Over the past several months, the Turkish Parliament has been
negotiating an omnibus bill which aims to promote the investments
in Turkey mainly by way of reducing transactional costs and
providing specific incentives. Finally, the law for the improvement
of the investment environment has been published on the Official
Gazette on 9 August 2016. The law introduces many
amendments, mostly pertaining to tax legislation, in a number of
laws, and it also enhances the way certain Islamic finance
instruments are recognised/treated for Turkish tax purposes. We
have summarised below certain amendments in relation to sukuk
Corporate income tax and value added
tax exemptions which were made available in Ijara transactions only
for immovable items, will now also cover the movable assets by
virtue of this law.
Sale transactions for the purpose of
issuing lease certificates will not reset the holding period for
immovable assets, which was an important concern for potential
source companies for benefitting from corporate income tax and
value added tax exemption.
Transfer of underlying assets under
the leasing certificates will be exempt from corporate income tax
and value added tax. The transfer will not reset the holding period
for immovable assets for CIT and VAT purposes.
Transfer of underlying asset
under the leasing certificates and establishing lien or
mortgage over such assets will be exempt from the charges regulated
under the Charges Law ("Harçlar Kanunu").
The scope of the stamp tax exemption
in relation to the transfer of the underlying assets under the
leasing certificates has been extended. By virtue of this
enhancement, now, it may be concluded that the stamp tax
exemptions which were made available in Ijara transactions only,
are now extended to the certain documents concluded for the Wakala,
Istisna and Musharaka transactions. Besides, the guarantee and
security documents concluded in relation to the repayment of lease
certificates will also be exempt from stamp tax.
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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