2023-82 / August 2023 Financial / Tax Bulletin
Find out the latest developments on tax regulation and be updated on regulatory changes along with their effects on your business through our tax bulletins. The important financial news of last month is briefly explained below.
We are glad to share these summaries with our clients and network. As a result of productive and comprehensive research, we present you the August 2023 bulletin.
Let’s briefly start with the headings and then examine the details. We will share information about Turkish economy in general, and the latest figures in labor, inflation, growth, main tax developments, social security obligations, banking and financial issues, R&D and incentives, and other issues below.
Main Economic Indicators
The balance of payments statistics for May 2023 is announced by the Central Bank
- The current account recorded a deficit of USD 7.933 million. Gold and energy excluded current account indicated net deficit of USD 1.283 million.
- Click to view the announcement.
Turkish Statistical Institute announced inflation figures for July 2023.
- Consumer price index increased by 47.83% annually and 9.49% monthly.
- Domestic producer price index increased by 44.50% annually and 8.23% on monthly basis.
- Click to view the announcement.
The Ministry of Treasury and Finance announced the foreign trade statistics for June 2023.
- According to the general trade system exports decreased by 10.5% and imports decreased by 17.5% in June 2023.
- According to the provisional data, produced with the cooperation of the Turkish Statistical Institute and the Ministry of Trade, in June 2023; exports were 20 billion 904 million dollars with a 10.5% decrease and imports were 26 billion 64 million dollars with a 17.5% decrease compared with April 2022.
- Click to view the press release.
The Ministry of Finance and Treasury announced the domestic borrowing strategy and debt statistics August – October 2023.
- Central Government Debt Statistics were published as well by currency, interest and instrument type.
- Click to view the domestic borrowing strategy.
Major Tax Issues
The tax omnibus has been enacted.
- For 2023, motorized vehicles tax is going to be levied an additional time.
- Corporate tax rate is increased by 5 points. The new rates, effective after the 1st of October, are as follows.
- Normal companies: 25%
- Financial institutions: 30%
- Publicly traded companies: 23%
- Exporters: 20%
- Industrials: 24%
- Tax exemptions for gains realized from real assets and qualifying funds have been limited.
- For real assets acquired before the enactment of the law, a corporate tax exemption of 25% and a VAT exemption of 100% may be used.
- For real assets disposed before the enactment of the law, a corporate tax exemption of 50% may be used.
- No exemptions apply for real assets acquired after the enactment of the law.
- 25% rent increase limitation for residential properties has been extended for one year.
- Retirement pensions have been increased.
Additional tax increases are in effect.
- VAT rates have been increased by 2 points across the board.
- Banking and insurance transaction tax has been increased to 15% for consumer loans.
- Gambling tax has been increased by 100%.
- Duties have been increased by 50%.
- Mobile phone registration duty has been increased to TRY 20k.
- Motorized vehicle tax has been increased for gasoline, diesel, solvents, and its derivatives.
The revaluation rate for the 2Q2023 advance corporate tax has been determined as %18.95.
Foreign currencies present in balance sheets as of 30 June 2023 have been included within the exchange rate adjusted certificates of deposits program.
New international tax issues are developing.
- Canada is working on increasing taxation revenue without imposing additional personal taxes, along with providing businesses with more green tax incentives.
- Spain has important judiciary developments affecting taxpayers.
- Germany is discussing proposals on the refunds and discounts regarding dividend and royalty payments made to international investors.
- Canada is imposing additional taxes on non-utilized real estate.
- Netherlands is changing the earning stripping rules applied to real estate companies.
- Luxembourg is going through important taxation changes.
- Denmark has ruled the inapplicability of EU tax exemptions for payments due to non-EU beneficiaries.
- Hungary is enacting an expanded EPR.
- Ireland is providing new tax incentives to video game developers.
- Poland has accepted the comment of the tax administration requesting a beneficiary declaration for international payments.
- Switzerland has agreed to the minimum taxation proposal of OECD/G20.
- Netherlands has made important rulings on the dividend withholdings due to foreign holding companies with Dutch participations.
- Crypto assets have been included in the information exchange agreement concept.
- OECD has made updates regarding income focused tax incentives regarding technocity gains exemptions.
- OECD has published the 2023 report on wages and taxation.
Social Security
The minimum wage has been increased.
- The daily minimum wage has been set as TRY 447.15.
- This rate is valid from 01/07/2023 to 31/12/2023.
The spending from the Unemployment Insurance Fund has been increased from 30% to 50%.
Banking & Finance
The Presidential Strategy and Budgeting Administration has published the 2022 General Activity Report.
Istanbul Finance Center is going live.
- The President has published the directives on the Istanbul Finance Center.
- The finance center will provide a 100% corporate tax exemption until 2031, and 75% afterwards.
- In addition, transit commerce businesses will be provided with a 50% corporate tax discount.
Withholdings on dividends paid by publicly traded companies has been set as 0% for the shares held by the company itself.
The Central Bank has increased the interest rates.
- The award rate for weekly repurchase agreements is currently at 17.5%.
The Central Bank has made a press release regarding selective credits and tightening decisions.
R&D and Incentives
The Ministry of Industry and Technology has announced that 1503 investment incentive documents have been prepared in the month of May.
The Central Bank has taken steps to ease the access of exporters to financing.
- Daily limit for rediscount loans has been increased to TRY 1.5B.
- The requisite of 30% additional export cost is no longer enforced.
Commerce
The Public Procurement Institution has updated its listing fees in accordance with the increased VAT rates.
The Banking Regulation and Supervision Agency has enacted policies for the improvement of financial integrity.
Climate & Environment
The ISSB has published the IFRS Sustainability Disclosure Standards.
- UFRS S1 is used to disclose the sustainability opportunities and risks of firms.
- UFRS S2 is used for disclosures regarding the climate, to be used alongside with S1.
Best regards,
Partners, Taxia
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