Turkish Parliament has adopted a new law, Law No 6322 that
brings out a limitation to financial expenses to corporate and
income taxpayers. Accordingly, amounts including but not limited to
credit interest, foreign exchange losses i.e as a part of financial
charges that exceed the equity capital and not a part of investment
expenses shall not be determined as financial expenses and be
written off as of 01 January 2013.
Since the law 6322 dated 15 June 2012 is in force as of 2013,
the limitations shall not be applied to the financial expenses of
Due to the Ministry of Finance has not declared any statement
about the implementation of these limitation, these shall be
applied according to the 54th and 55th serial number of general
Principally to be subject to a limitation, expense or cost
element of expenditure should be born by foreign resources.
Commission of LCs, printing costs and similar expenses in
connection with bond issuance or expenses such as mortgage expenses
that are not related to the use of any foreign resources shall not
be subject to limitations in this regard.
As same, early payment discounts and pre-payment expense
deduction that are deemed as decrease in financial income are out
of the scope of the limitation. Stamp duty and banking and
insurance transaction taxes with regard to credit agreements and
the transfer of the loan, or cost and expense elements incurred not
depending on the duration of use of foreign resource is not subject
to the deduction limitation as well.
However, it is obvious that banking and insurance transaction
taxes calculated over credit interests in duration of usage of
foreign-born resource shall be subject to limitations on
Leasing payments subject to 3226 numbered Leasing Law are not
subject to expenditure reductions. In addition, the financing costs
of the expense of taxpayers who have obtained the constraint in the
implementation of financial income, the income and expenses of the
clarification is not possible, by comparing with each other.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Cyprus Tax Department recently issued Forms T.D 38, T.D 38Qa and T.D 38Qb applicable to individuals being Cyprus tax residents but non-Cyprus domiciled.
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