Interest Rates to be Applied in Advance and Rediscount Transactions Redetermined.
In Article 45 of the Central Bank of the Republic of Turkey Law No. 1211, it is stated that “The Bank may accept commercial bills and documents issued by banks for rediscount, within the principles it determines, provided that they carry at least two valid signatures.” According to this article, the Central Bank accepts commercial bills and documents issued by banks for rediscount and meets the temporary liquidity needs of the banks. The Central Bank may also provide advances by taking these bills as collateral.
In terms of tax law, the concept of rediscount is used in the valuation of receivables and payables related to promissory notes. According to Articles 281 and 285 of the Turkish Tax Procedure Law (VUK) No. 213, it is stated that receivables and payables related to promissory notes that have not yet matured may be valued at the value of the evaluation date. According to these articles, rediscounting is mandatory for banks and insurance companies, and for others, it is optional. However, taxpayers who subject receivable promissory notes to rediscount must also subject their payable promissory notes to rediscount.
In rediscount calculations, when the interest rate on the note is not specified, the official discount rates of the Central Bank must be applied.
According to the detailed procedures for rediscount transactions explained in the General Communique No. 238 of the VUK, the interest rate determined by the Central Bank for advance transactions will be applied, and the internal discount method will be used.
With the Communique published in the Official Gazette No. 32231 on 24/06/2023, the discount interest rate to be applied for rediscount transactions on promissory notes with a maturity of up to 3 months has been set at an annual rate of 15.75%, and the interest rate for advance transactions has been set at an annual rate of 16.75%.
Accordingly, taxpayers who wish to subject their receivables and payables related to promissory notes to rediscount must apply the interest rate of 16.75% for advance transactions using the internal discount method, in cases where the interest rate on the note is not specified.
You can access the relevant Central Bank of the Republic of Turkey Communique here.
Sincerely,
BİLGENER
