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Additional Taxes Have Been Introduced to Corporate Tax Payers in Turkey
In accordance with the 27th paragraph of Article 10 of Law No. 7440 on the Restructuring of Certain Receivables and The Amendment of Certain Laws, which entered into force after being published in the Official Gazette of Turkey dated March 12, 2023, an additional tax was imposed on corporate taxpayers over the amount they showed as an exception or deduction in their 2022 returns.
According to the regulations, the exemptions and deductions that can be subtracted from a corporation’s income for tax purposes (as outlined in the Corporate Tax Law and other related laws) must be declared by corporate taxpayers for 2022. These deductions may reduce the amount of Corporate Tax owed under Article 32/A of the Corporate Tax Law. However, if the corporation fails to declare these deductions correctly, an additional tax of 10% will be imposed.
In the continuation of the same regulation, it is regulated that an additional tax of 5% is levied on the exempt income obtained from abroad and proven to carry at least a 15% tax burden, with the exception regulated in subparagraph (a) of paragraph 1 of Article 5 of the Corporate Tax Law.
It has been stated that corporate taxpayers located in Adana, Adiyaman, Diyarbakir, Elazig, Gaziantep, Hatay, Kahramanmaras, Kilis, Malatya, Osmaniye and Sanliurfa provinces, which were declared disaster areas, and in Gurun District of Sivas Province, are exempt from this additional tax.
In addition, it has been regulated that this additional tax will be applied to corporate taxpayers assigned a special accounting period by showing them in the tax returns required for the accounting period ending in 2023.
In the Corporate Tax Law:
- Exemption regarding the earnings of funds established in Turkey and investment partnerships regulated in accordance with Article 5/1-d,
- Exception regarding the amount that is not spent and returned from the money paid by the cooperative members as management expenses, regulated in accordance with article 5/1-i, and the risturn exception for consumption cooperatives,
- Exception for gains arising from sell-lease-repurchase transactions pursuant to article 5/1-j,
- Exception regarding gains arising from the sale of assets and rights for the issuance of lease certificates in accordance with article 5/1-k,
- Exception provided for currency-protected deposit accounts within the scope of temporary article 14,
- Discount on sponsorship expenditures regulated in article 10/1-b,
- Discount for donations and aids made against receipt pursuant to article 10/1-c,
- Discounts regarding the construction of donated schools, health facilities, student dormitories, kindergartens, orphanages, nursing homes, and care and rehabilitation centers, or donations and aids made for these facilities to continue their activities, as regulated in Article 10/1-c,
- Discounts regarding aid and donations made for cultural and tourism purposes, regulated in article 10/1-d,
- Discounts regarding donations and aids made to aid campaigns initiated by the President, regulated in article 10/1-e,
- Discounts for aid and donations made to Red Crescent and Green Crescent in return for receipt, regulated in article 10/1-f,
- Discount regarding the amounts allocated as venture capital funds regulated in article 10/1-g,
- Discounts in protected workplaces regulated in article 10/1-h,
No additional tax will be calculated on it.
In accordance with temporary article 61 of Income Tax Law No. 193, there are certain investment incentives available for investment expenditures related to investments covered by investment incentive certificates, as well as for micro and small enterprises operating within technology development zones and R&D zones, as defined in Article 407 of Presidential Decree No. 1 on Presidential Organization. Any income earned through the design centers that are exempted or discounted from the tax will not be subject to any additional tax. The calculated additional tax must be paid in two installments. The first installment, calculated at rates of 5% and 10%, must be paid in April 2023, during the payment period for corporate tax. The second installment must be paid in August 2023, the fourth month following the payment period.
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