Türkiye's Manufacturing Corporate Tax Cut to 12.5%

A halved rate for manufacturers

Among the headline measures in Law No. 7582 is a straightforward but powerful one: the corporate tax rate on manufacturing income is cut from 25% to 12.5%. It is a halving of the rate, and for companies whose profits come from making things in Türkiye, it is one of the most immediately valuable parts of the 2026 package. Unlike a deduction or an exemption that has to be claimed line by line, a rate cut applies to the qualifying profit as a whole — the arithmetic is simple and the effect is felt on every lira of manufacturing profit.

Read together, these measures show the direction of travel: Law No. 7582 rewards real economic activity carried on inside Türkiye — manufacturing, trade and exported services — rather than passive presence.

Where it sits in the 2026 package

The manufacturing rate cut is not a standalone reform; it is one strand of the broad pro-investment package enacted by Law No. 7582 and published in the Official Gazette on 4 June 2026. The same law introduces the 20-year foreign income exemption for new residents, the eighth Asset Peace regime, and the Qualified Service Centre for groups running regional operations from Türkiye. Seen in that company, the 12.5% manufacturing rate is the package's centrepiece for the industrial economy — the counterpart, on the factory floor, to the incentives aimed at investors, new residents and service groups.

Who benefits

The cut is targeted at income from manufacturing, so the clearest winners are companies that actually make products in Türkiye — industrial producers, processors and assemblers whose profit is earned from production rather than from trading or passive holdings. For an established manufacturer, moving from a 25% to a 12.5% rate on manufacturing profit is a material improvement in after-tax margin that flows straight to the bottom line, year after year.

For foreign groups weighing where to place production, it also changes the location calculus. A lower headline rate on manufacturing income improves the return on building or expanding a Turkish plant, and it sits alongside Türkiye's other investment incentives rather than replacing them.

Interaction with other incentives

A rate cut is easy to combine with other reliefs because it operates at a different level from most of them. Deductions and exemptions reduce the tax base; a rate cut reduces the rate applied to what is left. That makes the 12.5% manufacturing rate broadly complementary to the wider measures in the package — the transit-trade incentive expanded to 95%, and the Istanbul Financial Centre regime we cover in the IFC incentives extended to 2047.

How these fit together depends on the exact composition of a company's income — manufacturing profit, traded income and any exported services can each be governed by different rules. Where a group has more than one qualifying activity, the sensible course is to map each income stream to the measure that governs it, rather than assuming a single relief covers the whole business.