05.10.2024/55
Cancellation of the Qualified Investment Contribution Amount from Other Tax Debts
In the second paragraph added to Article 32/A of the Corporate Tax Law by Law No. 7338, it is stipulated that 10% of the amount determined by applying the investment contribution rate to the investment expenditure made on the basis of the investment incentive certificate can be used by canceling other accrued tax debts, excluding special consumption tax and value added tax.
Explanations on the subject are included in the General Communiqué on Corporate Tax Serial No. 23 published in the Official Gazette dated 28.09.2024 and numbered 32676.
Accordingly, the following issues will need to be complied with for the investment contribution amount that can be used:
- The amount that can be requested for cancellation cannot be more than half of the amount found after deducting the investment contribution amount used through discounted corporate tax from the investment contribution amount.
- It will be accepted that the investment contribution amount corresponding to one times the investment contribution amount used by the cancellation of other tax debts is also waived.
- Thus, the amount of contribution to investment will be reduced by the amount requested to be deducted from other taxes and the amount of contribution to investment foregone due to the deduction.
- The cancellation request must be made until the end of the second month following the month in which the corporate tax return is due.
Only one example is given in the Communiqué on the subject, which is given below. The Communiqué does not include explanations on the application of reduced tax on income from other activities and the use of the indexed investment contribution amount in this respect. We will explain the views of our Consultancy on the subject in our future publications.
Example: The total amount of the complete new investment of (B) A.Ş. within the scope of the investment incentive certificate started in the 2023 accounting period is 10.000.000 TL. 2.000.000 TL of this investment, which started to be partially operated in the 2023 accounting period, has been realized as of 11/3/2023 and (B) A.Ş. has earned 1.000.000 TL from the said investment in the 3rd provisional taxation period of the 2023 accounting period. (Investment contribution rate: 30%, tax deduction rate: 50%)
The investment contribution amount that (B) A.Ş. benefits from the partial operation of the investment within the scope of the investment incentive certificate by applying discounted corporate tax to the income of 1.000.000 TL obtained in the 3rd provisional taxation period of the 2023 accounting period is 125.000 TL. Therefore, the 475.000 TL portion of the 600.000 TL investment contribution amount (600.000 TL – 125.000 TL) that could not be utilized in this period (600.000 TL – 125.000 TL) of the 600.000 TL investment contribution amount, which was entitled in the 3rd provisional taxation period of the 2023 accounting period due to the investment expenditure made, can be utilized by applying the reduced tax rate to the earnings obtained from this investment in the following accounting periods.
With the petition dated 22/5/2023, the taxpayer requested that 10% of the investment contribution amount calculated due to the application of discounted corporate tax within the scope of the eighth paragraph of Article 32/A of the Corporate Tax Law be used by canceling other tax debts. The taxpayer’s income tax withholding and stamp tax debt for the period of November/2023 is 80.000 TL.
The amount of contribution to investment that the taxpayer can benefit from through cancellation will be calculated as follows.
The upper limit that (B) A.Ş. can request for cancellation is 237.500 TL and the taxpayer’s tax debt that can be canceled is below the said upper limit.
However, since TL 60.000, which is 10% of the eligible investment contribution amount, is below the debt amount of TL 80.000, in accordance with the application made by the taxpayer on 22/5/2023, only TL 60.000 of the eligible investment contribution amount can be canceled from the other tax debt amounting to TL 80.000.
In order for this cancellation to be made, the taxpayer must submit a new petition regarding the cancellation including the above calculations after submitting the declaration for the 3rd provisional taxation period of the 2023 accounting period.
On the other hand, in the event that (B) A.Ş. abandons the said amount from other tax debts, the investment contribution amount corresponding to one times the amount used will be waived.
Therefore, (B) A.Ş. will not be subject to corporate tax at a reduced rate of TL 120.000, which is the sum of TL 60.000, which is the sum of TL 60.000 that (B) A.Ş. deducts from other taxes, and TL 60.000 corresponding to one times this amount (the amount of investment contribution foregone).
In addition, the said application regarding the utilization of the earned investment contribution amount through the abandonment of other tax debts is valid for the investment expenditures to be made as of 1/1/2022.
The taxpayers requesting the cancellation should revise the calculations in the cancellation request petition and submit a new cancellation request petition after submitting each provisional tax and annual declaration. Abandonment request will be made separately on the basis of each investment incentive certificate.
Since the investment contribution amounts to be used by the taxpayers by way of cancellation will be taken into account as income in the determination of corporate income by the taxpayers, it is possible to deduct these amounts from the corporate income by showing them in the “Other Discounts and Exemptions” line in the “Exemptions and Discounts to be Deducted Even If There is a Loss” section in the provisional and annual corporate tax returns.”
You can access the relevant Communiqué here.
Sincerely,
BİLGENER
