Turkey: The Communiqué On Amending Corporate Tax General Communiqué Was Published In The Official Gazette

"The Communiqué on Amending the Corporate Tax General Communiqué Serial No. 21" was published in the Official Gazette No. 32119 on March 1, 2023.

Following changes were made in the relevant communiqué.

Application of discounts on the earnings of institutions operating in the Istanbul Financial Center Region;

• With the subparagraph (i) added to the first paragraph of Article 10 of the Corporate Tax Law (In Turkish), institutions operating in the Istanbul Financial Center Region by obtaining a participant certificate pursuant to the provisions of the Istanbul Financial Center Law, are exempt from selling the goods purchased abroad exclusively within the scope of this activity without being brought to Turkey, or 50% of the income they receive from their intermediation in the purchase and sale of goods abroad will be deducted from the declared corporate income.
• 50% of the income to be found as a result of deducting the expenses and cost elements incurred due to these activities from the revenue obtained from the activities accepted within the scope of the deduction can be deducted by showing them in the "Exemptions and Discounts to be Deducted in Case of Earnings" section of the corporate tax return.
• Amounts that cannot be deducted due to other discounts and exceptions and previous year's losses will not be carried over to the following periods.

Discount application in capital increase;

• The discount rate will be applied as 75% for the portion of the cash capital increases that are covered by cash brought from abroad.
• For capital increases to be made as of July 5, 2022, it will be applied separately for five accounting periods, including the accounting period in which the decision regarding the capital increase or the articles of association were registered at the initial establishment stage.
• In case of a capital decrease in the following periods, the portion of the cash capital increase equal to the reduced capital amount will not be taken into account in the discount calculation.
• In case of a capital increase in the following periods after the capital decrease is made, if the conditions are met, the discount application can be benefited for the increased capital amount within the period stipulated in the law, depending on the period in which the capital increase was made.
• It will be possible to benefit from the cash capital increases realized as of July 5, 2022 separately for five accounting periods, starting from the accounting period in which the cash capital increase was made.
• Companies that were newly established or made a capital increase before July 5, 2022 will be able to continue to benefit from the discount separately for five accounting periods, including the 2022 accounting period.
• The discount amount, which cannot be benefited due to insufficient earnings during the five accounting periods, including the accounting period in which the cash capital increase is made, may be subject to deduction in the following periods without any time limit and without being indexed.

Taxation in capital decrease conducted after transfer transactions;

• In the transfer transactions made within the scope of Article 19 of the Corporate Tax Law, the accounts in the balance sheet of the transferee company must be transferred to the transferee company's balance sheet as a whole over the registered values, and the equity items added to the capital must be followed in the sub-accounts of the transferee company's capital.
• Items transferred from company capital within the scope of transfer transactions will not be subject to corporate tax and/or tax deduction at this stage.
• In case of a capital reduction in the company that has taken over the mentioned capital elements in the following periods, taxation must be made within the scope of the communiqué according to the nature of the reduced capital elements. In this case, for determination of the five full-year period stipulated in Article 32/B of the Law, the periods during which the capital elements remain in the capital of the transferor company will also be considered by the transferee companies.

The communiqué is to be effective as of publishing date.

Relevant details can be accessed from here (In Turkish).