06.07.2021

In the subparagraph (ı) added to the first paragraph of the 10th article of the Corporate Tax Law with the 8th article of the Law on the Amendment of Certain Laws and Decree Laws dated 27/3/2015 and numbered 6637, it is stipulated that 50% of the amount calculated until the end of the relevant accounting period can be deducted from the corporate income, provided that it is separately shown on the corporate tax return in the determination of the corporate tax base, within the relevant accounting period of capital companies, excluding institutions operating in the finance, banking and insurance sectors and state economic enterprises, by taking into account the weighted annual average interest rate applied to commercial loans in TL opened by banks for the year benefiting from the discount by the Central Bank of the Republic of Turkey on the basis of cash capital increases in the paid or issued capital amounts registered in the trade registry or the portion of the paid-in capital paid in cash in newly established capital companies.

1.1. Scope of the discount

In calculating the amount to be subject to discount pursuant to this regulation, which was introduced to strengthen the capital structures of capital companies, until the end of the relevant accounting period, the amount to be calculated according to the provisions of subparagraph (ı) of the first paragraph of Article 10 of the Corporate Tax Law will be taken into account, over the cash capital increases in the paid or issued capital amounts registered in the trade registry as of 1/7/2015 or the cash amount of the paid-in capital in newly established capital companies as of this date.

In this discount application,

  1. a) Cash capital increase refers to the cash increases in the paid or issued capital amounts registered in the trade registry by the capital companies in the relevant accounting period and the portion of the paid-in capital in newly established capital companies in cash.
  2. b) Commercial loans interest rate refers to the “Commercial Loans” (Opened in TL) (Excluding Legal Entity Overdraft Account and Corporate Credit Cards) interest rate from the “Weighted Average Interest Rates Applied to Loans Extended by Banks”, which will be considered as the weighted annual average interest rate applied to commercial loans in TL opened by banks and which was announced last year by the Central Bank of Republic of Turkey (CBRT) for the year in which the discount was used.
  3. c) Duration refers to the ratio of the number of months from the date of deposit (in which the registered capital is deposited to the bank account of the company before the decision regarding the capital increase is registered in the trade registry) to the bank account of the company to the end of the accounting period, compared to the 12 months, when the cash portion of the capital increase registered in the trade registry is deposited in the company’s bank account.

In the calculation of the amount to be subject to the discount; cash capital increases in paid or issued capital amounts in existing capital companies, in newly established capital companies, the part of the paid-in capital that is covered in cash will be taken into account, and discounts will not be available for the portion of the capital that is not covered in cash.

In addition to these, the following will not be taken into account in the calculation of the discount amount.

– Capital increases arising from non-cash asset transfers to capital companies,

– Capital increases arising from the participation of capital companies in merger, transfer and division transactions,

– Capital increases arising from the addition of equity items in the balance sheet to the capital,

– Capital increases made by the shareholders or by persons related to the shareholders within the scope of Article 12 of the Corporate Tax Law, by using loans or borrowing,

– Capital increases realized by adding securities such as stocks, bonds or bills other than cash capital to the company,

– Capital increases realized in the form of offsetting balance sheet items within each other

Example: (A) Ltd. Company lent 1.000,000 TL to Ms. (D), who is a 50% shareholder, on 4/5/2015, and this amount is followed in the “Receivables from Shareholders” account. On 15/7/2015, it was decided to increase the capital of (A) Ltd. Company by 2.000,000 TL in cash and 50% of this amount, 500,000 TL, was deposited into the company’s bank account on the same date. The decision regarding the cash capital increase was registered in the trade registry on 22/7/2015. Ms. (D) has fulfilled her capital commitment by depositing the remaining 750.000 TL in the bank account of (A) Ltd. Company, of which she is a shareholder, on 31/7/2015 and she has not yet paid the debt of 1.000.000 TL that she received from the company on 4/5/2015.

Since the capital increases realized by the shareholders by using loans or borrowing money will not be taken into account in the calculation of the discount amount, for the 1,000,000 TL paid by Ms. (D) in relation to the capital commitment, Ms. (D) has received the 1.000. It is not possible to benefit from the discount until the debt of 1.000.000 TL is paid (in case of partial payment of this debt, limited to the unpaid amount).

1.2. Those who will benefit from the discount

Except for institutions operating in the finance, banking and insurance sectors and state economic enterprises; capital companies that meet the conditions can benefit from the discount. Therefore, institutions operating in the finance, banking and insurance sectors and state economic enterprises will not be able to benefit from this discount.

1.3. Application of Discount

Based on the cash capital increase, the portion of the amount calculated until the end of the relevant accounting period, which corresponds to the rate determined by the Council of Ministers, can be deducted from the corporate earnings of the relevant period, taking into account the commercial loan interest rate announced by the CBRT for the year benefiting from the discount.

The amount that can be deducted from the corporate income will be calculated as follows:

In the application of the discount, the fraction of the month (in which the registered capital is deposited to the bank account of the company before the decision regarding the capital increase is registered in the trade registry) in which the increased capital is paid in cash by the shareholders during the accounting period will be counted as a whole month, and the discount amount will be calculated on a pro-rata basis for the remaining period of the year.

1.3.1. Registration of the capital increase and depositing the increased amount into the company’s bank account

Capital companies will be able to benefit from this discount application as of the accounting period in which the decision of their authorized bodies regarding the partial or full cash capital increase is registered in the trade registry.

The amount of capital increase that can be subject to the discount calculation is limited to the portion of the increased capital actually deposited in cash to the company’s bank account by the shareholders, and the portion of the committed capital that is not actually deposited into the company’s bank account in cash by the shareholders will not be taken into account in the calculation of the discount amount.

This discount can be benefited from for the capital committed in cash, based on the following;

– Registration date for the part of the company deposited into the bank account before the decision on the capital increase is registered in the trade registry

– Date of deposit into the company’s bank account for amounts deposited into the company’s bank account after the registration date

Example 1:  A decision was taken on 15/7/2015 to increase the capital of (B) A.Ş. by 6,000,000 TL in cash and the amount committed by Mr. (F), one of the partners of the company, is 2,000,000 TL and the amount committed by Mr. (K) is 4,000,000 TL. 1,500,000 TL, 25% of the committed amounts, was deposited into the company’s bank account by the partners on 30/7/2015, and then the capital increase decision was registered with the trade registry on 3/8/2015.

Company partner Mr. (F) invested the remaining portion of the capital he has committed, 1,500,000 TL on 6/8/2015, after the registration date of the decision regarding the capital increase, and the other partner of the company, Mr. (K), deposited the remaining 3.000.000 TL of the committed capital to the bank account of the company on 9/11/2015.

The discount rate that (B) A.Ş. can benefit from is 50%, and the commercial loan interest rate announced by the Central Bank of Republic of Turkey as of the end of 2015 is 10%.

It is possible to benefit from the discount based on the registration date of this decision, 3/8/2015, for 25% of the capital commitment deposited in the bank account of (B) A.Ş. before the decision regarding the capital increase is registered in the trade registry

The discount amount will be calculated by taking into account the dates when these amounts are deposited into the company’s bank account, for capital commitments deposited into the company’s bank account by the partners after the registration date of the decision.

From this month until the end of the year, the discount amount can be calculated for the portion of 1,500,000 TL deposited into the company’s bank account, since the decision regarding the capital increase was registered with the trade registry on 3/8/2015, the committed capital must be paid before the registration date of the decision.

Discount amount = Cash capital increase x Commercial loans interest rate x Discount rate x Duration

= 1.500.000 TL x 0,10 x 0,50 x (5/12)

= 31.250 TL

After the date of registration of the decision regarding the capital increase in the trade registry, from the months when these amounts are deposited into the company’s bank account, the discount amount can be calculated until the end of the year, since 1,500,000 TL of the committed capital was deposited by Mr. (F) on 6/8/2015 and the remaining 3,000,000 TL was deposited into the company’s bank account on 9/11/2015 by Mr. (K), the other partner of the company,

For the amount deposited by Mr. (F),

Discount amount = Cash capital increase x Commercial loans interest rate x Discount rate x Duration

= 1.500.000 TL x 0,10 x 0,50 x (5/12)

= 31.250 TL

For the amount deposited by Mr. (K),

Discount amount = Cash capital increase x Commercial loans interest rate x Discount rate x Duration

= 3.000.000 TL x 0,10 x 0,50 x (2/12)

= 25.000 TL

Therefore, the total discount amount (31.250 TL + 31.250 TL + 25.000 TL =) calculated over the capital increase of 6.000.000 TL in the 2015 accounting period and to be taken into account in the determination of corporate income will be 87.500 TL.

Moreover, if (B) A.Ş. does not reduce its capital in the 2016 accounting period and fulfills other conditions, it will be able to calculate the discount amount for 12 months over the whole of this capital increase of 6,000,000 TL.

Example 2: With the general assembly decision dated 22/12/2015, it was decided to increase the capital of (C) A.Ş. by 12.000.000 TL and 25% of this amount, 3.000.000 TL, was deposited to the bank account of the company on 29/12/2015.

The said general assembly resolution was registered with the trade registry on 13/1/2016 and the remaining 9.000.000 TL of the capital commitment was deposited in cash on 29/1/2016 to the bank account of the company. (C) A.Ş. will take into account the discount rate in calculating the discount amount of 50%, and the commercial loan interest rate announced by the Central Bank of Republic of Turkey as of the end of 2016 is 10%.

Although the decision regarding the capital increase was taken in the 2015 accounting period, as of 2015 accounting period, it is not possible to benefit from the discount for 25% of the committed capital deposited to the bank account of the company on 29/12/2015, since the registration of this decision to the trade registry was carried out on 13/1/2016.

On the other hand, in determining the corporate tax base for the 2016 accounting period, (C) A.Ş. will be able to benefit from the discount application on the entire amount of its capital increased in cash, since the decision regarding the capital increase was registered in the trade registry in January 2016, and the remaining part of the capital commitment was deposited in the bank account of the company by the partners in this period.

Discount amount = Cash capital increase x Commercial loans interest rate x Discount rate x Duration

= 12.000.000 TL x 0,10 x 0,50 x (12/12)

= 600.000 TL

(C) A.Ş. will be able to benefit from the discount application for the amount of 600.000 TL in the determination of the corporate tax base for the 2016 accounting period.

(Section added with Article 1 of Corporate Tax General Communiqué Serial No. 10) 1.3.1.1. Status of capital advances

In order to be used in the fulfillment of the capital commitment arising from the capital increase to be made in the future, it is possible to consider the amounts deposited to the bank account of the company as a capital advance by the partners before the decision regarding the capital increase, based on the date of registration of the said decision in the trade registry, provided that:

  1. The amounts deposited in the company’s bank account as a capital advance are followed in the “Other Capital Reserves” account, which is among the equity items in the company’s balance sheet, as of the date of depositing the bank account.
  2. Registration of the decision regarding the capital increase related to these amounts to the trade registry until the end of the accounting period of the date the amounts deposited to the bank account of the company as capital advance are deposited into the bank account

Therefore, it is not possible to take into account the amount of capital advance which is not subject to capital increase in the accounting period of the date of deposit in the bank account of the company. Moreover, for the amounts that are not followed in the “Other Capital Reserves” account, which is among the equity items in the balance sheet from the date of deposit in the company’s bank account, it is not possible to benefit from the discount application even if the capital increase regarding these amounts is realized in the relevant accounting period.

Example: Capital advance amounting to 1.000,000 TL deposited by Mr. (T), one of the partners of (B) A.Ş., to the bank account of the company on 10/5/2016, in order to provide the financing needed for the project carried out by the company and to be added to the capital in the future, by (B) A.Ş. It was transferred to the company records by being recorded in the “Other Capital Reserves” account on 10/5/2016. Then, the decision regarding the cash capital increase of (B) AŞ was registered with the trade registry on 30/6/2016, and the necessary accounting records regarding the capital increase related to the said amount were made.

Accordingly, for this amount deposited by the partner Mr. (T) to the company’s bank account on 10/5/2016 and recorded in the “Other Capital Reserves” account on the same date, it is possible to benefit from the discount application as of 30/6/2016 when the decision regarding the cash capital increase was registered in the trade registry.

1.3.2. Benefiting separately for each accounting period

Capital companies will be able to benefit from the discount application for each subsequent accounting period, starting from the accounting period in which the cash capital increase is made, on the cash capital increases they make.

On the other hand, in case of a capital reduction in the following periods, the portion of the cash capital increase equal to the reduced capital amount will not be taken into account in the calculation of the deduction.

Example: (BA) A.Ş.’s general assembly resolution dated 3/8/2015 regarding the increase of 6,000,000 TL in cash was registered with the trade registry on 24/8/2015 and the entire capital commitment was deposited into the bank account of the company within this month.

(BA) A.Ş. will benefit from the discount for a period of 5 months in the 2015 accounting period and also from this discount in the following accounting periods due to this increased capital amount as long as it continues to meet the conditions.

1.3.3. Transfer of the amount that cannot be deducted due to insufficient earnings to the next periods

In case the deduction amount calculated by the capital companies for the cash capital increase cannot be deducted in the determination of the tax base for the relevant accounting period due to insufficient earnings, these deduction amounts can be subject to deduction in determining the base for the following accounting periods without being subject to any indexation.

Example: (D) A.Ş., which calculated a discount amount of 50.000 TL over the cash capital increases realized in the 2016 accounting period, could not benefit from the discount due to its financial loss in this accounting period.

(D) A.Ş.’s discount amount of 50.000 TL, which could not be deducted from the corporate income due to insufficient earnings in the 2016 accounting period, will be carried over to the following periods. If there is a profit in the following periods, this amount that cannot be deducted in the 2016 accounting period can be subject to deduction in the determination of the relevant period’s base without being subject to any indexation.

1.3.4. Capital decrease

If the capital companies benefiting from this discount make a capital decrease later on, it is not possible to benefit from this decrease as of the month following the month in which the decision regarding the capital decrease is registered in the trade registry for the portion of the cash capital increase equal to the decreased capital amount.

On the other hand, if the capital companies have made a capital decrease before the cash capital increase, the portion equal to the decreased capital amount will not be taken into account in the calculation of this decrease.

Example: The general assembly decision was taken on 9/5/2016 regarding the increase of the capital of (E) A.Ş. by 150.000 TL, and 37.500 TL, which is 25% of the capital commitment, was deposited to the bank account of the company by the partners on 11/5/2016.

The decision was registered in the trade registry on 23/5/2016, and the remaining part of the committed capital, 112.500 TL, was deposited in cash by the shareholders to the company’s bank account on 27/6/2016. The discount rate that (E) A.Ş. can benefit from is 50%, and the commercial loan interest rate announced by the Central Bank of Republic of Turkey as of the end of 2016 is 10%.

The general assembly decision regarding the decrease of the capital of (E) A.Ş. by 120.000 TL was registered in the trade registry on 10/7/2019.

The discount amount that (E) A.Ş. can benefit from in the 2016 accounting period will be calculated for the 37.500 TL portion of the subscribed capital, taking into account the date of registration of the decision, 23/5/2016, for the part of 112.500 TL, it will be calculated by taking into account the date of 27/6/2016, when this amount is deposited into the company’s bank account by the partners.

For 37.500 TL;

Discount amount = Cash capital increase x Commercial loans interest rate x Discount rate x Duration

= 37.500 TL x 0,10 x 0,50 x (8/12)

= 1.250 TL

For 112.500 TL;

Discount amount = Cash capital increase x Commercial loans interest rate x Discount rate x Duration

= 112.500 TL x 0,10 x 0,50 x (7/12)

= 3.281,25 TL

(E) A.Ş. will be able to deduct a deduction amount of TL 4,531.25 in the 2016 accounting period (1.250 TL + 3.281.25 TL =) in the determination of the corporate tax base. In 2017 and 2018 accounting periods, provided that other conditions are met, the discount amount can be calculated for 12 months over the said cash capital increase, taking into account the commercial loans interest rate announced by the CBRT for these periods.

For the August-December 2019 period, the discount amount can be calculated over the capital amount of 30.000 TL (150.000 TL – 120.000 TL=) considering the capital reduction, since the capital decrease was made on 10/7/2019, over the capital amount of 150.000 TL for the January-July 2019 period.

On the other hand, if (E) A.Ş. makes a capital increase in the following periods, provided that it meets the conditions, it will be able to benefit from the discount application for these increased capital amounts.

1.4. The authority granted to the Council of Ministers regarding the discount application

The authority granted to the Council of Ministers with the fourth paragraph of subparagraph (i) of the first paragraph of Article 10 of the Corporate Tax Law has been used by the Council of Ministers Decision dated 26/6/2015 and numbered 2015/7910.

1.4.1. Discount rates

In the aforementioned Council of Ministers Decision, the general discount rate has been determined as 50%, and depending on their situation, capital companies will be able to benefit from the discount application by adding the following rates to this rate.

1.4.1.1. Discount rate in publicly traded capital companies whose shares are traded on the stock exchange, ratio registered in the trade registry of the nominal amount of the shares followed as tradable shares in the stock exchange at the Merkezi Kayıt Kuruluşu A.Ş. (Central Registry Agency) as of the last day of the year benefiting from the discount, to the paid in or issued capital will be applied by adding the following:

– 25 points for companies with 50% or less,

– 50 points for companies with more than 50%,

Example: The authorized body of (F) A.Ş. has decided to increase the cash capital of 6,000,000 TL on 6/7/2015. 1,500,000 TL, 25% of the capital committed in cash, was deposited into the bank account of the company on 3/8/2015 by the partners. The said decision was registered with the trade registry on 12/8/2015 and the remaining portion of the capital commitment, 4.500.000 TL, was deposited into the bank account of the company until the end of August 2015.

As of 31/12/2015, the ratio of the nominal amount of the shares of (F) A.Ş., which are followed up as tradable shares at the Merkezi Kayıt Kuruluşu A.Ş., to the issued capital is 40%, and as of the end of 2015, the commercial loan interest rate announced by the CBRT is 10%.

Accordingly, the discount rate that (F) A.Ş. will consider in the discount application due to the cash capital increase realized will be (50% + 25%=)  75% provided other conditions are met.

Discount amount = Cash capital increase x Commercial loans interest rate x Discount rate x Duration

= 6.000.000 TL x 0,10 x 0,75 x (5/12)

= 187.500 TL

On the other hand, if the ratio of the nominal amount of the shares of (F) A.Ş. to the issued capital of Merkezi Kayıt Kuruluşu A.Ş., which are followed up as tradable shares, is 80%, the discount rate (50% + 50%=) that will be taken into account in the calculation of the discount amount will be 100%.

Discount amount = Cash capital increase x Commercial loans interest rate x Discount rate x Duration

= 6.000.000 TL x 0,10 x 1 x (5/12)

= 250.000 TL

1.4.1.2. If the capital increased in cash is used in production and industrial facilities with investment incentive certificates, machinery and equipment investments belonging to these facilities and/or land and plot investments allocated for the construction of these facilities, the said discount will be applied by adding 25 points, limited to the fixed investment amount included in the investment incentive certificate.

Example: Authorized body of (G) A.Ş. has decided to increase the cash capital of 24.000.000 TL on 28/8/2015. 6,000,000 TL, 25% of the capital committed in cash, was deposited into the company’s bank account on 8/9/2015.

The decision in question was registered with the trade registry on 15/9/2015 and the remaining portion of the capital commitment was deposited into the company’s bank account by the end of September of the same year. On the other hand, (G) A.Ş. used 10.000.000 TL of this resource obtained from the cash capital increase in the investment of industrial facility with investment incentive certificate, which includes a fixed investment amount of 9.000.000 TL in September of the same year.

The ratio of the nominal amount of the shares of (G) A.Ş. to the issued capital of the Merkezi Kayıt Kuruluşu A.Ş. which are followed as tradable shares in the stock exchange is 80%, and as of the end of 2015, the commercial loan interest rate announced by the CBRT is 10%.

Accordingly, since the ratio of the nominal amount of the shares of (G) A.Ş. to the issued capital of Merkezi Kayıt Kuruluşu A.Ş. which are followed as tradable shares in the stock exchange, is 80%, the discount rate that will be taken into account in the calculation of the discount amount will be (50% + 50%=) 100%.

On the other hand, limited to this amount, the discount rate will be taken into account as (50% + 50% + 25%=) 125% by adding 25 points, since 9.000.000 TL of the 10.000.000 TL used in the investment incentive certificate industrial facility investment of (G) A.Ş.’s cash capital increase is related to the fixed investment amount.

Discount amount = Cash capital increase x Commercial loans interest rate x Discount rate x Duration

= 9.000.000 TL x 0,10 x 1,25 x (4/12)

= 375.000 TL

For the remaining capital increase of (24.000.000 TL – 9.000.000 TL=) 15.000.000 TL, the discount rate will be considered as (50% + 50%=) 100%.

Discount amount = Cash capital increase x Commercial loans interest rate x Discount rate x Duration

= 15.000.000 TL x 0,10 x 1 x (4/12)

= 500.000 TL

Therefore, the total amount that (G) A.Ş. can deduct in its corporate tax return for the 2015 accounting period is (375,000 TL + 500,000 TL=) 875,000 TL.

1.4.2. Limitations on discount application

Different discount rates have been determined to be taken into account in the discount application in the third paragraph of the first article of the Council of Ministers Decision No. 2015/7910.

1.4.2.1. The discount rate will be applied as 0% for capital companies whose income consists of passive income such as interest, profit share, rent, license fee, security sales income other than commercial, agricultural or self-employed activities, which are carried out by employing capital, organization and personnel, 25% or more of which is proportional to the company’s activity.

Example: (H) A.Ş. decided to increase the capital of 10.000.000 TL in cash on 29/7/2015 and this decision was registered in the trade registry on 14/8/2015. However, from the income statement of (H) A.Ş. for the 2015 accounting period, it is seen that 55% of its income consists of the sum of the interest income from the time deposit accounts of the company in the banks and the profit shares obtained from the subsidiaries.

Accordingly, in the calculation of the amount that can be deducted due to the cash capital increase, the discount rate to be taken into account for the 2015 accounting period will be applied as 0%, since more than 25% of (H) A.Ş.’ income consists of passive income.

1.4.2.2. The discount rate will be applied as 0% in the calculation of the deductible amount, for capital companies whose total assets are 50% or more of subsidiaries, subsidiaries and participation shares.

Example: (K) A.Ş. took a cash capital increase decision of 2.000.000 TL on 7/6/2016 and this decision was registered in the trade registry on 10/8/2016. As of the last day of the accounting period in which the cash capital increase decision of (K) A.Ş. was registered, it is seen that 57% of total assets consist of subsidiaries, affiliates and subsidiaries.

Therefore, the discount rate to be taken into account in the calculation of the deductible for the 2016 accounting period will be applied as 0%, since more than 50% of the total assets of (K) A.Ş. consists of subsidiaries, affiliates or subsidiaries.

1.4.2.3. The discount rate will be applied as 0% in the calculation of the deductible amount, limited to the amount corresponding to the portion of the increased cash capital that has been invested in other companies as capital or made available as a loan.

Example 1: (L) A.Ş. made a cash capital increase of 1,000,000 TL on 10/9/2015 and invested 400,000 TL of this fund, which it obtained from the cash capital increase, on 22/10/2015 as capital to the newly established company (KL) Ltd, of which it is a partner.

The discount rate that (L) A.Ş. will take into account in calculating the deductible amount for the 400,000 TL invested as capital in the newly established (KL) Ltd Company of the cash capital increase amounting to 1.000,000 TL will be 0%.

However, (L) A.Ş. will be able to benefit from the discount application according to the rate to be determined in the relevant period, provided that other conditions are met for the remaining 600,000 TL capital increase.

Example 2: (T) A.Ş., which increased its capital in cash by 5.000.000 TL on 17/9/2015, lent 2.000.000 TL of this resource to its partner on 27/10/2015.

The discount rate that (T) A.Ş. will take into account in calculating the deductible amount for the 2,000,000 TL loaned to its partner of the cash capital increase amounting to 5,000,000 TL will be 0%. However, for the remaining 3,000,000 TL portion of the cash capital increase, provided that other conditions are met, it will be able to benefit from the discount application according to the rate to be determined.

On the other hand, it is possible to benefit from the discount application, limited to the amount collected, starting from the period when 2,000,000 TL given as a loan is partially or completely collected.

1.4.2.4. In capital companies investing in land and plot, a discount rate of 0% will be applied in calculating the deductible amount, limited to the amount corresponding to the land and plot investment.

Example: (M) A.Ş., which had a cash capital increase of 1.000.000 TL on 11/1/2016, purchased a land for 800.000 TL on 23/10/2017.

Accordingly, (M) A.Ş. will be able to benefit from the discount application for 12 months in the 2016 accounting period, provided that the conditions are met, taking into account the general discount rate, due to the cash capital increase of 1,000,000 TL in the 2017 accounting period, the 10-month general discount rate will be taken into account, and in the remaining 2 months, the discount rate will be applied as 0%, limited to the amount of 800,000 TL used in the purchase of the land on 23/10/2017.

1.4.2.5. In case of a capital reduction in the period from 9/3/2015 to 1/7/2015 when the subparagraph (ı) of first paragraph of Article 10 of the Corporate Tax Law entered into force, the discount rate will be applied as 0% in the calculation of the deductible amount, limited to the amount corresponding to the reduced capital amount.

Example: The authorized body of (N) A.Ş., which had a capital decrease of 4.000.000 TL on 15/4/2015, decided to increase its capital in cash of 10.000.000 TL on 7/7/2015, and 2,500,000 TL, 25% of this amount, was deposited into the company’s bank account by the partners on the same date.

The said decision was registered in the trade registry on 15/7/2015 and the remaining portion of the capital commitment, 7.500.000 TL, was deposited in cash on 29/7/2015 by the partners to the company’s bank account.

Accordingly, (N) A.Ş. will be able to benefit from the discount application by taking into account the general discount rate for only the portion of (10.000.000 TL – 4.000.000 TL=)  6,000,000 TL of the cash capital increase, if it meets the conditions, and for the remaining 4,000,000 TL, the discount rate will be 0%.

1.5. Other issues

1.5.1. It is possible to benefit from this deduction only as of the fourth temporary taxation period among the temporary tax periods, since the most recently announced commercial loan interest rate for the year utilized by the CBRT will be taken into account when calculating the discount amount.

On the other hand, the amounts that cannot be deducted in the relevant accounting period due to insufficient earnings can be subject to deduction in the determination of the provisional tax bases of the temporary taxation periods for the following accounting period.

1.5.2. Capital companies, for which a special accounting period has been determined, will be able to benefit from the discount by taking into account the commercial loan interest rate announced by the CBRT as of the end of the accounting period, provided that the conditions are met.

1.5.3. Capital companies wanting to benefit from the discount are required to submit the bank account statement approved by the relevant bank branch, in paper form or electronically, containing these transactions regarding the amount of the committed capital increase actually deposited into the company’s bank account, to the tax offices to which they are affiliated in terms of corporate tax within the period of filing the relevant period corporate tax return.

Moreover, within the framework of the explanations in this section of the Communiqué, capital companies wanting to benefit from the discount are required to submit information on the capital they have increased in cash and the amount to be subject to the discount in the annex of the corporate tax return.

Source: Revenue Administration of Republic of Turkey – Translated by Karen Audit – The rights of this translation belong to KarenAudit and unauthorized use is prohibited.
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.