07.07.2023/73
The rate of withholding tax on dividends deemed to be distributed in relation to the shares or partnership shares acquired by fully taxpayer capital companies has been re-determined as 15% and the rate of withholding tax of 0% has been restricted only to fully taxpayer capital companies whose shares are traded on the stock exchange.
As it is known, with the amendment made in Article 94 of the Income Tax Law with the Law No. 7256 published in the Official Gazette dated 17.11.2020, full taxpayer capital companies acquired their own shares or partnership shares;
i) In case of redemption through capital reduction, the difference between the acquisition price and the nominal value of the shares or partnership shares is the date of registration of the decision regarding the capital reduction in the trade registry,
ii) In case of disposal for a price below the acquisition price, the difference between the acquisition price and the disposal price is the date of disposal,
iii) The difference between the acquisition price and the nominal value of the shares or partnership shares, if they are not redeemed or disposed of through capital reduction within two full years from the date of acquisition, on the last day of the two full year period from the date of acquisition,
dividends distributed and 15% withholding tax will be withheld on these amounts.
With the aforementioned regulation, the President of the Republic is authorized to reduce this rate to zero or increase it by up to one times, separately or jointly, according to whether the shares of the full-fledged taxpayer capital company are traded in Borsa Istanbul, the ratio of the traded shares to the total shares, whether the repurchased shares are among the shares traded in Borsa Istanbul, whether they are repurchased from full-fledged taxpayer institutions, and the total amount of the annual sales revenue and other revenues of the full-fledged taxpayer capital company.
Within the scope of this authorization, with the Presidential Decree No. 6791 published in the Official Gazette dated 14.02.2023 and numbered 32104 (1st Repeated) full taxpayer capital companies The withholding tax rate to be applied on dividends deemed to be distributed in respect of their own shares or partnership interests acquired by them0% (Circular No. 15.02.2023/32).
However, with the Presidential Decree No. 7343 published in the Official Gazette dated 07.07.2023 and numbered 32241, the Decree No. 2009/14592 regarding the withholding rates in Article 94 of the Income Tax Law has been amended again. The reduced withholding tax rate is reserved only for full taxpayer capital companies whose shares are traded on the stock exchange.Accordingly, 0% withholding tax will be applied only on the dividends deemed to be distributed due to the acquisition of their own shares by full taxpayer capital companies whose shares are traded on the stock exchange.
On the other hand, 15% withholding tax will be applied for the dividends that will be deemed to be distributed in relation to their own shares or partnership shares to be acquired by other full taxpayer capital companies as of 07.07.2023.
You can access our Circular dated February 15, 2023 and numbered 23 here.
The relevant Presidential Decree is available here.
Sincerely,
BİLGENER
