New developments
The corporate tax rate applied on the income pertaining to the periods of 2021 and 2022 has been amended with the Law No. 7316 on Certain Amendments on the Law on the Collection of the Public Receivables and Certain Laws ("Law No. 7316"), which was published on the Official Gazette dated 22 April 2021.
What does the amendment mean?
According to Temporary Article 13 of the Corporate Tax Law No. 5520, the corporate tax rate has been determined as the following:
- 25% for the income derived in 2021
- 23% for the income derived in 2022
These rates will apply for the period starting within the relevant year for the taxpayers, subject to a special accounting period.
Besides, this amendment on the temporary increase of the corporate tax rate came into effect to apply to the tax returns to be submitted by 1 July 2021 and to the income pertaining to the taxation period starting as of 1 January 2021 (or to the taxation period starting after 1 January 2021 for the taxpayers subject to the special account period).
Accordingly, the rate to be applied at 25% for the income in 2021 will apply as of the advanced taxation period of 2021/II for the taxpayers subject to the calendar year as their accounting period. In other words, the corporate tax rate applies at 20% to the income derived in the advanced taxation period of 2021/I.
If no further amendment is made, the corporate tax rate will apply at 20% to the income derived in 2023 and the following years.
Conclusion
We believe that this temporary increase on the corporate tax rate is aimed particularly at meeting the financial resource needs that COVID-19 caused.
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.