Cash Capital Deduction will be based on 13.47% for 2022
The 10th article of the Corporate Tax Law was amended by the Law No. 6637, published in the Official Gazette on 07.04.2015, with the addition of a cash capital increase interest deduction.
With this provision, except for institutions operating in the finance, banking, and insurance sectors, as well as public economic enterprises, corporations may deduct 50% of the amount calculated until the end of the relevant accounting period from their corporate tax base for cash capital increases or cash contributions to paid-in capital of newly established capital companies, which are registered in the trade registry within the relevant accounting period. The deduction is based on the most recently announced “Weighted Average Annual Interest Rate Applied to Commercial Loans in TL” by the Central Bank of the Republic of Turkey (CBRT) for the year in which the deduction is applied.
In line with the authority granted by this article, the 2015/7910 Cabinet Decision was published to specify conditions for the application of a higher or lower deduction rate.
Additionally, with the Law No. 7338 published in the Official Gazette on 26.10.2021, a provision was added to Article 10 of the Corporate Tax Law, stating that “for cash capital increases funded by funds brought from abroad, this rate will be applied as 75%.”
In the calculation of the cash capital deduction, the “Weighted Average Interest Rates Applied to Loans Opened by Banks” announced by the CBRT for the year benefiting from the deduction are used. The interest rate for “Commercial Loans (TL-based loans) (excluding Corporate Overdraft Accounts and Corporate Credit Cards)” is used for this calculation. The most recent rate announced by the CBRT for 2022 is 13.47%. Therefore, for capital increases registered and paid in cash after 01.07.2015, this rate will be applied in the calculation of the cash capital deduction.
You can access the most recently announced interest rate by the CBRT for 2022 here.
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BİLGENER
