Law No. 7440 Introduces Additional Tax on Certain Corporate Taxpayers
Law No. 7440 on Restructuring Certain Receivables and Amendments to Certain Laws was published in the Official Gazette No. 32130 on 12.03.2023.
This law includes several tax regulations along with provisions on debt restructuring and tax base increase. One of the most significant tax regulations is the additional tax arrangement in Article 10/27 of the Law.
Scope of the Additional Tax
According to this regulation:
- Exemption and discount amounts deducted from corporate income under the Corporate Tax Law and other relevant laws,
- Tax bases subject to reduced corporate tax rates under Article 32/A of the Corporate Tax Law
will be subject to a 10% tax, calculated without being related to the period’s income.
Additionally, a 5% tax will be calculated on participation income exemptions under Article 5/1-a of the Corporate Tax Law and exempt income earned from abroad, provided that it is proven to be subject to a tax burden of at least 15%.
Deadline for Payment of the Additional Tax
The first installment of the additional tax will be paid within the corporate tax payment period in April, and the second installment will be paid in August, the fourth month following this period.
For taxpayers with special accounting periods, this tax will be applied through the declarations that need to be filed for the accounting period that ends in 2023. For example, for a taxpayer using the special accounting period from 01.04.2022 to 31.03.2023, this tax will be calculated in the declaration for the period ending on 31.03.2023.
Status of Taxpayers in the Earthquake-Affected Areas
Taxpayers in the provinces of Adana, Adıyaman, Diyarbakır, Elazığ, Gaziantep, Hatay, Kahramanmaraş, Kilis, Malatya, Osmaniye, and Şanlıurfa, as well as the Gürün district of Sivas province, who have corporate tax liability due to the declaration of a force majeure situation because of the earthquake, are exempt from the additional tax. However, we believe a regulation should be made to include taxpayers in the region who have tax liability registered outside the affected areas under this exemption.
Exemptions and Discounts Not Subject to Additional Tax
Certain exemptions and discounts are excluded from the scope of the additional tax in the relevant regulation. The exemptions and discounts that are not included in the additional tax scope are as follows:
- Income from portfolio management by Investment Funds and Companies (Article 5/1-d of the Corporate Tax Law)
- Exemption on rebate in cooperatives (Article 5/1-i of the Corporate Tax Law)
- Exemption on income from Sale-Leaseback transactions (Article 5/1-j of the Corporate Tax Law)
- Exemption on income from the sale of assets and rights for the purpose of issuing leasing certificates (Article 5/1-k of the Corporate Tax Law)
- Exemption on income from Currency-Indexed Deposit Accounts (Temporary Article 14 of the Corporate Tax Law)
- Sponsorship expenses (Article 10/1-b of the Corporate Tax Law)
- Donations and aids (Article 10/1-c and 10/1-ç of the Corporate Tax Law)
- Donations and aids for cultural and tourism purposes (Article 10/1-d of the Corporate Tax Law)
- Donations and aids for campaigns initiated by the President (Article 10/1-e of the Corporate Tax Law)
- Cash donations and aids to the Turkish Red Crescent and the Green Crescent (Article 10/1-f of the Corporate Tax Law)
- Venture Capital Fund (Article 10/1-g of the Corporate Tax Law)
- 50% of the income derived from services provided to individuals or organizations residing abroad (Article 10/1-ğ of the Corporate Tax Law)
- Protected Workplace Discount (Article 10/1-h of the Corporate Tax Law)
- Investment Discount Exemption (Temporary Article 61 of the Income Tax Law)
- Donations and aids that can be deducted from corporate income under relevant laws
- Exemption on small and micro-enterprises’ earnings in Technology Development Zones and R&D and Design deductions
Will the Additional Tax Be Considered as an Expense or Deduction?
According to the regulation, the calculated additional tax will not be considered as an expense or deduction and will not be offset against any taxes.
You can access the relevant Law here.
Best regards,
BİLGENER
