As explained in our Newsletter (No.Q2/2015); through the
amendment made on Article 10 of the Corporate Income Tax Law by the
Law No. 6637, companies were enabled to deduct 50% of the interest
calculated over capital increases made in cash from the corporate
income tax base. Based on the authority provided to the Council Of
Ministers under the legal regulation, the Council of Ministers
amended this rate with Decree No.2015/7910 (published in the
Official Gazette dated June 30, 2015 and No. 29402). Accordingly,
the deduction applies as follows;
For publicly held companies whose
shares are traded in the stock exchange, 50 points will be added to
50% deduction rate if the rate of the nominal value of the shares
traded in the stock exchange registered in the Central Securities
Depository ("Merkezi Kayıt Kuruluşu A.Ş.")
comparing to the paid–in capital or issued capital registered
with trade registry of those is more than 50%; 25 points will be
added to 50% deduction rate if the above stated ratio is less than
If the capital increased in cash is
used in production and industry plants with investment incentive
certificates and investments of machines and equipment in relation
to these plants and/or investments of lands and plots allocated to
construction of these plants, the deduction in question shall apply
by adding 25 points to the 50% rate stated above, as limited to the
fixed investment amount in the investment incentive
On the other hand, as per the Decree, such deduction shall apply
at the rate of 0%:
for companies 25% or more of whose
income comprises passive incomes such as interest, dividend,
rental, license fee, marketable security sales etc. apart from
commercial, agricultural or independent professional activities
conducted through capital, organization and personnel employment
parallel to the activities of the company,
for companies 50% or more of whose
total assets comprise of long-term securities, participation
shares, and subsidiaries,
for the portion of the increased
capital which is used in the capital increase in other companies or
extended as loan to other companies,
for companies investing in lands and
plots, as limited to the amount corresponding to the land or plot
for the decreased capital amount, if
capital has been decreased in the period between March 08, 2015 and
July 01, 2015.
The above mentioned rates have become effective as of 1 July
2015 in parallel with the effective date of the respective
provision of law.
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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