Türkiye rebrands as safe haven

The last time IAB reported on Türkiye, the county was being crippled by run-away interest rates.  While rates have started to ease from their peak levels, monetary conditions remain very tight in real terms. After aggressive tightening during 2023–2025 to combat inflation, the Central Bank began a gradual easing cycle in late 2025. Policy rates have declined from peak levels above 45%, but they are still among the highest globally.

This means that financing costs remain elevated, especially for SMEs and leveraged corporates. Access to credit is still selective, and banks continue to apply tight lending standards.

“However, compared with the instability seen during the peak inflation period of 2022–2024, the business environment has become more predictable,” said Baycan Aksu, partner at Bağımsız Denetim A.Ş, an MGI Worldwide member firm. “The return to more orthodox monetary and fiscal policies has improved investor sentiment and restored a degree of confidence among international lenders and foreign investors.”

Businesses still face significant challenges, such as persistent inflation and wage pressure, high borrowing costs and regulatory unpredictability. “Overall, the environment is less hostile than during the peak crisis period, but it remains difficult and highly cost-sensitive,” said Aksu. “Companies are more cautious with investment decisions, and many are prioritising liquidity preservation and operational efficiency.”

Deniz Şenalp, partner at Ulusal Bagimisiz Denetim Ve YMM A.S, a Russell Bedford member firm, feels the most important shift has been the restoration of macroeconomic orthodoxy since mid-2023, which has reduced the volatility that made day-to-day business planning so difficult. Politics, however, still continues to throw big sticks in the spokes.

“The Economic Confidence Index ended 2025 at its highest level since March,” he said. “However, business confidence declined from March 2025 onwards, partly reflecting political turbulence: the arrest of Istanbul’s mayor in March 2025 triggered a sharp Turkish Lira depreciation, prompting the Central Bank to deploy more than USD$50 billion in foreign reserves to defend the currency before executing a surprise 350 basis point rate hike in April.”

The conflict in the Middle East is a worrying development and has mainly affected Türkiye through higher energy prices, supply chain uncertainty, increased FX and inflation risks and lower regional trade visibility in some sectors. “This has not caused a broad collapse in business activity, but it has changed the nature of demand,” said Aksu. “Many professional services firms report stronger demand for restructuring, cash flow management, risk management and independent audit support linked to inflation accounting and going-concern assessments.”

So far, banks have remained supportive toward larger corporates and strategically important sectors, but they are generally cautious. Loan restructurings and covenant renegotiations have become more common. State-owned banks continue to play a stabilising role in the market, while private banks remain selective on credit risk.

For some, the conflict is a windfall. İsmail Vefa AK, partner at Vizyon, an MGI Worldwide member firm, has seen instability in the Middle East lead to increased interest in Türkiye, particularly in financial services, investment advisory and corporate structuring.

“Türkiye is increasingly viewed as a relatively stable and well-established regional base,” he said. “We have observed growing interest from foreign investors in acquiring Turkish companies, entering into partnerships, investing in Turkish capital markets and using Türkiye as a regional platform. Financial services, corporate finance, valuation, restructuring and tax advisory services are therefore seeing stronger demand.”

Şenalp has seen the conflict open a strategic window for Türkiye.” The government has moved quickly, launching a coordinated push to attract capital, talent and corporate headquarters that might otherwise have gravitated towards Gulf financial centres now caught in the crossfire,” he said.

The local accounting and audit industry remains active and resilient, but margins are under pressure. Regulatory complexity has increased, inflation accounting requires additional work, companies need more advisory support, while tax and compliance requirements continue to expand.

“Fee pressure remains significant,” said Aksu. “Many clients are resistant to large fee increases despite rising labour costs and inflation. As a result, profitability can be challenging, especially for mid-sized firms.”

“Tax offices and inspectors are increasingly deploying AI-powered audit tools, and traditional accounting and bookkeeping firms are struggling to keep pace with the growing volume of requests from tax authorities,” said Şenalp. “Competition in audit continues to have harmful effects on audit fees, reducing the attractiveness of the profession and discouraging new graduates from entering the sector.”

Again, a skills shortage is the most acute pressure point. “Attracting and retaining skilled auditors has become increasingly difficult, particularly as demand from both private and public companies for qualified independent auditors grows,” said Şenalp. “A notable pattern has emerged where younger professionals leave firms for marginal salary increases once they have gained experience, meaning firms bear the investment cost of training without retaining the benefit. Senior finance professionals with IFRS expertise and M&A exposure are especially hard to find, and candidates expect fast career progression and strong compensation packages given inflation and currency volatility.”

Hakan Şahin, audit partner at IŞIK Yeminli Mali Müşavirlik ve Bağımsız Denetim A.Ş., a BKR International member firm, is concerned that there is simply not enough new blood coming into the profession. “Younger generations are becoming less interested in accounting and audit careers,” he said. “The main reasons are relatively low expected compensation levels compared to workload, together with lengthy and demanding qualification procedures. Separate professional examinations are required for accounting and independent audit qualifications, and many young professionals are no longer willing to commit to such long certification processes unless compensation levels become significantly more attractive.”

“Staff recruitment is a complicated issue,” agreed Zeynep Asali, partner at Asalı Bağımsız Deneti, a PrimeGlobal member firm. “Hyperinflation creates a volatile employee market that means determining a fair salary to a specific position is hard.”

As competition for staff heats up, some of the tactics used to recruit have increased tension in the market. “In some cases, the transfer of trained personnel between firms has created concerns around unfair competition, and there have been public reviews and investigations in relation to practices that may affect competition in the sector,” said Vefa AK.

In the meantime, regulation law change continues to churn and add pressure. One of the most important is the strengthening of the tax incentives applicable to the Istanbul Financial Centre. Income derived from transit trade and certain international trading activities carried out through the Istanbul Financial Centre is expected to become fully exempt from corporate income tax. In addition, income from financial services exports within the Istanbul Financial Centre is expected to benefit from full tax advantages on a long-term basis until 2047.

Türkiye has also announced a new regime for individuals who have not been Turkish tax residents in the previous three years and who transfer their tax residence to Türkiye. Under this framework, foreign-sourced income may benefit from a long-term exemption regime, while taxation would generally focus on Turkish-sourced income. This is designed to attract qualified individuals, investors and senior professionals. In addition, important corporate tax incentives have been announced for exporters and manufacturers.

In the meantime, local firms have plenty of new opportunities to keep them busy. The first mandatory ESG reports were due in 2025 and the scope is set to broaden from 2026. Companies have needed substantial support in data collection, materiality assessment, and report preparation, which has created new revenue streams for advisory and audit firms.

Vefa AK has seen high interest rates and tighter global liquidity conditions push companies to seek alternative financing channels. This has increased demand for IPO advisory, investor search, fund-raising, corporate finance, valuation, restructuring and independent audit services. Şahin has seen increased demand in tax compliance, e-ledger/e-invoicing support, payroll and employment-related advisory, transfer pricing, consulting and company registration services. However, strong price competition continues to affect profitability in many of these service areas.

The make-up of Turkish accounting firms is also beginning to change. Rather than major consolidation, the Turkish market has seen notable separations and spin-offs. In recent years, several senior partners and experienced professionals from Big Four and other large international firms have left to set up their own advisory, audit or consulting firms.

“This has made the market more competitive and entrepreneurial,” said Vefa AK. “It has also created more boutique and specialist advisory firms that can serve clients in areas such as tax, audit, transfer pricing, corporate finance, sustainability reporting and regulatory consulting.”

Vefa AK feels confident that business is only going to get better over the next 12 months. “Regional instability and security concerns in the Gulf and the wider Middle East may encourage more investors and businesses to consider Türkiye as a safer and more diversified regional base,” he said. “This should support further growth in accounting, audit, tax advisory, corporate finance and restructuring services. From the perspective of the accounting profession, the next 12 months are likely to bring both stronger client demand and a need for higher-quality, more specialised advisory services.”

Şahin expects continued strong demand for compliance and advisory services. The main drivers will be tax regulation, digital reporting, inflation, financing constraints and regional uncertainty. “However, for price pressure within the sector to ease, companies procuring accounting and audit services may need to place greater emphasis on service quality rather than focusing primarily on fees,” he said. “In many cases, purchasing decisions are still heavily price-driven, which continues to fuel fee competition across the profession.”

Şenalp is more cautiously optimistic. The instability in the Middle East is predicted to slow the decline in inflation and there is still the looming threat of energy price shocks and regional instability capable of derailing the disinflation path and prompting a reversal in monetary easing. He also pointed out that municipal and national political dynamics, including the ongoing Kurdish peace process, will continue to influence investor confidence and the operating environment for professional services firms.

While there may be turbulent times ahead, local firms can only hope that getting control of inflation will go a long way to seeing them through any economic shocks.