In a presentation comprising more than 100 pages of new tax legislation, the Turkish Revenue Administration has proposed various changes to the Turkish tax legislation, including implementing a global minimum tax in accordance with Organisation for Economic Co-operation and Development (OECD) BEPS Pillar Two rules.

This confirms that the work on the draft bill proposing BEPS Pillar Two rules is at an advanced stage and has been added to the list of legislative processes in Turkiye. A draft bill is expected to be submitted to the Grand Assembly of the Turkish Parliament and adopted as a Law prior to the summer recess, which will begin on 1 July 2024.

The Turkish Revenue Administration intends to focus on introducing a global minimum corporate tax in accordance with the rules agreed to within the Inclusive Framework to be applied to the corporations that will be under the scope of Global Anti-Base Erosion (GloBE) rules.

The global minimum corporate tax is expected to enter into force to be applied on the income derived as of 1 January 2024, to be declared with a special additional tax return to be filed in 2025.

In addition to the global minimum corporate tax, a domestic minimum tax, for both individuals and corporations, is intended to be introduced. Briefly, the draft bill is expected to propose a corporate tax that cannot be less than the higher of a minimum tax calculated based on corporate income without deducting discounts and exemptions, or a percentage of declared revenue. The bill is expected to remove certain tax exemptions or change the way they are applied.

Taking these developments into account, affected taxpayers will need to begin analyzing the changes in the domestic and global minimum tax system and estimating the impact of potential top-up tax.