Turkey’s 2025 Tax Amendments Now in Force: New Rules on Rental Income, Property Tax, Fees and Social Security

I. Introduction

Law No. 7566 on Amendments to Tax Laws and Certain Laws and Decree Laws (commonly referred to in public as the “new tax package”), which had previously been adopted by the relevant committees of the Grand National Assembly of Turkey, was published in the Official Gazette dated 19 December 2025 and entered into force.

Prepared with the aim of broadening the tax base and increasing public revenues, this new 2025 tax amendments package introduces significant amendments not only to the Income Tax Law (Law No. 193), but also to numerous other statutes—most notably the Fees Law (Law No. 492), the Property Tax Law (Law No. 1319), and the Social Insurances and General Health Insurance Law (Law No. 5510).

II. Key Amendments Introduced by Law No. 7566

2.1 Amendments Under the Income Tax Law

Deductibility of Interest Expenses in Residential Rental Income

Article 1 of Law No. 7566 amends Article 74 of the Income Tax Law, titled “Expenses.” Prior to the amendment, Article 74 allowed taxpayers to deduct (i) interest on loans used in relation to leased assets and rights, and (ii) for one immovable property leased as a residence, 5% of the acquisition price for a period of five years starting from the year of acquisition.

With Law No. 7566, residential properties have been excluded from the scope of the interest expense deduction, effective for income and earnings relating to taxation periods starting from 1 January 2025. Accordingly, it would be accurate to state that interest expenses will be deductible only in relation to commercial (workplace) leases. That said, the wording concerning the deduction of 5% of the acquisition price for one residential property for five years remains unchanged.

Re-Introduction of the 4th Provisional Tax Period

Pursuant to Article 2 of Law No. 7566, the phrase “determined for the first nine months” in Article 120 of the Income Tax Law (which regulates provisional tax returns) has been removed, thereby re-introducing the fourth provisional taxation period (October–December).

Under this amendment, taxpayers’ earnings will be determined and declared on the basis of four quarterly periods (3, 6, 9, and 12 months), including the full 12-month period at year-end. The change applies to taxation periods starting from 1 January 2025; therefore, corporate taxpayers whose fiscal year aligns with the calendar year will submit their first fourth-period provisional tax return for the October–December 2025 period.

Amendment Concerning Investment Funds

Article 3 of Law No. 7566 amends Provisional Article 67 of the Income Tax Law and narrows the scope of the withholding tax (withholding) exemption applicable to gains derived from investment fund participation units held for more than one year.

Before the amendment, participation units of investment funds whose portfolios consisted of at least 51% of shares traded on the Istanbul Stock Exchange (now referred to as Borsa Istanbul) were exempt from withholding tax if held for more than one year and were also treated as non-reportable (excluded from declaration).

Under the new regulation, the exemption no longer applies to investment funds that:

are sold only to qualified investors,
are not traded on the Turkey Electronic Fund Trading Platform (TEFAS), and
are not subject to any proportional limitation regarding assets and transactions that may be included in the fund portfolio.

2.2 Cap on Property Tax Value Increases and Related Restrictions

Increase in Tax Loss Penalties in Relation to Fees

Article 6 of Law No. 7566 amends Article 63 of the Fees Law (Law No. 492), titled “Registered Value, Property Tax Value.” Under this provision, fees payable upon the transfer and acquisition of real estate are calculated based on the purchase/sale price declared by the taxpayers.

Prior to the amendment, where the declared amount was found not to reflect the true value, the fee difference was collected together with a tax loss penalty at a rate of 25%, pursuant to the Tax Procedure Law. With the amendment, the phrase “at a rate of 25%” has been replaced with “one-fold,” meaning the tax loss penalty will be applied at 100% of the relevant fee difference.

Introduction of an Upper Cap on Property Tax Values

With the amendment introduced to Provisional Article 23 of the Property Tax Law (Law No. 1319), it is stipulated that building and land tax values calculated for 2026 may not exceed twice the tax values for 2025.

This regulation aims to limit excessive increases in property tax amounts arising from minimum unit value determinations made in 2025 by municipal Property Tax Appraisal Commissions. However, although the increase in the property tax amount is capped in the short term, the remaining provisions indicate that no limitation has been introduced on the minimum square-meter unit values for land and plots determined by those commissions, which form the basis of property tax calculations. While the measure appears positive on its face, it is unlikely to reduce existing disputes in practice.

Amendment to the Annual Increase Rate Applied to the Tax Base

Article 11 of Law No. 7566 amends Article 29 of the Property Tax Law by replacing the phrase “at half of the revaluation rate” with “at the revaluation rate” in relation to the calculation of tax values. Accordingly, unless a different rate is determined for a given year, tax values will be increased each year at 100% of the revaluation rate.

2.3 Increases and Additional Obligations in License and Authorization Certificate Fees

Amendments to the Fees Law

Under the amendments introduced by Article 9 of Law No. 7566 to Tariff No. (8) annexed to the Fees Law, an annual fee obligation has been introduced for authorization certificates in the sectors of jewelry trade, second-hand motor vehicle trade, and real estate trade, and license fees for private healthcare institutions (e.g., private practices, polyclinics, medical centers, and oral and dental health institutions) have been significantly increased.

Trade Authorization Certificate Fees: An annual fee of TRY 30,000 has been set for jewelry trade, and TRY 20,000 for authorization certificates issued in the name of enterprises engaged in second-hand motor vehicle trade and real estate trade.
Healthcare Institution Fees: Annual fees have been introduced for licenses of private healthcare institutions. For example, the annual fee has been set at TRY 50,000 for private medical center licenses and TRY 20,000 for practice compliance certificates.

These fees are to be applied at double in provinces that are metropolitan municipalities (excluding districts with a population not exceeding 30,000).

Precious Metals and Aviation: Annual license fees ranging from TRY 5,000,000 to TRY 7,500,000 have been introduced for precious metals refineries and intermediary institutions.
Annual license fees ranging from TRY 100,000 up to TRY 1,000,000 have been introduced for airline and general aviation operators.

Amendments to Motor Vehicle and Title Deed Fees

Law No. 7566 also introduces changes to motor vehicle and title deed fees. The repealed paragraph (5) under the section titled “I—Proportional fees calculated over value or weight” in Tariff No. 2 has been re-regulated to impose a fee at the rate of 2 per thousand (0.2%) of the sale/transfer value—not less than TRY 1,000—for (i) the initial registration of vehicles and (ii) their sale and transfer.

In addition, in paragraph 20 (20/a) of the “Title Deed Transactions” section in Tariff No. 4, the phrase “property tax value, not less than the declared transfer and acquisition value” has been revised to read “declared transfer and acquisition value, not less than the property tax value.” Although this reflects the practice already applied in practice, the amendment resolves an inconsistency in wording with Article 63 of the Fees Law.

2.4 Social Security and Employment: Premium Rates and Deductions

Law No. 7566 introduces amendments to various provisions of Law No. 5510 and revises existing ratios and thresholds.

Increase in Voluntary Insurance and Service Debt (Buy-Back) Premium Rates

Pursuant to Articles 21, 26, and 35 of Law No. 7566, the rates used for voluntary insurance premiums and for various service debt (buy-back) transactions—such as military service, overseas periods, and civil service buy-backs—have been increased from 32% to 45%, or from 20% to 39%, depending on the relevant category. As a result, the cost burden for individuals making premium payments through buy-back mechanisms has increased.

Additionally, for individuals whose employment was terminated and who were reinstated by court decision, premiums will now be calculated not on the full insurable earnings base, but on 45% of that base.

It should also be noted that Article 21 of Law No. 7566 increases premium rates by 1% in certain categories, including the general health insurance premium rate, social security support premium, agricultural insurance, and supplementary insurance premiums.

Increase in the Upper Threshold for Insurable Earnings and Deductions from Income/Pensions

Article 24 of Law No. 7566 amends Article 82 of Law No. 5510 by replacing the reference to “7.5 times” (the daily earnings upper threshold used for premium calculations) with “9 times.”

With Article 25, a new additional provision (Additional Article 24) has been added to Law No. 5510, allowing the collection of premium-related debts (including general health insurance premiums) from individuals receiving income or pensions from the Institution by making deductions from such income/pensions, provided that the deduction does not exceed 25%.

III. Other Notable Provisions

VAT Exemptions and Temporary Provisions

Article 30 of Law No. 7566 adds a temporary article (Temporary Article 18) to the Corporate Tax Law, providing that deliveries of goods and services rendered to UEFA, participating teams, and responsible legal entities within the scope of events such as the 2026 UEFA Europa League Final and the 2032 UEFA Championship are exempt from VAT and corporate tax.

In addition, Article 31 extends the period set out in Temporary Article 3 of the Check Law regarding the ban related to issuing dishonored checks from 31 December 2025 to 31 December 2028.