Under Turkish tax legislation, certain investment funds and investment partnerships benefit from partial corporate income tax exemptions, meaning that only specific types of income, rather than all profits, are exempt from taxation.
The purpose of this regulation is to diversify capital markets and increase investor participation by providing targeted tax incentives.
Conditions for the Exemption
- Authorization and Supervision by the Capital Markets Board (CMB)
The fund or partnership must be established and regulated by the Turkish Capital Markets Board (CMB / SPK). - Limited Scope of Activity
The entity must operate within a defined investment scope, such as:- Venture capital investments,
- Real estate investments,
- Precious metals or capital market instruments.
- Eligible Income Type
The exemption applies only to income derived from portfolio management activities. - Excluded Income
Income such as interest, rental income, or commercial trading profits is not covered by the exemption.
Application and Explanation
This exemption applies to investment funds and partnerships that do not qualify for full tax exemption.
Certain entities, such as special portfolio management structures, may benefit from the exemption only for a specific portion of their income.
Within the framework determined by the CMB, withholding tax (WHT) may still apply to portfolio income.
In addition, investment funds may be evaluated together with other incentives, such as capital gains exemptions on the sale of participation units.
A real estate investment fund earns income from equity and bond transactions within its portfolio.Since these earnings arise from portfolio management activities, they are exempt from corporate income tax. However, only 50% of the capital gains derived from real estate sales qualifies for the exemption, while the remaining portion is taxable.
Legal Basis
This regulation is based on Article 5/1-d of the Turkish Corporate Tax Law (Law No. 5520) and the relevant capital markets legislation.
Its objective is to make investment funds and partnerships more competitive from a tax perspective and to strengthen Turkey’s capital markets.
For professional guidance on investment fund taxation, partial income exemptions, and capital markets compliance in Turkey, contact ÖzbekCPA.
