Applications: Management and coordination of the necessary application processes before the IFC Management Office.
- Corporate Structuring: Establishment of joint-stock companies (JSC) or branch structures in compliance with Turkish law and international tax treaties.
- Incentive Stacking: Harmonizing IFC tax advantages with the grants provided under Presidential Decree No. 10962 to ensure maximum fiscal efficiency and minimum administrative burden.
To evaluate how your company can benefit from these incentives, you may contact NPartners for further assistance.