During How Many Years Can You Deduct Company Loss from the Tax?

23.08.2017

1- WHILE CALCULATING THE TAX ASSESSMENT IN CORPORATE TAX, WHICH LOSSES WILL BE SUBJECT TO DISCOUNT?
While calculating tax assessment in Corporate Tax, the losses indicated below can be subject to discount on condition that the amounts related to every year are stated separately in Corporate Tax Return;
1.1- The conditions listed below are required while deducting the losses (which have taken place in previous declarations on condition that they have not been transferred more than 5(five) years), the losses whose amounts do not exceed the amount of equity capital as of the date of transfer date of acquired institutions, the losses that are in proportion to acquired asset and whose amounts do not exceed the acquired amount of equity capital of the dividend company.
1.1.1- Corporate Tax Returns related to the last 5(five) years should be submitted on time.
1.1.2- The activities of acquired company should continue at least 5(five) years beginning from the financial year when the separation or the transfer takes place.

***In case of the aggression of these conditions, there will be loss of tax for taxes that are not accrued on time because of loss offsetting.

1.2- In Turkey, except for the losses related to incomes being exempted from corporate tax, the losses originated from overseas activities on condition that they are not transferred more than 5(five) years;
1.2.1- Including the losses of tax assessments submitted according to tax laws of territorial country; the losses that are included every year in a report kept by the institution given the audit mandate;
1.2.2- On condition that that report and a translated copy of it should be submitted to the related Tax Office in Turkey, that losses can be subject to discount.

2- WHICH DOCUMENTS SHOULD BE KEPT AND CONFIRMED IN THE AUDIT REPORT ATTACHMENT?
2.1- Tax returns,
2.2- Balance sheet and income statement attached to the report kept by the auditing firm are supposed to be confirmed by the authorized institutions.

3- IF THERE IS NO AUDITING FIRM IN THE COUNTRY WHERE ONE IS ACTIVE, WHO MAY CONFIRM THE DECLARATIONS?
If there is no auditing firm in the country where one is active, tax returns can be confirmed by
3.1- Turkish Embassy or Consulate in that country with one copy of the document,
3.2- the representatives in the same nature that secure the Turkish benefits, if there is no embassy or consulate. It will be enough to submit the original document with a translated copy to Tax Office.

4- HOW SHOULD THE OVERSEAS LOSSES (BEING SUBJECT TO DISCOUNT) BE CALCULATED?
If the overseas losses (being subject to discount in Turkey) are set off or recorded as expense in related country, the amount of overseas income, which will be included in declaration in Turkey and which is before it is written as offsetting or expense, will be taken into consideration.

Source: Corporate Tax Law