# Turkey’s New Tax Framework for International HR Centers # Turkey’s New Tax Framework for International HR Centers ## Why Multinational HR Operations May Start Moving to Turkey Global companies no longer manage human resources country by country. Today, many multinational groups centralize: * payroll coordination, * recruitment support, * HR reporting, * employee onboarding, * mobility management, * training, * performance systems, * and workforce analytics through regional HR operations centers. Historically, these structures were often established in: * Poland, * Hungary, * Dubai, * Ireland, * Portugal, * or Singapore. Turkey may now be positioning itself as a serious alternative. A newly proposed Turkish tax framework for “Qualified Service Centers” could allow certain multinational groups to operate international HR and management support functions from Turkey with a potential **95% corporate tax exemption** on qualifying foreign-source income. For international companies managing large workforces across multiple jurisdictions, this may become one of the most important developments in Turkey’s international business strategy. * * * # Turkey Is Trying to Attract Operational Headquarters — Not Only Factories For years, Turkey mainly promoted itself as: * a manufacturing location, * export base, * logistics platform, * or regional sales market. The new proposal suggests something broader. Turkey now appears to be targeting: * shared service centers, * operational headquarters, * regional management functions, * and multinational support operations. This includes HR management functions. The draft legislation specifically references: * human resources services, * training services, * management coordination, * and operational support functions as qualifying activities under the proposed framework. That is highly significant because global HR operations are increasingly centralized internationally. * * * # What Is the Proposed “Qualified Service Center” Regime? The draft legislation introduces a new category called a “Qualified Service Center.” Under the proposal, qualifying Turkish companies generally must: * operate within an international group structure, * actively support operations across at least three countries, * and generate at least 80% of annual revenue from foreign-related group entities. If these conditions are met: > 95% of qualifying foreign-source income may become exempt from Turkish corporate taxation. The regime is designed specifically for multinational operational structures rather than ordinary domestic businesses. * * * # Why HR Operations Are Becoming Centralized Globally Large multinational groups increasingly consolidate HR functions because workforce management has become: * data-driven, * compliance-intensive, * technology-focused, * and operationally complex. A centralized HR operations center may manage: * recruitment coordination, * onboarding systems, * workforce analytics, * compensation reporting, * payroll coordination, * employee mobility, * internal training, * compliance documentation, * and HR technology systems for multiple jurisdictions simultaneously. This creates: * operational consistency, * cost efficiency, * centralized governance, * and better reporting capabilities. * * * # Why Turkey May Become Attractive for HR Operations ## 1\. Competitive Employment Costs HR operations require large support teams. Turkey may offer significantly lower employment costs compared to: * Western Europe, * the UK, * and many Gulf jurisdictions. This becomes especially important for: * payroll coordination teams, * recruitment operations, * HR analytics, * onboarding teams, * and internal support functions. * * * # 2\. Large Educated Workforce Turkey has a substantial pool of: * HR professionals, * finance specialists, * multilingual graduates, * analysts, * and operational personnel. Many multinational companies already employ Turkish teams remotely. The proposed framework may encourage companies to formalize and expand those operations inside Turkey. * * * # 3\. Strategic Regional Position Turkey’s location allows HR operations teams to coordinate across: * Europe, * the Middle East, * Central Asia, * and North Africa from a single operational base. This is highly relevant for multinational groups managing regional workforce structures. * * * # 4\. Tax-Efficient Shared Services Structuring The proposed 95% exemption may significantly improve the economics of centralized HR operations structures. However, the structure would still require careful analysis regarding: * transfer pricing, * payroll, * employment law, * VAT, * and operational substance. * * * # Which HR Functions Could Potentially Qualify? Based on the draft wording, qualifying functions may potentially include: * HR coordination, * recruitment operations, * workforce management support, * training services, * HR reporting, * employee onboarding support, * performance management systems, * payroll coordination, * internal compliance support, * and HR analytics. This is particularly relevant because multinational groups increasingly use centralized HR shared service models globally. * * * # Which Companies May Benefit Most? ## Technology & SaaS Companies Fast-growing technology companies often centralize: * recruitment, * onboarding, * payroll operations, * people analytics, * and HR systems management. Turkey may become attractive for these structures. * * * # E-Commerce & Marketplace Groups Marketplace businesses often require centralized workforce coordination across multiple jurisdictions. * * * # Private Equity Portfolio Structures PE-backed groups frequently consolidate: * HR reporting, * workforce management, * and compliance operations across portfolio companies. * * * # International Consulting Networks Global advisory groups often maintain centralized: * recruitment, * training, * compliance, * and HR support teams. * * * # This Is Not a “Paper Company” Opportunity One critical point should be understood clearly: The proposed framework would likely require genuine operational substance. International tax authorities increasingly focus on: * real personnel, * actual management functions, * transfer pricing, * documented service flows, * and operational activity. A properly structured HR operations center would likely require: * real employees, * operational management functions, * intercompany service agreements, * payroll compliance, * and transfer pricing support. This is especially important for multinational shared services structures. * * * # Turkey’s Broader International Strategy Is Becoming Clear This proposal is part of a much broader shift. Turkey has recently: * expanded export-of-services tax incentives, * strengthened Istanbul Finance Center incentives, * proposed regional headquarters advantages, * and introduced additional foreign investment measures. The overall direction is increasingly visible: > Turkey wants to attract globally mobile operational functions — including HR, finance, analytics and management services. * * * # Frequently Asked Questions ## Is the 95% exemption already finalized? The framework currently exists as a legislative proposal and should be monitored closely for final implementation details. * * * ## Can unrelated third-party customers qualify? The proposed regime primarily targets services provided to related foreign group entities. * * * ## Would HR management services potentially qualify? The draft legislation explicitly references HR and training-related services among qualifying activities. * * * ## Is transfer pricing relevant? Yes. Because the Turkish company would generally provide services to related foreign entities, transfer pricing would likely become a central issue. * * * # Final Thoughts Global HR operations are becoming increasingly centralized, technology-driven and international. At the same time, multinational groups are searching for jurisdictions that combine: * operational scalability, * qualified talent, * manageable payroll costs, * and tax efficiency. Turkey may now be positioning itself directly within that competition. If implemented effectively, the proposed framework could gradually transform Turkey into: * a regional HR operations hub, * shared services location, * and multinational management platform for international groups operating across multiple jurisdictions. For multinational companies evaluating where to centralize: * HR support, * workforce analytics, * onboarding, * payroll coordination, * and internal management functions, Turkey may soon become a jurisdiction worth serious consideration. * * * # Evaluating an International HR Operations Structure in Turkey Establishing a multinational HR operations center involves much more than company formation. International groups typically need to evaluate: * transfer pricing implications, * payroll structuring, * employment law compliance, * operational substance, * VAT treatment, * corporate taxation, * and ongoing reporting obligations. Groups evaluating Turkey as a location for: * HR shared services, * regional workforce coordination, * payroll operations, * or multinational management support structures should generally conduct a detailed operational and tax review before implementation. OZM Consultancy assists foreign companies with: * Turkish company formation, * international tax structuring, * transfer pricing, * payroll compliance, * accounting support, * and ongoing corporate advisory services for multinational operations in Turkey. info@ozmconsultancy.com