Domestic Minimum Corporate Tax Example-8
In case of:
- Commercial balance sheet profit,
- Exempt profit from the sale of industrial property rights,
- Exemption for overseas subsidiary profit.
Example 8:
For (H) A.Ş.., in the 2025 fiscal period:
- The commercial balance sheet profit is 7,000,000 TL, and the exempt profit from the sale of industrial property rights is 4,000,000 TL.
- The taxpayer also benefits from a 1,000,000 TL overseas subsidiary profit exemption based on Article 5, paragraph 1, subparagraph (b) of Law No. 5520, with 150,000 TL of corporate tax paid on this profit in Country A.
- Additionally, the company has earned 800,000 TL in Country B under the exemption provided by subparagraph (h) of the same paragraph, with 50,000 TL of corporate tax paid on this income in that country.
In this context, since overseas income exemptions subject to a tax burden of 10% or more have already been taxed at 10%, these exempt incomes are excluded from the minimum tax calculation. On the other hand, for exempt overseas income with a tax burden less than 10%, only the portion of income corresponding to the actual tax burden may be deducted from the minimum tax base.
Accordingly, the domestic minimum corporate tax for the institution in question will be calculated as follows:
| Corporate Tax | Minimum Corporate Tax | |
| Commercial Profit (a) | 7,000,000 | 7,000,000 |
| Deductions | 5,800,000 | 1,500,000 |
| – Foreign subsidiary income deduction | (b+c+ç) | (b+500,000) |
| 1,000,000 TL (b) | ||
| – Foreign construction, repair, assembly, and technical services income deduction | ||
| 800,000 TL (c) | ||
| (Deduction amount corresponding to 10% tax burden (50,000/0.1) 500,000 TL) | ||
| – Industrial property rights income deduction | 4,000,000 TL (d) | |
| Corporate tax base | (a-b-c-d) | (a-b-500,000) |
| 1,200,000 | 5,500,000 | |
| Calculated corporate tax | (1,200,000 x 25%) | (5,500,000 x 10%) |
| 300.000 | 550.000 | |
| Corporate tax to be paid | 550.000 | |
Since the calculated corporate tax for (H) A.Ş. is lower than the minimum corporate tax, the calculated corporate tax will be taken as 550,000 TL.
In accordance with Article 5, paragraph 1(b) of Law No. 5520, the tax burden on the 1,000,000 TL overseas subsidiary income exemption in Country (A) is 15% (150,000/1,000,000 = 15%), which exceeds 10%, so the overseas subsidiary income is excluded from the minimum tax calculation.
In accordance with Article 5, paragraph 1(h) of Law No. 5520, for the 800,000 TL exempt income on which 50,000 TL tax was paid abroad, an amount of 500,000 TL is excluded from the minimum tax application, calculated by considering the minimum tax rate (50,000/0.1). Minimum tax will be calculated on the remaining 300,000 TL.
Source: Corporate Tax Law Communiqué No. 23
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