11.01.2024/10
Cash Capital Deduction will be based on 52.73% for 2023
With the Law No. 6637 on Amendments to Certain Laws and Decree Laws published in the Official Gazette dated 07.04.2015, interest deduction in cash capital increases was added to Article 10 of the Corporate Tax Law.
With this provision, with the exception of institutions operating in the finance, banking and insurance sectors and state-owned enterprises, cash capital increases in the paid-in or issued capital amounts of capital companies registered in the trade registry within the relevant accounting period, or the portion of the paid-in capital covered in cash in newly established capital companies, over the most recently announced by the Central Bank of the Republic of Turkey for the year in which the discount is utilized “Weighted average annual interest rate applied to TL denominated commercial loans extended by banks” 50% of the amount calculated until the end of the relevant accounting period can be deducted from the corporate tax base.
With the Council of Ministers Decree No. 2015/7910 issued pursuant to the authorization granted by the aforementioned article, the conditions for the higher or lower application of the said discount rate have been determined.
In addition, with the Law No. 7338 published in the Official Gazette dated 26.10.2021, Article 10 of the Corporate Tax Law “This ratio is applied as 75% for the portion of cash capital increases covered by cash brought from abroad.” provision has been added. Regulation related to the Communiqué Serial No. 21 has been added to the General Press release on Corporate Tax (Serial No. 1). “10.6. Discount on Capital Increase” at the end of the section titled, “On the other hand, the deduction rate will be applied as 75% for the portion of cash capital increases covered by cash brought from abroad.” is compiled in the form of.
With the amendment made by Law No. 7417 dated 5.7.2022 and numbered 7417, the indefinite right to benefit from the discount regulation has been limited by taking into account the accounting period in which the decision regarding the capital increase or the articles of association was registered during the initial establishment phase and the 4 accounting periods following this period.Corporate Tax General Communiqué (Serial No: 1) “10.6.3.2. Benefiting separately for each accounting period”The sub-section titled “The Law on the Protection of Human Rights and Freedoms” is completely amended together with its title. With the new regulation, the title of the said sub-section “Benefit from the discount for five accounting periods” has been changed to
In this regulation, it is stated that for capital increases to be made as of 05.07.2022, when the provision of the law entered into force, a discount will be applied separately for five accounting periods, including the accounting period in which the decision regarding the capital increase or the articles of association was registered during the initial establishment phase. In case of a capital decrease in subsequent periods, the portion of the cash capital increase to the extent of the decrease will be excluded from the discount calculation. However, in case of a capital increase in the periods following the capital decrease, if the conditions set forth in the Communiqué are fulfilled, the deduction application can be utilized for this increased capital amount within the period specified in the article depending on the period in which the capital increase is made.
In the calculation of the cash capital deduction, the most recent “Weighted Average Interest Rates Applied to Loans Extended by Banks” announced by the CBRT for the year in which the deduction is utilized is used.“Commercial Loans (in TL) (Excluding Legal Entity ODA and Corporate Credit Cards)” interest rate. The most recent interest rate announced by the CBRT for 2023 is 52.73%. Accordingly, the interest rate of 52.73% will be used in the application of interest deduction calculated over the cash capital increase for 2023.
The latest interest rate announced by the CBRT for 2023 is available here.
Sincerely,
BİLGENER
