2023-93 / October 2023 Financial / Tax Bulletin
Find out the latest news on tax regulations 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.
Let’s briefly start with the headings and then examine the details.
Main Economic Indicators
Turkey's Growth Forecast Revised Up by International Organizations
- International organizations revised their growth forecasts for Türkiye, indicating positive outlooks for the country's economy. Fitch Ratings, in its Global Economic Outlook September 2023 report, increased its annual growth forecast for Türkiye in 2023 from 2.5 percent to a robust 4.3 percent. The report predicts a growth rate of 3 percent in 2024 and 3.4 percent in 2025. Fitch Ratings highlights the strong growth observed in the second quarter, attributing it to increased consumption, investment, and public spending.
- Fitch Ratings also affirmed Türkiye's credit rating at "B" and revised the rating outlook from "negative" to "stable" after two years.
- Similarly, Moody's adjusted its growth forecast for Türkiye in 2023, raising it to 4.2 percent from the initial projection of 2.6 percent, as outlined in its Global Macro Outlook 2023-2024 August update report.
The balance of payments statistics for July 2023 is announced by the Central Bank
- The current account recorded net deficit of USD 5,466 million. Gold and energy excluded current account indicated net surplus of USD 717 million.
- Goods deficit recorded USD 10,477 million.
- Click to view the announcement.
Turkish Statistical Institute announced inflation figures for September 2023.
- Consumer price index increased by 61.53% annually and 4.75% monthly.
- Domestic producer price index increased by 47.44% annually and 3.40% on monthly basis.
- Click to view the announcement.
The ratio of general government deficit to GDP was 2.1% in 2022.
- The general government deficit was estimated as 309 billion 422 million TRY and the ratio of the general government deficit to Gross Domestic Product (GDP), which was 1.1% previous year, increased to 2.1% in 2022.
Gross and Net External Debt Stock of Turkey as of 30 June 2023
- “Gross External Debt Stock of Türkiye” amounted to 475.8 billion USD, whereas “Net External Debt Stock of Türkiye” amounted to 267.7 billion USD as of 30 June 2023. In that period, stocks to GDP ratios stood at 46.5% and 26.2%, respectively.
Major Tax Issues
Turkey International Tax News: Multilateral Instrument is resent to Turkish Parliament.
- Turkish Government resent a draft Law for the ratification of "Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (known as Multilateral Instrument/MLI).
- The MLI was originally signed by Turkey in 2017 and the first Draft Law was sent to Turkish Parliament in 2020 but it has not been ratified and even did not come to agenda of the General Assembly since then.
- The new Draft Law considers the recent positions of other signing jurisdictions but there is no important change with the position of Turkey. In this sense, for example Turkey still opts Option C in relation to elimination of double taxation under Article 5 of the MLI.
Constitutional Court has overruled the objection regarding Additional Vehicle Tax being contrary to the Constitution
- After the earthquake, there are new taxes levied in our country. One of them is “additional tax on vehicles” and the other is “additional corporate tax” on some of the tax exemptions.
- Our legal team has reviewed the cases about tax brought to the Supreme Court. You can follow the link to see the results.
- The Supreme Court did not start to review this file yet. You can find more information on this new additional corporate tax which is 5% or 10%.
- For more information, please check out our blog post.
Constitutional Court has accepted the objection regarding “digital tax” being contrary to the Constitution.
- At the same Court decision, the Supreme Court overruled the objection regarding “precious house tax” and “accommodation tax” being contrary to the Turkish Constitution.
The general communique (number 47) on VAT application is undergoing crucial changes.
- It is published in the Official Gazette and got effective.
- The following four topics were being revised.
- Exemptions regarding the construction of housing to be donated to victims of natural disasters.
- Continuing projects that have started before the general communique regarding exemption applications on projects.
- 16.1. Exemptions on sales of real assets.
- VAT on sales of cards, passwords, and codes.
- This last item on sales of cards, passwords and digital codes is not on the published Communique although it was announced on Draft regulation. It is understood that, this topic will be widely regulated by the Ministry of Finance later.
- Tax rate for financial lease agreement is changed as well. Before this legislation, the date of the signed contract was important. After the revision, tax rate on the date of the invoice should be used in financial lease transactions.
Turkish Tax Administration launched new “Digital Tax Office”
- You can easily handle many of the tax issues in the link.
Partial split-ups for real assets will no longer be possible for real assets from 2024.
- It is been used widely by the corporate tax payers. Corporate tax and VAT advantage is no longer available for real assets starting in 2024.
- As the partial split-ups for real assets will no longer be possible for real assets from 2024, we kindly remind you that you have still time for tax planning.
Inflation adjustment will be made this year if not changed
- According to Law Number 7352 published in the Official Gazette on 29.01.2022 and the provisional article 33 of the Tax Procedure Law; financial statements shall not be subject to inflation adjustment regardless of whether requirements for inflation adjustment arises or not in terms of 2021 and 2022 accounting periods, including provisional tax periods (due to accounting periods ending in 2022 and 2023 for those assigned a special accounting period).
- On the other hand, financial statements dated 31/12/2023 shall be subject to inflation adjustment regardless whether requirements for inflation adjustment have occurred or not.
- The profit/loss difference resulting from the inflation adjustment will be demonstrated in the previous years' profit/loss account; the previous year's profit determined in this way will not be subject to tax, and the previous year's loss will not be accepted as loss.
- In accordance with the regulation in provisional article 33, the Ministry of Treasury and Finance is authorized to determine the procedures and principles regarding the implementation of this article.
- There is a draft Communique regarding with this application, but not published officially yet.
Banking & Finance
The Central Bank of Turkey eased the interest rates on KKM.
- Corporate tax exemption was introduced for corporate taxpayers who convert foreign currencies and gold balances in their deposit and participation accounts into Turkish lira in terms of foreign exchange difference and interest income.
- You can find more information regarding with this application.
- With a new legislation, there is no limitation on those deposit accounts by Central Bank.
The Central Bank has increased the interest rates.
- The award rate for weekly repurchase agreements is currently at 30.00%.
- The Monetary Policy Committee (the Committee) has decided to raise the policy rate (the one-week repo auction rate) from 25 percent to 30 percent.
- The Committee decided to continue the monetary tightening process to establish the disinflation course as soon as possible, to anchor inflation expectations, and to control the deterioration in pricing behavior.
- The rebate rate for rediscount transactions is currently at 30.75%.
- The interest rate for advance payments is currently at 31.75%.
Banking Sector Monthly Bulletin Released - 2023 August
- Financial information submitted regularly to the BRSA (BDDK) by the institutions under the scope of the Banking Law and other regulations within the framework of supervison function, those having fundamental information feature are presented on monthly basis in the direction of the targets of transparency and informing the public.
- For more information, please check out Aylık Bülten.
R&D and Incentives
The Ministry of Industry has drafted “priority goods” to be given the HAMLE incentives.
Commercial Regulations
The Ministry of Trade has published the Guideline on the Online Consumer Ratings.
- The Guidelines mainly cover online consumer reviews of goods or services and ancillary contracts offered by sellers and providers or intermediary service providers. Reviews published on complaint platforms are also considered within the scope of the Guidelines.
Foreign Trade Statistics for August 2023 as announced by TURKSTAT
- According to the general trade system exports increased by 1.6% and imports decreased by 6.9% respectively in August 2023.
- The foreign trade deficit decreased by 23.1% in August 2023.
Best regards,
Partners, Taxia
PDF İndir
