March 23, 2023
Türkiye introduces additional tax for 2022
The Turkish Parliament recently enacted Law No. 7440 (Law), which was then published in the Official Gazette and entered into force on 12 March 2023. Based on a bill entitiled “the Restructuring of Certain Receivables and the Amendment of Some Laws,” the Law includes new taxes for 2022 to help address the damage that recent earthquakes caused in the Türkiye’s southeastern region beginning on 6 February 2023.
The Law adds a tax for corporations that benefitted from certain exemptions and deductions to be claimed in their corporate tax returns for 2022.
Generally, corporate taxpayers will declare a 10% additional tax on their 2022 corporate income tax return, regardless of their corporation tax base, on (1) the amounts they claimed as deductions and exemptions based on the certain provisions of Corporation Tax Code (CTC) and other laws and (2) the tax bases to which a discounted corporation tax rate applied within the scope of Article 32/A of the CTC. In some cases, the additional tax will be 5%, rather than 10%. For example, a 5% rate will apply for exemptions related to participation earnings, including foreign participations.
This new tax will be paid in two installments, with the first installment due in 30 April 2023 (which will be extended to 2 May 2023 due to holidays) and second installment due in August 2023.
The additional tax liability does not apply to certain exemptions and deductions, including:
Exemptions and deductions for which the additional tax will apply include:
A 5% additional tax will be calculated on the exempted income obtained from abroad with a 15% tax burden and the participation exemption in Article 5/1-a of the CTC mentioned above.
A 10% additional tax will be calculated and paid on other exemptions and deductions.
For additional information with respect to this Alert, please contact the following:
Kuzey Yeminli Mali Müsavirlik A.S., Istanbul
Kuzey Yeminli Mali Müsavirlik A.S., Ankara
Ernst & Young LLP (United States), Turkish Tax Desk, New York