Turkey has continued legislative developments to give effect to
a tax incentive for share capital increases which are made in cash.
The incentive encourages use of equity capital and strengthens
capital structures in equity companies. The Communiqué to
Amend the General Corporate Tax Communiqué (Serial No: 1)
("Communiqué") was published in
Official Gazette number 29643 on 4 March 2016. The incentive was
introduced by legislative amendments in July 2015
(more). The latest Communiqué outlines details about the
incentive's scope, limits, procedures and principles.
When calculating corporate tax, using the Central Bank's
weighted annual average interest rate for commercial loans, 50% of
the following amounts can be deducted from the company's
Amounts registered as paid and issued
cash capital increases in an existing company. To be eligible in
this first year, the amounts must have been registered with the
trade registry by 1 July 2015. In future years, the increases must
be registered by the end of the relevant accounting period.
Amounts paid in cash as capital in
companies formed after 1 July 2015.
The tax incentive is not available to public economic
enterprises, or entities operating in finance, banking and
Capital increases caused by the following events are excluded
from the incentive calculations:
Asset transfers other than cash.
Mergers, demergers or transfers.
Adding equity capital items which are
already on the balance sheet to the capital.
Loan or debt by a shareholder (or
Introducing instruments such as stock
certificates, bonds and notes.
Offsetting items on the balance
Equity companies are not eligible for the tax incentive if they
have more than 25% passive income, or more than 50% of total assets
as long term securities and shares of affiliates and
The tax incentive percentage will be taken as 0% for:
Cash capital injected in other
companies as capital or as a loan.
Cash capital corresponding to land
and premises investments.
Decreased capital in companies which
decreased their capital between 9 March 2015 and 1 July 2015.
Please see this
link for full text of the Communiqué (only available in
Information first published in the
MA | Gazette, a fortnightly legal update newsletter produced by
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