Corporate & Commercial
Turkish International Ship Registry (TUGS): 2026 Tax Guide
Registering under the Turkish flag through TUGS brings major tax exemptions under Law 4490. Istanbul maritime lawyers explain eligibility, cost and process.
For an international shipowner, the choice of flag is never merely administrative. It shapes your tax exposure, your financing costs, the way you crew the vessel, and how easily the ship can be bought, mortgaged, or sold. The Turkish International Ship Registry (Türk Uluslararası Gemi Sicili, TUGS) is Türkiye's second ship register, set up by Law No. 4490. Under Article 12 of that Law, earnings from operating and transferring TUGS-registered ships and yachts are exempt from income and corporate tax, and the main transaction documents are kept outside stamp duty and fees. This guide explains who qualifies, what it costs, which crewing rules come with the flag, and where the exemptions stop.
Key Takeaways: What You Need to Know
Two registries, one flag. Türkiye keeps the National Ship Registry (Milli Gemi Sicili) and TUGS. Ships and yachts entered in TUGS fly the Turkish flag (Law No. 4490, Article 7), but only TUGS carries the Article 12 tax package.
Tax-exempt shipping income. Earnings from operating and from transferring a TUGS-registered ship or yacht are exempt from income and corporate tax and from the related funds (Article 12, first paragraph).
Tax-exempt wages, but not a free choice of master. Wages paid to personnel on TUGS vessels are exempt from income tax, yet the master must be a Turkish citizen and, where the owner is a Turkish citizen, at least 51% of the remaining crew must be Turkish as well (Article 9).
Low-friction transactions. Purchase, sale, mortgage, registration, credit, ship hire, time charter and all freight contracts are outside stamp duty and fees, and the sums paid under them are outside the banking and insurance transactions tax (BSMV).
Owned, not bareboat-chartered. Registration is open to individuals resident in Türkiye, whatever their nationality, and to companies incorporated in Türkiye (Article 5); vessels under a bareboat charter cannot be entered in TUGS (TUGS Regulation, Article 12).
What Is the Turkish International Ship Registry (TUGS)?
The Turkish International Ship Registry was set up by Law No. 4490 of 16 December 1999, which entered into force on its publication in the Official Gazette on 21 December 1999 (Article 16). Its stated purpose is to develop Turkish shipping by making it easier to acquire and operate registered ships and commercial yachts (Article 1). Article 3 places the registry in Istanbul, and registering ships is today a duty of the Directorate General of Maritime Affairs (Denizcilik Genel Müdürlüğü) under Article 478(1)(d) of Presidential Decree No. 1.
TUGS sits beside the general flag rules of the Turkish Commercial Code (TCC, Law No. 6102). Under Article 940 of the TCC, a ship owned by a Turkish trading company is a Turkish ship only if most of those authorised to manage the company are Turkish citizens and the voting majority lies with Turkish shareholders. Law No. 4490 goes further: Article 7 lets every ship and yacht entered in TUGS fly the Turkish flag and enjoy the rights granted by national legislation, except that a vessel which does not also meet the Commercial Code's flag test cannot rely on the Cabotage Law No. 815. (Article 7 still cites Article 823 of the former Code No. 6762; the current test is Article 940 of Law No. 6102.)
TUGS vs the National Ship Registry (Milli Gemi Sicili)
The National Ship Registry is the register kept under the Commercial Code for merchant ships entitled to fly the Turkish flag under Article 940 (TCC Article 956). A ship cannot sit in both: under Article 7 of the TUGS Regulation, if a ship entered in TUGS is also on the national register, the national entry is deleted ex officio. Cabotage, meaning the carriage of goods and passengers from one point of the Turkish coast to another together with towage, pilotage and port services, is reserved to Turkish-flagged vessels by Article 1 of the Cabotage Law No. 815 of 1926.
Feature | National Registry (MGS) | TUGS |
Legal basis | Turkish Commercial Code (Law No. 6102) | Law No. 4490 and the TUGS Regulation |
Who may register | Owners meeting the Turkish-ship test of TCC Art. 940 | Individuals resident in Türkiye (Turkish or foreign); companies incorporated in Türkiye (Art. 5) |
Turkish flag | Yes | Yes (Art. 7) |
Tax on operating and sale gains | No Law 4490 exemption | Exempt from income and corporate tax (Art. 12) |
Income tax on crew wages | No Law 4490 exemption | Exempt (Art. 12) |
Stamp duty and fees on ship contracts | No Law 4490 exemption | Not charged (Art. 12) |
TUGS registration and tonnage fees | Not applicable | Payable (Art. 12) |
Master's nationality under Law 4490 | Not applicable | Turkish citizen (Art. 9) |
Cabotage (Law No. 815) | Yes | Only if the TCC flag test is also met (Art. 7) |
Who Can Register a Ship or Yacht in TUGS?
Eligible Owners
Under Article 5 of Law No. 4490, ships and yachts may be entered in TUGS if they belong to Turkish or foreign natural persons resident in Türkiye, or to companies incorporated in Türkiye under Turkish law. The Article adds no shareholder-nationality test for those companies, so a foreign group can hold TUGS tonnage through a Turkish subsidiary (see our guide to company formation in Türkiye). If that company fails the Commercial Code's Turkish-ship test, the vessel keeps the flag and the tax package but cannot trade in cabotage.
Eligible Vessels
Article 4 lists what may be registered on request: (a) ships and yachts already on the National Ship Registry when the Law entered into force; (b) ships and yachts built in Türkiye; and (c) ships imported from abroad above 3,000 DWT, or above 300 gross tons for passenger ships and special-purpose or special-built ships. The imported limb, as worded, refers to ships only. Under Article 2, a ship is any commercially used cargo, passenger or deep-sea fishing vessel, plus special-purpose and special-built vessels; a yacht must be recorded in a tourism company's inventory and described as a "commercial yacht" in its tonnage certificate, so a privately used yacht is outside the definition.
Financial Leasing and Bareboat Charters
Ships and yachts acquired from abroad under a financial lease are entered in a special column of the registry (Law No. 4490, Article 5). A bareboat charter is different: Article 12 of the TUGS Regulation states that ships and yachts under a bareboat charter cannot be registered in TUGS. The separate route in Article 941(2) of the TCC lets the ministry permit a non-Turkish ship, left for at least one year to persons who could fly the Turkish flag, to fly that flag if the owner consents, Turkish rules on the master and officers are met and the foreign law does not prevent it. Such ships go into a special register, not into TUGS (Article 941(3)), so the Article 12 exemptions should not be assumed for them.
Crew, Class and Insurance on a TUGS Vessel
Article 9 of Law No. 4490 requires the master of every TUGS ship or yacht to be a Turkish citizen, whether the owner (donatan) is Turkish or foreign. Where the owner is a Turkish citizen, at least 51% of the remaining crew must also be Turkish citizens. Article 21 of the TUGS Regulation also applies the 51% rule, outside the cabotage trade, to an owner company that meets the Commercial Code's Turkish-ship test.
Seafarers on TUGS vessels are subject to Turkish social security and labour law, although foreign seafarers who prove insurance at home or private insurance elsewhere are, on request, kept out of Turkish disability, old-age and death insurance (Article 10). On the technical side, TUGS ships may work only with class societies authorised by the maritime administration (Regulation, Article 20), and ships and yachts on the register may place their insurance abroad (Law No. 4490, Article 13).
The Tax Benefits of Registering a Ship in Turkey (Law No. 4490)
The commercial heart of TUGS is Article 12 of Law No. 4490, which bundles three exemptions.
Corporate and Income Tax Exemption
Under the first paragraph of Article 12, earnings derived from operating a TUGS-registered ship or yacht, and from transferring it, are exempt from income and corporate tax and from the funds levied on those taxes. Since the 2017 amendment, Article 12 also states that the exemptions apply when the vessel is transferred by deletion from TUGS for registration elsewhere, or transferred in any other way. For ships that entered TUGS through the imported-tonnage limb of Article 4(c), there is a condition: the ship must have been operated while registered in TUGS for at least six months.
The domestic minimum corporate tax added to the Corporate Tax Law (Law No. 5520) in 2024 does not claw this back. Article 32/C(2)(c) of that Law deducts earnings exempted under Law No. 4490 when the minimum-tax base is computed.
Seafarer Wage Tax Exemption
Wages paid to personnel working on TUGS-registered ships and yachts are exempt from income tax and funds (Article 12, sixth paragraph). The exemption has no nationality condition of its own; the crewing limits come from Article 9.
Stamp Duty and Transaction Exemptions
Under the second paragraph of Article 12, purchase, sale, mortgage, registration, credit, ship hire, time charter and all freight contracts relating to ships and yachts to be registered in TUGS are not subject to stamp duty or fees, and the sums received because of these transactions are not subject to the banking and insurance transactions tax (BSMV) or funds. For lenders, the credit agreement and the ship mortgage are both on that list. Charter terms themselves are covered in our charter party disputes guide.
Practical Scenario. Suppose a European group owns a bulk carrier well above 3,000 DWT in international trade. It incorporates a company in Türkiye, the company acquires the vessel, and the ship is entered in TUGS under the imported-tonnage limb of Article 4. The company's earnings from operating the ship fall within the Article 12 exemption, the crew's wages are exempt from income tax, and the loan agreement and mortgage securing the acquisition loan are outside stamp duty and fees. The master must still be a Turkish citizen. When the ship is sold three years later, the gain falls within the exemption and the six-month operating condition for imported ships has been met. How profits are taxed when distributed to shareholders abroad, and how the group is taxed in its home country, are separate questions that Law No. 4490 does not answer.
TUGS Registration Fees and the Annual Tonnage Fee
The registry charges are set in the fourth paragraph of Article 12 itself. The statutory base is:
Registration fee (kayıt harcı). The Turkish-lira equivalent of USD 10,000 plus USD 1 per net ton for ships, which the President may increase up to tenfold; a flat USD 5,000 equivalent for yachts.
Annual tonnage fee (yıllık tonaj harcı). USD 1 per net ton for each calendar year on the register, collected in two equal instalments in January and July; the President may also increase this up to tenfold.
Türk Loydu discount. Both fees are reduced by 50% where the vessel is classed directly, or dual-classed, with Türk Loydu.
Non-fossil propulsion. Since the 2024 amendment, ships and yachts whose main propulsion system uses no fossil fuel other than LNG pay no registration fee and only 50% of the annual tonnage fee.
Reorganisations and inheritance. No registration fee on record changes caused by company mergers, demergers, or changes of type or trade name, or on inheritance; a transferred share in a ship pays the fee pro rata.
Leasing. No registration fee when a leasing company transfers the vessel to the lessee under the lease.
Dollar amounts are converted at the Central Bank of the Republic of Türkiye's foreign-exchange selling rate on the registration date, or on the payment date for tonnage-fee instalments. Because the President can raise the amounts, the figure actually charged must be confirmed on the filing date. Until the tonnage-fee instalments that have fallen due are paid, the entry cannot be deleted and the vessel cannot be registered to a new owner.
How TUGS Registration Works
The procedure is in the TUGS Regulation, which refers matters the Law does not cover to the Commercial Code and the general ship-registry rules (Article 14). In outline:
Eligibility check. The owner under Article 5, the vessel under Article 4, and the Commercial Code's Turkish-ship test for cabotage and crewing.
Application. A petition requesting registration, filed with the documents listed in Annex 2 to the Regulation (Article 8).
Fees. Registration cannot be made until the registration fee has been collected (Regulation, Article 26).
Existing entries. A ship moving from the national register takes its mortgages, attachments for public receivables and other encumbrances with it into TUGS (Article 15) and exchanges its national certificate for a TUGS ship certificate (Article 10).
Vessels abroad. Owners may apply through a Turkish consulate. Once the fees are collected, a TUGS flag certificate (bayrak şahadetnamesi) is issued, and if the registry application follows within one year the vessel is registered without coming to Türkiye (Article 13).
A mortgage annotated on the flag certificate has the effect of registration and is carried into the register of its own motion when the ship is registered (Regulation, Article 13; TCC, Article 1015(5)).
Mortgages, Finance and Leaving TUGS
A ship mortgage is created by agreement between the owner and the creditor and by registration in the ship register; the agreement must be in writing with notarised signatures, or made at the ship registry (TCC Article 1015(1) and (2)). TUGS adds a lender protection of its own: deleting a ship or yacht from the register requires the mortgagee's consent (Law No. 4490, Article 6), and where an attachment or other encumbrance is recorded, it must be lifted or the mortgagee must consent before deletion (Regulation, Article 15). If a creditor moves against the vessel itself, see our guide to ship arrest in Türkiye.
On exit, due tonnage-fee instalments must be paid before the entry is closed. Where a ground arises that requires the registry to delete the vessel of its own motion, the tonnage-fee liability ends from the month following that ground, even if the deletion is recorded later (Article 12).
Common questions about this topic
What Is the Turkish International Ship Registry (TUGS)?
TUGS is Türkiye's second ship register, created in 1999 by Law No. 4490 and kept in Istanbul. Vessels entered in it fly the Turkish flag and receive the tax exemptions in Article 12 of that Law.
What Does TUGS Registration Cost?
The Law sets a registration fee of USD 10,000 plus USD 1 per net ton for ships, a flat USD 5,000 for commercial yachts, and a yearly fee of USD 1 per net ton, all paid in Turkish lira. The President can raise the ships' registration fee and the tonnage fee up to tenfold, so the amount has to be checked when you file.
Can a foreign-owned company register a ship in TUGS?
Yes, provided the company is incorporated in Türkiye under Turkish law; Article 5 imposes no nationality test on its shareholders. The ship then flies the Turkish flag, but it is shut out of cabotage unless the company also passes the Turkish-ship test in Article 940 of the Commercial Code.
Can a bareboat-chartered vessel be registered in TUGS?
No. The TUGS Regulation excludes bareboat-chartered vessels. A vessel acquired from abroad on a financial lease can be registered in a special column, and a bareboat-in ship can instead apply for a flag permit under Article 941(2) of the Commercial Code, which leads to a separate register.
Does the master of a TUGS ship have to be Turkish?
Yes, whatever the owner's nationality. If the owner is a Turkish citizen, the Law also requires at least 51% of the other crew to be Turkish. The income tax exemption covers the wages of all personnel working on board.
Is the gain exempt if the ship is sold out of TUGS?
Yes. Article 12 extends the tax, stamp duty and fee exemptions to transfers made by deleting the vessel for another registry. A ship imported under Article 4(c) must first have been operated on the TUGS register for at least six months.
Can a yacht be registered in TUGS?
Only a commercial yacht as defined in Article 2: built as a yacht, carrying no more than 36 guests, listed in a tourism company's inventory and shown as a commercial yacht in its tonnage certificate. It must also fall within Article 4, which covers yachts built in Türkiye or already on the national register when the Law took effect in December 1999.
This guide is general information on Turkish law, not legal advice on your own matter. Rules and practice change; check the position before you act.