TAXIA Kişisel Rıza Formu

2024-19 / Taxademy Newsletter (April 2024)

Find out the latest developments on tax and related regulations and be updated on regulatory changes along with their effects on your business through our monthly tax bulletins.

Türkiye’s local elections and results are the main news in Türkiye in April.

New Draft Circular on inflation accounting for firms about the capital and reserves, upcoming tax returns season for corporate tax, Türkiye’s new tax treaty with Cuba, new IPO limits for energy, agriculture, defense industry and innovative firms and new thresholds for audit requirement for the companies are the main headlines.

Major Tax Issues

Double Tax Treaty with Cuba is signed in Ankara in March 13th, 2024.

• Türkiye has 102 tax treaties and 90 of them are effective.

You should double check the corporate tax rates as it become more complex.

• Corporate tax rate is depending on the FY year, type of the companies (financial or non-financial), the main activities (industrial/exporting) and whether it is publicly listed or not and type/region of the investment incentive certificates if there is any.
• There might be some gray areas in the practice that you should ask for advice.

The notional interest rate on the 2023 cash capital discount is revised as 53.11%.

• New capital injection will enjoy this “notional deduction” depending on the capital’s origin.
• Foreign capital will be deducted at a rate of 75%. Domestic capital will be deducted at a rate of 50%. It is super incentive for FDI to Turkiye.

The Draft Circular on inflation accounting was announced by the Ministry of Trade.

• Draft Circular is explaining the financial tables to be considered in different cases such as profit distribution, capital increase and capital reserves to be converted to the capital.

Corporate Tax return season has just started in April.

• We will hold a webinar for German – Turkish firms in April 16th.
• If you want to join in us, please let us know.
• Important matters are summarized below for FY23 corporate tax returns:
  • %50 tax deduction rate is increased to %80 for those who served specific services to the clients abroad if all the earnings are brought to Türkiye. This rate increase has started for corporate tax payers in 2023.
  • %05 “lump sum expenditure allowance” will not be used starting from 2024 for exporters. So, it will be the last year to use this application in tax returns.
  • %5 export sourced corporate tax deduction can be used by intermediated firms as well.
  • Participation exemption system for foreign sourced dividends is eased this year. New amendment gives %50 exemption rather than full exemption with lighter conditions.
  • Dividends should be remitted to Türkiye by the date corporate income tax is due.

Banking & Finance

Open Letter to the Ministry of Finance from CBRT.

Press Release on the Simplification of the Macroprudential Framework.

The Central Bank of the Republic of Türkiye continues to simplify macroprudential policies to safeguard the functionality of market mechanisms and macro financial stability. Regarding the securities maintenance practice, the Bank has decided that.

• The securities maintenance ratio applied to liabilities subject to securities maintenance will be reduced from 4% to 1%,
• The implementation regarding securities maintenance based on loan growth will be terminated.

The date for Partial Payment in Private Pension has been determined as July 1, 2024

SPK reduced the thresholds for some industries in IPO.

• New IPO limits for energy, agriculture, defense industry and innovative firms are below:

BDDK (BRSA) has redefined the threshold values at which loans can be taken for vehicle purchases.

Turkish CMB (SPK) has started the practice of making applications electronically.

The Bank considers to terminate the securities maintenance practice in a short while.

The Central Bank decided to raise the interest rates to 50%.

• The Monetary Policy Committee (the Committee) has decided to raise the policy rate (the one-week repo auction rate) as 50 percent.
• Participating Committee Members; Yaşar Fatih Karahan (Governor), Osman Cevdet Akçay, Elif Haykır Hobikoğlu, Hatice Karahan, Fatma Özkul.

R&D and Incentives

Fund allocation requirement for R&D incentives is still ongoing.

• It will be calculated on the tax exemption of R&D and Technopark firms.
• This requirement will be 3% this year. The funds should be calculated in April and should be allocated till the year end.

Türkiye’s new Free Zone, Bati Anadolu opens.

• Free zones (FZ) are special sites deemed outside the customs area, although they are physically located within the political borders of the country. FZs are designed to boost the number of export-focused investments.
• Legal and administrative regulations in the commercial, financial, and economic domains that are applicable within the customs area are either not implemented or partially implemented in FZs.

Commercial Regulations

Thresholds for audit of the firms are increased.

• Because of the high inflation the limits were increased by the President.
• There are 3 main criteria for the firms to be audited: Size of the firm, net revenue, and number of employees. Starting from 2024, revenue and size of the companies’ criteria are doubled while the number of the employees stays same. Firms having size bigger than TRY150 million, revenue bigger than TRY300 million and headcount more than 150 must be audited. 2 out of those 3 criteria are enough.

Ministry of Trade announced a Draft Communique regarding with the inflation accounting.

• Ministry is explaining which financial statement will be considered in different cases such as profit distribution, capital increase or decrease, technical bankruptcy or other issues.
• As it will be very important for the firms to gather general assembly and distribute profits, we will follow the Draft close.

You can find more about the inflation accounting practice in Turkiye.

Foreign Trade Statistics for February 2024 as announced by TURKSTAT;

• According to the general trade system exports increased by 13.6%, imports decreased by 9.2% respectively in February 2024.
• The foreign trade deficit decreased by 44.2% in February 2024.

Miscellaneous

The KGK regulation draft on Crypto Assets has been published.

Green Cement will be a priority in Türkiye after a Public Procurement Authority Decision.

Constitutional Court published important decision on tax exemption on the foreign currency deposit system. Good news is that it is not cancelled by the Court.

Consumer Price Index for March 2024 as announced by TURKSTAT;

• Consumer price index (CPI) increased by 68.50% annually and 3.16% monthly.

Turkish EMRA (EPDK) determined the calendar for the electronic guarantee system.

• According to the Board Decision dated March 14, 2024 taken by EMRA, indefinite letters of guarantee must be replaced with electronic ones by January 1, 2025.

Turkish Competition Authority

• A Fine of 4.6 million TL imposed on ABC Deterjan in an investigation concluded with a Settlement (30.3.2024).

Best regards,

Taxademy