Bulletin Details

Expected Amendments on Tax Legislations

The Draft Law Amending Various Tax Law and Law and Statutory Decrees (the “Draft Law”) has been brought before the Parliament. Following enactment of the Draft Law, substantial amendments shall be made over the tax legislation. Please see below the information on the expected amendments:

1. Corporate Tax Law: The corporate tax which is currently at the rate of 20% shall be increased to 22% for all taxpayers for the years of 2018, 2019 and 2020. This change will enter into force on the publish date of the Draft Law and new rate shall be applicable in the tax returns which will be submitted in April 2018. For the incorporations where special accounting period is determined, the amendment on such corporate tax rate shall be applied on accounting periods commencing within 2018, 2019 and 2020. 

The current tax exemption at the rate of 75% applied over income of incorporations arising from the sale of immovable in their actives for two years shall be decreased to 50%. Such change in the rate of tax exemption will be effective on the date of publish of the Draft Law.

As per the Draft Law, the whole of special provisions reserved by the leasing and financing companies in accordance with the Article 16 of the Law of Leasing, Factoring and Financing companies, shall be considered as expense on the year that such provisions are reserved. The Article 16 regulates that the companies within the scope shall reserve provision in line with the procedure and principles determined by Banking Regulation and Supervision Agency to cover the loss arising from its receivables arisen or expected to be arisen where the amount of loss cannot be determined accurately. This principle applicable for the banks will become applicable for the other financial incorporations as well. Please note that this amendment will be effective on January 1, 2019. 

Furthermore, the application and renewal fee related to Advance Price Agreement will be completely removed on the publish date of the Draft Law.

2. Income Tax Law: According to the current Income Tax Law, in case the lump sum expense method is selected for taxation of immovable income, 25% of the income is considered as expense without submitting any certificated document. With the Draft Law, 25% rate of lump sum expense will be decreased to 15% to be applicable with declarations that will be submitted in March 2018.   

3. Value Added Tax Law: The value added tax related to the services provided through electronical environment by a real person or an entity, that does not have residence, workplace, registered office and principal office, to a real person who is not a value added tax payer, shall be declared and paid by such service provider. The scope of services to be provided through electronical environment and the procedure and principles of practice shall be determined by the Ministry of Finance. Such regulation will be effective in the beginning of the next month following the publish date of the Draft Law.   

Handover of immovable and participation shares in return of debtors and guarantors to leasing and financing companies and handover of such immovable and participation shares by leasing and financing companies shall be exempt from value added tax. Such exemption applied for the banks will be applicable for leasing and financing companies as well. Please note that this exemption will be effective as of January 1, 2018.

Tax Procedural Law: The Draft Law amends the Tax Procedural Law to include tax payers’ residence addresses that are registered before online system namely MERNIS to the tax payers’ known addresses and sets the rule to seek for tax payers’ resident address on MERNIS if the tax payers cannot be found in their registered work place address.

Accordingly, if cases where the tax payer cannot be found in the workplace address or in the event of closure of business or conditions to be deemed as such, the notifications shall be served in personally to the tax payer or the registered residence address of president, manager or legal representatives of the entities if the tax payer is a legal entity (e.g. company).

The Ministry of Finance is granted with the below authorities:

-  Impose obligation of notification to service providers, either real persons or entities, which engage in commercial activities electronically and/or which provide electronic business environment for others’ economical or commercial activities regarding their business activities;

-  To determine the content, format, standards, submission time and method;

-  To classify the obligation of notification into work volume, sector, types of tax payers, purchase/sale amounts, types of goods and services;

-  To impose obligation to intermediary service providers to obtain data regarding notifications of other parties’ economical and commercial activities;

Following the enactment of the Draft Law, regulations are expected to be made by a Tax Procedure Law General Communiqué of the Ministry of Finance.

Please note that this amendment will be effective on January 1, 2018. 

5. Law No. 6183: The Draft Law has amended the Article 22/A of Law No. 6183 which regulates the transactions which cannot be done before the payment of governmental receivables, authorizes the Ministry of Finance to impose mandatory obligation to submit indebtness documents by governmental institutions and organizations for any the governmental due debt before making any payment to debtees for purchase of goods and services and construction works.

Following the enactment of the Draft Law, the above stated institutions and organizations shall request the documents indicating that the debtee does not have any tax related debts following the Ministry’s exercise the granted authority. Please note that this amendment will be effective on January 1, 2018. 

6. Stamp Tax Law: Documents regarding inability of project contractors’ applications of funds by special purpose entities which are established for the purpose of obtaining funds in return of stocks that are exported for the financing of public-private partnership projects, and documents regarding the deposit and reimbursement of such are exempted from stamp tax. Please note that this amendment will be effective on publish date of the Draft Law.

7. Act of Fees: Transactions regarding inability of project contractors’ applications of funds by special purpose entities which are established for the purpose of obtaining funds in return of stocks that are exported for the financing of public-private partnership projects, and transactions regarding the deposit and reimbursement of such are exempted from fees excluding litigation fees. Please note that this amendment will be effective on publish date of the Draft Law.

For further queries, you may contact with Günbay Attorney Partnership.