100% Tax Reduction for Software Developers and Designers: 2026 Conditions
📌 Update note: Presidential Decision No. 11257, published in the Official Gazette on 30 April 2026, raised the service export earnings deduction rate from 80% to 100%. The new rate applies to earnings for tax periods starting on or after 1 January 2026. The 80% rate continues to apply to earnings for 2025 and earlier.
If you provide software, design or similar services to clients abroad, you may be entitled to a benefit that can significantly reduce your tax burden. However, this benefit can be lost in one go through an incorrectly issued invoice, a foreign currency transfer that arrives after the tax return deadline, or confusion over whether an ETGB is needed. In this guide we go through the conditions for the deduction, the paperwork and where the ETGB (Electronic Commerce Customs Declaration) fits into service exports, step by step.
🚀 At a Glance
Who benefits? Income taxpayers (self-employed professionals, sole proprietorships) and corporate taxpayers (Ltd./Inc.) who provide services to clients abroad.
How much is the deduction? 100% of earnings from service exports for 2026 earnings, and 80% for 2025 and earlier, can be deducted from declared earnings.
What is the most important condition? The service must be used exclusively abroad and the earnings must be brought into Türkiye by the tax return deadline.
Is an ETGB required? No. The ETGB is a customs document used for physical goods sent by courier; it is not required for digital service exports.
What Is the Service Export Earnings Deduction?
Article 89/13 of the Income Tax Law and Article 10/1-ğ of the Corporate Tax Law allow earnings from certain services provided in Türkiye to persons not resident in Türkiye, or to those whose place of business, legal seat and business centre are abroad, and used exclusively abroad, to be deducted from the tax base.
The main services covered are:
Software and software update services
Graphic, UI/UX and other design services
Architecture and engineering services
Data processing, data analysis and data storage services
Medical reporting, call centre, product testing and certification services
The rate was raised from 50% to 80% by Law No. 7491 at the end of 2023, and then to 100% for 2026 earnings by Decision No. 11257. The Decision only changed the rate; the conditions in the law remain in force unchanged.
4 Key Conditions for the Deduction
For the deduction to apply, all of the following conditions must be met together:
1. Foreign Client Condition
The service must be provided to persons not resident in Türkiye, or to those whose place of business, legal seat and business centre are abroad. Also providing services to residents of Türkiye does not prevent the deduction; however, the deduction only applies to earnings from foreign clients. You therefore need to keep the two income groups separate in your records.
2. Exclusive Use Abroad Condition
The service must be used only abroad. A mobile app or web service available to users both in Türkiye and abroad may not meet this condition. In a private ruling dated 30.01.2026, the Revenue Administration stated that earnings from an app available on the App Store and Google Play to both domestic and foreign users cannot qualify for this deduction.
3. Invoice Condition
The invoice or self-employment receipt must be issued in the name of the client abroad. The invoice or receipt must show the client's trade name and foreign address.
4. Bringing Earnings into Türkiye Condition
All earnings must be brought into Türkiye by the date the tax return is due. Since a problem may arise for the entire deduction, not just the part not brought in, it is important to tie this condition to a calendar.
💡 Üstad Reminder: A balance sitting in a foreign payment account such as Payoneer, Wise or Stripe may not count as brought into Türkiye. Transfer the balance to your bank account in Türkiye before the tax return date and keep your transfer receipts.
Invoicing and VAT
Services provided abroad are exempt from VAT as service exports under Article 11/1-a of VAT Law No. 3065. For this, the service must be performed for a client abroad and used abroad.
No VAT is charged on the invoice; the invoice must carry the note "Service Export – VAT Exemption".
If you will claim a VAT refund, you need to document that the payment was brought into Türkiye in foreign currency.
The VAT exemption and the income tax deduction are subject to different conditions. If you do not bring the foreign currency in on time, your VAT exemption may continue, but you lose your earnings deduction.
💡 Üstad Reminder: If you are self-employed, you can quickly calculate your receipt amounts with the Üstad self-employment receipt calculator.
What Is an ETGB and Is It Required for Service Exports?
The ETGB (Electronic Commerce Customs Declaration) is an electronically issued customs declaration used when small shipments below certain value and weight limits are sent abroad by express courier or post (micro exports). The declaration is prepared not by customs brokers but by authorised courier and postal companies.
What does this mean in practice?
For digital services such as software development, UI/UX, logo and graphic design, and consultancy, an ETGB is not issued and not required. Your invoices, contracts and foreign currency collection documents show that the service was exported.
The ETGB only comes into play for physical products. For example, if you sell a printed design product, hardware or a device sent by courier, you may need an ETGB under micro exports.
Sales of physical products are not covered by the service export earnings deduction; you need to assess these two types of income separately.
Common Mistakes That Lead to Losing the Benefit
Late collection: Foreign currency arriving after the tax return date puts the deduction at risk.
Invoice to the wrong address: Not issuing the invoice in the name of the foreign client removes the condition.
Mixed-use products: Apps also available domestically do not meet the "exclusively abroad" condition.
Services to a free zone: This deduction does not apply to software or update services provided to buyers in a free zone.
Outsourcing the service to another firm: Having the service carried out entirely by someone else, instead of providing it as your own activity, can remove the right to the deduction.
Overlapping incentives: You cannot also use this deduction for earnings on which you benefit from Law No. 5746 (R&D/design) or technopark incentives.
Salaried employment: The deduction applies to commercial and self-employment earnings; it does not apply to wage income.
💡 Üstad Reminder: For limited and joint-stock companies, the minimum corporate tax calculation must be assessed separately even if the 100% deduction applies. Plan your company's tax burden with your accountant without waiting for the end of the year.
What You Need to Do
Track your foreign and domestic income separately in your records.
Issue every invoice or receipt with the foreign client's trade name and address, and add the VAT exemption note.
Transfer collections to your bank account in Türkiye before the tax return date.
Keep contracts, invoices and foreign currency receipts together.
Check whether your product is offered exclusively to users abroad.
Review the deduction with your accountant before filing.
❓ Frequently Asked Questions
What is the service export deduction rate in 2026?
The deduction rate for 2026 earnings is 100%. The 80% rate applies to earnings for 2025 and earlier.
Can I benefit as a freelancer?
Yes. Self-employed professionals and sole proprietors can benefit from the same deduction under Income Tax Law (GVK) 89/13; you must meet all the conditions.
Do I need to issue an ETGB for service exports?
No. The ETGB is used for shipments of physical goods; it is not required for digital services such as software and design.
What happens if I don't bring the money into Türkiye?
If all earnings are not brought into Türkiye by the tax return date, you may lose the income tax deduction. The VAT exemption may continue depending on its own conditions.
Can I benefit from the deduction if I also have domestic clients?
Yes, but the deduction only applies to earnings from foreign clients. You should therefore track the two income groups separately.
