Additional corporate tax regulation

Additional tax will be collected from the corporate tax declaration of 2022, and corporate tax payers will be responsible for paying this tax, while income tax payers will not be required to pay it. The calculated additional tax will be paid in two installments: the first installment will be due in April, within the corporate tax payment period, and the second installment will be due in August, the fourth month following the payment period.

The General Communique on the Restructuring of Certain Taxes and Other Receivables under Law No. 7440, prepared by the Revenue Administration Directorate of the Ministry of Treasury and Finance, was published in the Official Gazette and has come into effect.

Under this regulation, a one-time additional corporate tax was introduced with Law No. 7440 on the Restructuring of Certain Receivables and Amendments to Certain Laws.

The communique sets out the principles for the implementation of the additional tax, and detailed explanations and examples are also included in the communique.

The additional tax will be collected from the corporate tax declaration of 2022, and corporate tax payers will be responsible for paying this tax, while income tax payers will not be required to pay it. Corporate tax payers affected by the earthquake declared as force majeure in 11 provinces and 1 district will not be required to pay the additional tax.

Corporate tax payers can use exemptions and deductions in the declaration of their net corporate income in accordance with the Corporate Tax Law and other regulations.

It is expected to affect around 20 thousand taxpayers

The regulation is expected to affect around 20,000 taxpayers who benefit from exemptions and discounts in corporate tax in the year 2022. The additional tax will be calculated at 10% based on the exemption and discount amounts in the corporate tax declaration for 2022.

The exemptions covered include items such as the exemption of subsidiary earnings, real estate and subsidiary share sale gains exemptions, gains exemptions obtained from abroad subject to certain conditions, free zone and technology development zone gain exemptions.

Investment, R&D, and cash capital discounts are included in the coverage of the discounts.

Under Article 32/A of the Corporate Tax Law, an additional 10% tax will also be levied on the discounted corporate tax basis.

For exemptions such as subsidiary earnings and gains obtained from abroad with a 15% tax burden, the additional tax will be calculated at 5%.

For taxpayers designated with a special accounting period, the additional tax will be calculated based on the exemptions, discounts, and discounted corporate tax basis declared for the accounting period ending in 2023 in the corporate tax declarations to be submitted.

The calculated tax will be paid in two installments

The additional tax calculated will be paid in two installments, with the first installment due in April during the corporate tax payment period, and the second installment due in August, four months after the first payment.

Micro and small businesses will not be subject to additional tax for R&D and design discounts or technology park profits.

While R&D discount amounts and technology park profit exemption amounts are included in the additional tax, approximately 3,000 R&D and technology companies that are new entrepreneurs and classified as micro or small businesses are exempt from these discounts and exemptions being subject to the additional tax.

Exempt gains from investment funds and partnerships, including venture capital funds, are excluded from the scope of additional tax.

All gains obtained by investment funds and partnerships, which are important for the development of capital markets and the entrepreneurship ecosystem, are exempt from corporate tax, and their gains are also excluded from the scope of additional tax.

According to Article 325/A of the Tax Procedure Law, the fund amounts allocated for investment in venture capital funds or partnerships can be deducted from corporate income. These deducted amounts are also excluded from the scope of additional tax.

Currency-protected deposit accounts and donations and aid are not subject to additional tax. Exemption amounts applied to income obtained from currency-protected deposit accounts, exemption amounts related to gains from sale-leaseback transactions with financial leasing companies and asset leasing companies, rebates that cooperatives benefit from, and all kinds of donations and aid, as well as sponsorship expenses, are exempt from additional tax.

Amounts shown in the tax return that are not covered by discounts and exemptions will not be subject to additional tax.

Amounts shown in the "Other discounts and exemptions" section of the tax return, such as valuation differences between Turkish Accounting Standards/Turkish Financial Reporting Standards and Tax Procedure Law provisions, exchange rate gains resulting from the appreciation of the Turkish lira by the borrowing institution in hidden capital accepted borrowings, and amounts related to the cancellation of severance pay provisions, will not be subject to additional tax.

Additional tax will not be applied before March 12, 2023

Double taxation prevention agreements currently in effect will also exempt from additional taxes on gains exempted from corporate tax under bilateral or multilateral international agreements. In liquidation, merger, transfer, and full division transactions, no additional tax will be imposed on declarations made before March 12, 2023.

No additional taxes will be calculated on the discounts and exemptions that taxpayers have benefited from in their declarations for the year 2022, which they have submitted before the publication date of the Law, which is March 12, 2023, due to liquidation, merger, transfer, and full division operations.

Those who do not show or report their exemptions and discounts in their declarations will have to pay the additional tax penalty. The exemptions and discounts earned must be shown in the declaration.

Additional taxes, tax evasion penalties, and delay interest will be collected for the deficient taxes resulting from the exemptions and discounts that are not shown or not mentioned in the exemption/discount lines in the declaration.