15.02.2023/32
The Withholding Tax Rate on the Distributed Dividends of the Own Shares or Partnership Shares Acquired by Full Tax Liable Capital Companies Has Been Reduced to 0%
With the amendment made by Law No. 7256 published in the Official Gazette on 17.11.2020 to Article 94 of the Income Tax Law, the distributed dividends on the own shares or partnership shares acquired by full tax liable capital companies are considered as dividends in the following cases:
i) In the case of redemption through capital reduction, the difference between the acquisition cost and the nominal value of the shares or partnership shares, as of the date the decision on capital reduction is registered in the trade registry,
ii) In the case of disposal for a price lower than the acquisition cost, the difference between the acquisition cost and the disposal price, as of the date of disposal,
iii) If they do not redeem or dispose of the shares within two full years from the acquisition date, the difference between the acquisition cost and the nominal value of the shares or partnership shares, as of the last day of the two-year period from the acquisition date,
is deemed as a distributed dividend, and a withholding tax of 15% will be applied on these amounts.
With this regulation, the President is authorized to reduce or increase the withholding tax rate, either separately or together, based on factors such as whether the shares of the full tax liable capital company are listed on Borsa İstanbul, the share of listed shares among total shares, whether the repurchased shares are among the listed shares on Borsa İstanbul, whether the shares were repurchased from full tax liable institutions, and the total annual sales revenue and other income of the full tax liable capital company, with the authority to adjust this rate from zero to onefold.
Under this authority, with the publication of Presidential Decree No. 6791 in the Official Gazette No. 32104 (1st Repetition) on 14.02.2023, the withholding tax rate on the distributed dividends of the own shares or partnership shares acquired by full tax liable capital companies has been reduced to 0%.
You can access the related Decree here.
Sincerely,
BİLGENER
