05.07.2023/71
Tax Related Regulations in the New Omnibus Bill Proposal
On July 5, 2023, the Law Proposal on Additional Motor Vehicles Tax and Amendments to Certain Laws and Decree Law No. 375 for the Compensation of Economic Losses Caused by the Earthquakes Occurred on 6/2/2023, which was submitted to the Presidency of the Grand National Assembly of Turkey, includes regulations imposing additional tax obligations.
Summary information regarding the regulations envisaged to be introduced by the said Bill is summarized as follows, taking into account the text of the Bill and its justifications:
1. Changing the Corporate Tax Rate
The draft law sets the corporate tax rate at 25%.
The said rate is envisaged to be applied as 30% for the corporate earnings of banks, companies within the scope of the Financial Leasing, Factoring, Financing and Savings Financing Companies Law dated 21/11/2012 and numbered 6361, electronic payment and money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies.
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2. It is envisaged that the VAT Exemption and the Corporate Tax Exemption applied to real estate sales will be abolished.
Pursuant to Article 17/4-r of the VAT Law, the VAT exemption applied to the sale of immovable properties held in the assets of corporations for two years is abolished. However, the exemption will continue to apply to immovable properties that have been taken into assets before the effective date of the proposed Law.
On the other hand, the aforementioned proposal also abolishes the 50% exemption for the gain on sale of immovable properties that have been included in the assets of corporations for two full years. However, the exemption will continue to be applied for the immovable properties that have been included in the assets before the effective date of the article. However, the exemption will be applied at a rate of 25% for these immovables.
3. Additional Motor Vehicle Tax (MTV)
According to Article 1 of the text of the proposal, vehicles registered and registered in the relevant registry on the date of publication of the Law and vehicles that will be registered and registered for the first time in the relevant registries from the date of publication of this Law until 31/12/2023 will be registered and registered for one time only., up to the amount of motor vehicle tax accrued for 2023will be subject to additional motor vehicle tax.
For vehicles to be registered and registered for the first time after the publication date of the Law 197
Pursuant to Article 9/6 of the MTV Law numbered MTV, additional motor vehicle tax will be paid up to the tax that will accrue for the second six-month period.
Vehicles registered and registered as of the date of the earthquake, vehicles belonging to the owners of the buildings destroyed or heavily or moderately damaged due to the earthquake, vehicles that are heavily damaged in earthquakes and become unusable and vehicles belonging to taxpayers who lost their spouse or one of their first degree blood relatives due to the earthquake are exempt from the additional motor vehicles tax in the places where a state of force majeure is declared by the Ministry of Treasury and Finance within the scope of Article 15 of the Tax Procedure Law No. 213 dated 4/1/1961 due to the earthquakes that occurred in Kahramanmaraş Province on 6/2/2023.
Additional motor vehicle tax on vehicles registered and registered in the relevant registries on the date of publication of the Law, in two equal installments, the first installment by the end of the month following the month of publication of this Law and the second installment by the end of November 2023additional motor vehicle tax for the vehicles to be registered and registered for the first time in the relevant registries between the publication date of this Law and 31/12/2023If not, it is paid in advance together with the motor vehicle tax of these vehicles.
4. 1 Point Corporate Tax Reduction
In order to encourage exports, it is envisaged that the corporate tax rate, which is applied with a 1 percentage point discount to the earnings of exporting companies exclusively from exports, will be applied with a 5 percentage point discount. No increase is envisaged for the discount applied to earnings from manufacturing.
5. Regulation on Special Consumption Tax Increases
Pursuant to Article 6 of the Legislative Proposal and paragraph 5 to be added to Article 12 of the SCT Law, the lump sum tax amounts in the list numbered (I) or the latest lump sum tax amounts determined by the President will be deemed to be redetermined in January and July at the rate of the change in the domestic producer price index announced by the Turkish Statistical Institute in the last six months, effective from the day of the announcement of this change.
In this way, it is aimed to prevent the decrease in Treasury revenues arising from the inability of SCT, which is a specific tax, to monitor price movements during periods of high price increases and to maintain its relative weight in price changes.
On the other hand, the authority granted to the President by the aforementioned Law is amended in order to tax the goods included in the lists numbered (I) and (III) annexed to the Special Consumption Tax Law in accordance with the price fluctuations that may occur and to make fast and flexible decisions according to the social, economic and financial needs of the day.
6. Elimination of the Exemption for Earnings from Investment Funds Other Than Venture Capital
The draft law abolishes the exemption provided for the income derived by corporations from other investment funds, except for the exemption provided for the income derived from venture capital investment fund participation shares and shares of venture capital investment trusts.
With this regulation, the exemption for the gains derived from investment funds, which was introduced by Law No. 7351 to be applied as of the 2022 accounting period, is repealed.
However, the regulation,Investment fund units acquired after the date of publication of the Law will be applied for.
7. Exclusion of Immovables from the Scope of Partial Partition
Within the scope of subparagraph (b) of the third paragraph of Article 19 of the Corporate Tax Law No. 5520; immovables, participation shares, production and service enterprises can be subject to partial spin-off under certain conditions. The Regulation envisages that immovables will be excluded from the scope of partial spin-off.
Sincerely,
BİLGENER
