Corporate Tax General Communiqué Serial No. 21 in Turkey

The Corporate Tax General Communiqué in Turkey has been amended and published in the Official Gazette under the title “Communiqué on Amending Corporate Tax General Communiqué Serial No. 21 in Turkey” on March 1, 2023.

The updated communiqué includes several changes that institutions should be aware of, including discounts on earnings for those operating in the Istanbul Financial Center Region.

As per the amended Article 10 of the Corporate Tax Law, companies operating in the Istanbul Financial Center Region and holding participant certificates under the Istanbul Financial Center Law can benefit from exemptions or a 50% income deduction on the goods sold abroad without being brought into Turkey. Furthermore, 50% of the income resulting from the deduction of expenses and costs from activities included in the exemption can be deducted by showing them in the “Exemptions and Discounts to be Deducted in Case of Earnings” section of the corporate tax return in Turkey. It is important to note that any amounts that cannot be deducted due to other discounts or exceptions and previous year’s losses will not be carried over to the following periods.

Additionally, the updated Corporate Tax General communiqué includes discounts on capital increases that companies can benefit from. A discount rate of 75% will be applied to cash capital increases covered by cash brought from abroad. Moreover, companies can benefit from discounts on capital increases separately for five accounting periods, including the period in which the decision regarding the capital increase or the articles of association were registered at the initial establishment stage.

For companies conducting capital decrease after transfer transactions, 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. It is worth noting that items transferred from company capital within the scope of transfer transactions will not be subject to corporate tax in Turkey and/or tax deduction at this stage. If the company has capital reduction in the following periods, taxation must be made within the scope of the Corporate Tax General communiqué according to the nature of the reduced capital elements.

The updated Corporate Tax General communiqué is effective as of the publishing date, and relevant details are available in Turkish. For further information, please contact your customer representative.