Domestic Minimum Corporate Tax Example-5

If the following conditions are met:

  • Commercial balance sheet profit,
  • Exemption of earnings from foreign exchange-protected deposit accounts,
  • Previous years’ losses,
  • Right to apply reduced corporate tax under an investment incentive certificate.

Example 5:

For (E) A.Ş.:

  • The commercial balance sheet profit for the 2025 fiscal period is 15,000,000 TL,
  • Exemption of earnings from foreign exchange-protected deposit accounts is 5,000,000 TL, and
  • Previous years’ losses are 5,000,000 TL.

The company also has the right to apply a reduced corporate tax rate on an investment under an incentive certificate obtained before 2/8/2024, for the 2025 fiscal period, resulting in a tax base reduction of 2,000,000 TL at a reduced tax rate of 5%.

Accordingly, the minimum corporate tax for this corporation will be calculated as follows:

Corporation Tax
Minimum Corporation Tax
Net Profit from Commercial Balance Sheet (a) 15,000,000 15,000,000
Deductions
– Income from FX-protected deposit accounts (b) 5,000,000 (b) 0
Carryover of losses from previous years (c) 5,000,000 0
Corporate tax base (ç) (a-b-c)  5,000,000 15,000,000 (a)
Tax calculated on the portion of the base subject to the reduced rate based on the incentive document (d) (2,000,000 x 5%) = 100,000
Tax not taken according to the incentive document (e) (2,000,000 x 20%) = 400,000
Tax calculated on the portion of the base subject to the general rate (f) (3,000,000 x 25%) = 750,000
Calculated corporate tax (d+f) = 850,000
(15,000,000 x 10%) – e = 1,100,000
Corporate tax to be paid 1,100,000

From the calculated minimum corporate tax of 1,500,000 TL for (E) A.Ş., 400,000 TL of tax that was not claimed under Article 32/A for the incentive certificate will be deducted, resulting in a minimum corporate tax of 1,100,000 TL. Since this amount is higher than the corporate tax calculated as 850,000 TL according to the company’s declaration, the calculated corporate tax will be taken as 1,100,000 TL.

Source: Corporate Tax Law Communiqué No. 23
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