Law No. 7491 with Important Tax Regulations Published
Law No. 7491 on Amendments to Certain Laws and Decree Laws was published in the Official Gazette dated 28.12.2023 and numbered 32413. Amendments made in the said Law Income Tax Law, Tax Procedure Law, Value Added Tax Law and Corporate Tax Law The relevant regulations are summarized below:
A. Amendments to the Income Tax Law
1. The scope of the earnings exemption for social content production and application development for mobile devices was expanded.
Article 20/B of the Income Tax Law No. 193 applied to the earnings of social content producers who share content such as text, images, audio, video, etc. through social network providers on the internet, and the earnings of those who develop applications for mobile devices such as smartphones or tablets through electronic application sharing and sales platforms. With the amendment, “earnings from services such as individual courses, training, data processing and development, and product promotion provided through these platforms” are also included in the scope of the exemption.
The regulation entered into force as of 28.12.2023 to be applied to the earnings obtained as of 01.01.2024.
2. 50% of the dividends received by income taxpayers from abroad were exempted under certain conditions.
With the fourth paragraph added to Article 22 of the Income Tax Law, the income obtained from joint stock companies and limited liability companies whose legal and business centers are not located in Turkey, written in subparagraphs (1), (2) and (3) of the second paragraph of Article 75 half of the dividends,
- Holding at least 50% of the paid-in capital of these institutions; and
- The dividend is transferred to Turkey until the date of filing the annual income tax return for the calendar year in which the dividend is received
provided that it is exempt from income tax.
The regulation entered into force on 28.12.2023 to be applied to income and gains obtained as of 01.01.2023.
3. The lump-sum expenditure practice in exports was abolished.
The practice under Article 40 of the Income Tax Law, which has been in effect since 1995, allowing taxpayers engaged in export, construction, repair, assembly and transportation activities abroad to deduct lump-sum expenses related to these activities abroad, provided that they do not exceed five per thousand of the revenue obtained in foreign currency from these activities, has been abolished.
The regulation entered into force on 28.12.2023 to be applied to the earnings of the taxation period starting from 01.01.2024).
4. The discount rate applied to earnings from certain services provided abroad was increased from 50% to 80%.
With the amendment made to Article 89/13 of the Income Tax Law, it is possible to apply for the architectural, engineering, design, software, medical reporting, accounting record keeping, call center, product testing, certification, data storage, data processing services provided in Turkey and exclusively benefited from abroad to non-residents in Turkey and those whose workplace, legal and business center is located abroad, data analysis and service businesses operating in the fields of vocational training determined by the Ministry of Finance in consultation with the relevant ministries, and service businesses operating in the field of education and health and providing services to non-residents in Turkey, subject to the permission and supervision of the relevant ministry, 80% of the income generated exclusively from these activities can be deducted from the declaration. However, in order for the deduction to be made, the entire amount of the income must be transferred to Turkey by the date of filing the annual income tax return for the calendar year in which the income is earned.
The regulation entered into force on 28.12.2023 to be applied to income and gains obtained as of 01.01.2023.
5. The President’s authority to regulate the withholding tax for multi-year construction works has been expanded.
With the amendment made to Article 94 of the Income Tax Law, the President of the Republic is authorized to determine separately or jointly the amount of the rents paid for the construction works over the years, depending on whether the work is undertaken by public institutions and organizations and their affiliated, related and related institutions and whether they are within the scope of general or special budgeted administration, duration, type and whether the contractor is the main contractor, subcontractor or full or limited taxpayer.
The regulation entered into force on 28.12.2023.
6. The authorization regulation regarding some withholding tax rates in Provisional Article 67 was amended.
With the amendment to paragraphs 6 and 17 of Provisional Article 67, the President of the Republic
- To increase the withholding rates specified in paragraphs (1), (2), (3) and (4) separately or jointly up to 40% for the returns obtained from securities issued in foreign currency and dividend and interest income obtained from accounts opened in foreign currency, or to reduce them to the legal rate
- Reduce the rates in this article to zero or increase them up to 40% for each capital market instrument, issuers, date of issuance or acquisition, type of account, account opening date, type of earnings and revenues, their maturity, holding period and the persons who obtain them, and for the earnings obtained from the return of the participation certificates of the investment funds to the fund or from the disposal of the investment funds in other ways, separately according to the portfolio structure of the fund.
is authorized.
The regulation entered into force on 28.12.2023.
7. The period of the advantageous withholding tax on wage payments to athletes was extended.
The fixed and low withholding tax rate applied to salaries and payments deemed as salaries to athletes under the provisional Article 72 of the Income Tax Law has been extended until 31.12.2028.
The regulation entered into force on 28.12.2023.
8. The duration of the exemption applied to the gains arising from the disposal of warehouse receipts issued under the Agricultural Products Licensed Warehousing Law was extended.
With the amendment made to the provisional Article 76 of the Income Tax Law, the period of the exemption applied to the gains arising from the disposal of warehouse receipts issued within the scope of the Agricultural Products Licensed Warehousing Law has been extended until 31.12.2028.
The regulation entered into force on 28.12.2023.
B. Amendments to the Tax Procedure Law
1. It was stipulated that a contribution fee would be collected from the information that can be shared as a result of the query made in the systems of the Revenue Administration.
With the 413th repeated article added to the Tax Procedure Law No. 213, it is stipulated that a participation fee of not less than 25 kurus per query or returned record will be charged in return for sharing the information contained in the systems of the Revenue Administration and which can be shared with third parties within the scope of Article 5 of this Law with public institutions and organizations and legal entities other than public administrations within the scope of general administration within the framework of the provisions of the said article.
The regulation will enter into force on 01.01.2024.
2. The advantageous depreciation period applicable to new machinery and equipment acquired exclusively for use in manufacturing or R&D, innovation and design activities or within the scope of investment incentive certificate has been extended.
The depreciation periods for new machinery and equipment acquired exclusively for use in manufacturing or R&D, innovation and design activities or within the scope of an investment incentive certificate under the provisional article 30 of the Tax Procedure Law could be calculated by taking into account half of the useful life periods determined and announced by the Ministry.
With the regulation made, the term of the application, which expired on 01.12.2023, has been extended until 31.12.2024.
The regulation entered into force on 28.12.2023.
3. An arrangement was made to ensure that inflation adjustment does not affect the tax bases of banks and financial institutions.
With the amendment made in the provisional Article 33 of the Tax Procedure Law, the profit / loss difference arising from the inflation adjustment made by banks, companies within the scope of the Financial Leasing, Factoring, Financing and Savings Financing Companies Law dated 21/11/2012 and numbered 6361, payment and electronic money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies in the 2024 and 2025 accounting periods, including temporary tax periods, will not be taken into account in the determination of earnings.
The regulation entered into force on 28.12.2023.
C. Amendments to the Value Added Tax Law
1. The deduction of VAT declared as responsible is subject to the condition of payment.
With the amendment made to Article 29 of the Value Added Tax Law No. 3065, it is made possible to deduct the value added tax declared and paid with the title of responsible. Accordingly, VAT declared with the VAT declaration numbered 2 can only be deducted in the declaration numbered 1, provided that it is paid.
The regulation will enter into force on 01.01.2024.
2. The deadlines for declaration and payment of VAT declarations submitted as responsible were changed.
With the amendment made to Article 41 of the Value Added Tax Law, the date on which those who are held responsible for withholding tax will submit their value added tax returns has been set as the 21st day of the month following the taxation period.
With the amendment made to Article 46 of the aforementioned Law, the payment period for the declared tax has been set as the 23rd day of the month following the taxation period.
Accordingly, the declaration and payment periods of the VAT declaration number 2, which is due for declaration and payment until the 28th day of the month following the taxation period, have changed.
The regulation will enter into force on 01.01.2024.
3. The President is authorized to partially or completely revoke the right of restitution.
Article 36 of the Value Added Tax Law authorizes the President of the Republic to partially or completely abolish or reintroduce the right to discount and to determine the goods or services whose right to discount is restricted in this way, to allow the value added tax that is not claimed for refund in due time and transferred to subsequent periods to be eliminated through discount to be written as an expense in determining the income or corporate tax base, and to determine the minimum amount that can be requested for refund.
The amendment extends the President’s power to grant “rebates” to include the right to “refunds”.
The regulation entered into force on 28.12.2023.
D. Amendments to the Corporate Tax Law
1. The exemption for earnings from foreign subsidiaries will be applied as 50% without seeking other conditions, provided that there is a 50% participation share and the conditions for transfer to Turkey are met.
According to Article 5/1-b of the Corporate Tax Law No. 5520, the following participation gains derived by the corporations participating in the capital of joint stock and limited liability companies whose legal and business headquarters are not located in Turkey are exempt, provided that the conditions specified in the article are met.
With the amendment made, the exemption rate for the participation gains derived by the corporations participating in the capital of these foreign corporations is applied as 50%, provided that the company holding the participation share owns at least 50% of the paid-in capital of the foreign subsidiary and the gain is transferred to Turkey until the date when the corporate tax return for the accounting period in which the gain is obtained, without the condition of meeting the other conditions specified in this subparagraph.
The regulation entered into force on 28.12.2023 to be applied to income and gains obtained as of 01.01.2023.
2. The discount rate applied to earnings from certain services provided abroad was increased from 50% to 80%.
With the amendment made to Article 10/1-ğ of the Corporate Tax Law, it is possible to apply the amendments made to the Article 10/1-ğ of the Corporate Tax Law to the architectural, engineering, design, software, medical reporting, accounting record keeping, call center, product testing, certification, data storage, data processing services provided in Turkey to non-residents in Turkey and those whose workplace, legal and business center are located abroad and exclusively used abroad, data analysis and service businesses operating in the fields of vocational training determined by the Ministry of Finance in consultation with the relevant ministries, and service businesses operating in the field of education and health and providing services to non-residents in Turkey, subject to the permission and supervision of the relevant ministry, 80% of the income generated exclusively from these activities can be deducted from the declaration. However, in order for the deduction to be made, the entire amount of the income must be transferred to Turkey by the date of filing the annual income tax return for the calendar year in which the income is earned.
The regulation entered into force on 28.12.2023 to be applied to income and gains obtained as of 01.01.2023.
3. The President’s authority to regulate the withholding tax for multi-year construction works has been expanded.
With the amendment made to Article 15 of the Corporate Tax Law, the President of the Republic is authorized to determine separately or jointly, the amount of the rents paid for the construction works over the years, whether the work is undertaken by public institutions and organizations and their affiliated, related and associated institutions, whether they are within the scope of general or special budgeted administration, duration, type and whether the contractor is the main contractor, subcontractor or full or limited taxpayer. With the amendment made in Article 30, the same applies to the deductions to be made from limited taxpayer institutions.
The regulation entered into force on 28.12.2023.
4. Export transactions realized through foreign trade capital companies or sectoral foreign trade companies were included in the scope of the 5-point discount.
According to Article 32/7 of the Corporate Tax Law, the corporate tax rate is reduced by 5 percentage points for the export earnings of exporting companies. By expanding the scope of this discount, it has been made possible for manufacturers or suppliers to benefit from the 5-point discount for their earnings from export activities carried out through foreign trade capital companies or sectoral foreign trade companies based on an intermediary export contract.
The regulation entered into force on 28.12.2023 to be applied to income and gains obtained as of 01.01.2023.
4. The exemption period for KKM has been extended.
Currency-protected deposit exemptions under the provisional Article 14 of the Corporate Tax Law were subject to conversion conditions until 31.12.2023. With the amendment, this date has been changed to 30.06.2024.
The regulation entered into force on 28.12.2023.
You can access the relevant Law here.
Sincerely,
BİLGENER
