July 10, 2023
Turkiye proposes amendments in Turkish tax laws, including an increase in corporate income tax rates
A draft law presented to the Turkish Parliament for enactment proposes numerous amendments in the Turkish tax law. Included are proposals to:
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