- LEGISLATION AMENDMENTS
Significant tax amendments on the following were made by the Law numbered 7417 on the Amendment of Public Personnel Law, Certain Laws and Decree Law Numbered 375 ("Law") published under the Official Gazette dated July 5, 2022 and numbered 31887.
- Time Limit for Interest Deduction of Capital Increase in Cash
50% of the amount calculated until the end of the relevant accounting period and 75% for the portion of the cash capital increases that is met with cash brought from abroad may be deducted from the corporate income while determining the basis of corporate tax assessment by taking into account "Weighted average annual interest rate applied by banks to commercial loans in Turkish Lira ("TRY")" announced by the Central Bank of the Republic of Turkey for the year in which the reduction will be benefitted from which is calculated over the capital increases in cash in the paid or issued capital amounts of equity companies within the relevant accounting period, or over the portion of the paid capital covered in cash in newly incorporated equity companies, except for the institutions operating in finance, banking and insurance sectors and state-owned enterprises.
With the amendment made to the third paragraph of subparagraph (ı) of the first paragraph of Article 10 of the Corporate Tax Law numbered 5520 pursuant to Article 49 of the Law, the period of benefiting from this reduction is limited to the accounting period in which the decision regarding the capital increase or the articles of association is registered in the incorporation process and the four accounting periods following this period. In addition, with the thirteenth paragraph of the fifteenth provisional article added to the Corporate Tax Law pursuant to Article 50 of the Law, it is stipulated that companies which increase their capital and are incorporated for the first time before July 5, 2022 will benefit from the reduction for five accounting periods, including the 2022 accounting period.
- Increase in Special Irregularity Fines
With the amendments made to the first and second subparagraphs of the first paragraph of Article 353 of the Tax Procedure Law ("TPL") numbered 213 pursuant to Article 27 of the Law;
- In the event that invoices, notes of expenses, producer receipts and self-employment invoices that are required to be issued and received including the ones required to be issued as electronic documents are not issued or received; or any amounts other than the actual amount are included in these documents; or while these documents are required to be issued as electronic documents, they are issued in paper form except in mandatory cases determined by the Ministry of Treasury and Finance ("Ministry") or deemed not to be issued at all; the minimum special irregularity fine to be imposed on each of those who are obliged to issue and receive these documents has been increased from TRY 240 to TRY 1,000 for each document and the upper limit of the total special irregularity fine to be imposed for each document within a calendar year has been increased from TRY 120,000 to TRY 500,000.
- In the event that retail sales receipts, receipts issued with a payment recording device, admission and passenger transportation tickets, delivery notes, transport waybills, passenger lists, daily customers lists and the documents whose issuance are obliged by the Ministry including the ones required to be issued as electronic documents are not issued, not used, not kept; or the originals and the copies of these documents contain different amounts; or issued contrary to the fact; or while these documents are required to be issued as electronic documents, they are issued in paper form except in mandatory cases determined by the Ministry or deemed not to be issued at all; the special irregularity fine for each document has been increased from TRY 240 to TRY 1,000 and the upper limit of the total special irregularity fine for each document has been increased from TRY 12,000 to TRY 50,000 for each determination and from TRY 120,000 to TRY 500,000 for a calendar year.
With the additions made to the first paragraph of duplicate article 355 of the TPL pursuant to Article 28 of the Law, the following special irregularity fines will be imposed on the natural or legal person service providers engaged in commercial activities in the electronic environment and/or natural and legal person intermediary service providers that provide the electronic commerce environment for the economic and commercial activities of others regulated under the duplicate article 257 of the TPL:
- in case of the non-compliance with the obligations to submit
notifications regarding their commercial activities,
- the special irregularity fine will be applied fivefold for the first-class merchants and the self-employed ones (TRY 3,400 for 2022) and for the second-class merchants, the farmers who keep books and those whose earnings are determined in simple procedure (TRY 1,700 for 2022),
- the special irregularity fine will be applied twofold for other natural or legal persons (TRY 880 for 2022),
- in case of the non-compliance with the actual beneficiary
- the special irregularity fine will be applied threefold for the first-class merchants and self-employed ones.
- Authorization to the Ministry to Obtain Actual Beneficiary Information
With the addition of the ninth subparagraph to the first paragraph of duplicate article 257 of the TPL pursuant to Article 26 of the Law, the Ministry is authorized to determine the scope of the actual beneficiary in order to determine that the actual beneficiary information of legal entities and associations without legal personality is up-to-date, complete and accurate, to impose the obligation of notification of those who fall within this scope, to determine the content, format, standard, time and method of notification, to make changes on these, to determine the obligation to make notifications by sector, taxpayer groups and tax liability status, to impose obligation on the protection and submission of the information and notifications within this scope in electronic environment, and to determine other procedures and principles regarding implementation.
- Effective Date of the Corporate Tax Rate Amendment Applicable to Certain Financial Institutions
Pursuant to Article 25 of the Law numbered 7394 on the Amendment on the Law on the Amendment of the Assessment of Immovable Properties of the Treasury and Value Added Tax Law and Certain Laws and Decree Laws ("Law numbered 7394"), the corporate tax rate applied to the corporate income of companies within the scope of the Law numbered 6361 on the Financial Leasing, Factoring, Financing and Savings Financing Companies, electronic payment and money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies was determined as 25%, and it was regulated that this rate will enter into force "on April 15, 2022 which is to be applied to corporate earnings for the taxation period of 2023".
With the amendment made to subparagraph (ç) of the first paragraph of Article 39 of Law numbered 7394 pursuant to Article 57 of the Law, the effective date for the rate in question has been clarified with the regulation as "on April 15, 2022 which is to be applied to the corporate earnings for the taxation periods of 2023 and the following years".
- EFFECTIVE DATE
Pursuant to Article 65 of the Law, Articles 27 and 28 of the Law published under the Official Gazette on July 5, 2022 on increasing the special irregularity fines entered into force on August 1, 2022; Article 26 giving the authorization to the Ministry for obtaining actual beneficiary information, Article 49 introducing a time limit for interest deduction of the capital increase in cash; and Article 57 clarifying the effective date of the corporate tax rate amendment applicable to certain financial institutions entered into force on the date of publication of the Law.
Significant amendments in some tax regulations have been made with the Law. Within the scope of these amendments, a time limit for deduction of capital increase in cash defined under the Corporate Tax Law has been introduced, some special irregularity fines imposed under the TPL have been increased, the Ministry has been given the authorization for obtaining the actual beneficiary information and the effective date of the corporate tax rate amendment applicable to certain financial institutions has been clarified.
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