Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

July 10, 2023
2023-1195

Turkiye proposes amendments in Turkish tax laws, including an increase in corporate income tax rates

  • On 5 July 2023, a new draft law was proposed to the Turkish Parliament for enactment.
  • The draft law includes corporate tax increases, additional motor vehicles tax and certain reduced/canceled tax exemptions.

A draft law presented to the Turkish Parliament for enactment proposes numerous amendments in the Turkish tax law. Included are proposals to:

  • Increase the current 20% standard corporate income tax rate to 25%
  • Increase to 30% the current 25% corporate income tax rate applied on the income of financial institutions (for banks, financial leasing, factoring and financing companies, electronic payment and money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies)
  • Five-points reduction on the corporate income tax rate applied on income derived exclusively from exportation activities
  • Eliminate the value added tax (VAT) exemption currently applicable to the sale and delivery of immovables held by a corporation for more than two years
  • Eliminate the 50% capital gains tax exemption currently applicable to the sale of immovables held by a corporation for more than two years and acquired after the law’s publication date
  • Reduce to 25% the current 50% capital gains tax exemption applicable to the sale of immovables held by a corporation for more than two years if the corporation currently holds the immovables among its assets
  • Abolish the current corporate income tax exemption applied to investment fund earnings (except venture capital funds)

Assuming the draft law is finalized, the provisions concerning the corporation tax rate will come into effect beginning with tax returns that must be submitted as of 1 October 2023. These rates will apply to the earnings of corporations for the year 2023 and subsequent tax periods. The provisions will apply to the earnings of corporations that are subject to a special accounting period, obtained during the special accounting period that begins in calendar year 2023 and subsequent tax periods.

Currently, according to the Corporation Tax Code, immovables can be made subject to tax-free partial demergers. The draft law proposes to remove immovables from the scope of tax-free demerger rules. It is anticipated that this amendment will take effect on 1 January 2024, allowing ongoing partial demerger transactions to be completed.

Collection of one-time additional motor vehicles tax that is equal to the amount of motor vehicles tax accrued in 2023 is proposed. This tax will be applied once to vehicles that are registered by the law’s publication date, as well as to vehicles that are registered for the first time by 31 December 2023.

The draft law proposes to give the President authority to determine the rates of the Special Consumption Tax for certain goods. To prevent the fixed tax amounts for the goods listed in attachments of the Special Consumption Tax Law from being affected by inflation, fixed tax amounts will be automatically updated in January and July of each year. The update will be based on the rate of change in the domestic producer price index announced by the Turkish Statistical Institute in the last six months.

It is anticipated that draft law will be enacted after the discussions made in the Turkish Parliament and published after the approval of the President.

———————————————

For additional information with respect to this Alert, please contact the following:

Kuzey Yeminli Mali Müsavirlik A.S., Istanbul

Ernst & Young LLP (United States), Turkish Tax Desk, New York

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.

 


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or ey.com. Please refer to the privacy notice/policy on these sites for more information.


Yes, I accept         Find out more