Qualified Service Centers in Turkey
A practical guide for international finance teams evaluating Turkey as a location for centralized finance, reporting, treasury and other group functions.
Executive Summary
Turkey’s Qualified Service Center framework is relevant to international groups that centralize services in Turkey for related companies abroad. The official framework generally requires an active presence in at least three countries and at least 80% of annual revenue to be generated from related companies outside Turkey.
Qualifying income may benefit from a 100% corporate tax deduction for 20 accounting periods, subject to the statutory conditions. The regime should therefore be assessed as an operating-model and finance-structure decision rather than simply as a tax incentive.
Key Conditions at a Glance
What Is a Qualified Service Center?
A Qualified Service Center, or Nitelikli Hizmet Merkezi, is a framework available to international groups centralizing specified functions in Turkey for related companies abroad.
It sits within the Istanbul Financial Center framework but is relevant beyond traditional financial institutions. The official activity list includes finance, accounting, reporting, treasury, risk management, technology and several other group-support functions.
Which Functions May Fall Within the Framework?
| Finance Function | Examples |
|---|---|
| Accounting & Reporting | International accounting, financial reporting, compliance and reporting support |
| FP&A | Budgeting, financial analysis and management reporting |
| Treasury | Cash management, liquidity management, funding and borrowing activities |
| Risk & Advisory | Risk management, financial advisory and strategic management |
| Technology | Digital transformation, technology consulting and technical support |
The practical question for a CFO is not simply whether a function appears on the permitted activity list. The group must also determine how the Turkish entity will earn its revenue, which entities will receive the services and how qualifying income will be identified in the accounting records.
The 100% Corporate Tax Deduction
The principal tax feature is a 100% deduction for qualifying Qualified Service Center income.
According to the official Istanbul Financial Center guidance, qualifying income may benefit from the deduction for 20 accounting periods from the commencement of the qualifying activity, subject to the applicable statutory conditions.
This does not mean that every company located in Istanbul Financial Center is automatically exempt from Turkish corporate tax. The relevant analysis is which income qualifies and which income remains subject to ordinary Turkish taxation.
Illustrative Tax Calculation
The official guidance includes an example where a Qualified Service Center has TRY 45 million of tax base before the incentive and TRY 40 million of qualifying Qualified Service Center income.
| Commercial profit | TRY 40,000,000 |
| Non-deductible expenses | TRY 5,000,000 |
| Tax base before QSC deduction | TRY 45,000,000 |
| Qualifying QSC deduction | (TRY 40,000,000) |
At a 25% corporate tax rate, the tax in the official example is TRY 1.25 million.
What Should a CFO Review Before Implementation?
- Group presence across jurisdictions
- Functions to be located in Turkey
- Foreign related-party service recipients
- Domestic versus foreign revenue composition
- Intercompany charging methodology
- Transfer pricing documentation
- Qualifying versus non-qualifying income
- Accounting segregation
- Payroll and employee tax implications
- Corporate and minimum corporate tax modelling
Who Should Consider the Regime?
The framework is particularly relevant to international groups considering Turkey for centralized finance, accounting, FP&A, treasury, technology or other regional support functions.
Eligibility should nevertheless be assessed against the actual group structure, service model and revenue composition. Performing a listed activity does not by itself establish qualification.
Evaluating Turkey for a Regional Finance or Service Center?
SystemsCPA can assess the proposed operating model, intercompany revenue flows, Turkish accounting requirements and expected tax implications before implementation.
Discuss Your Turkey Finance StructureFrequently Asked Questions
What is a Qualified Service Center in Turkey?
It is a framework for international groups centralizing specified services in Turkey for related companies abroad, subject to structural and revenue conditions.
What is the 80% revenue requirement?
At least 80% of annual revenue must generally be generated from related companies located outside Turkey.
Does the regime mean zero corporate tax?
No. The 100% deduction applies to qualifying income subject to the relevant conditions. Non-qualifying income may remain taxable in Turkey.
Turn Turkey compliance into certainty
SYSTEMS CPA supports foreign-owned companies with company formation, accounting, tax compliance and payroll in Turkey — one accountable local partner. Reviewed by Evren Özmen, SMMM (Certified Public Accountant), TÜRMOB Reg. No. 35675.
