Base Increase and Tax Restructuring Law Adopted by Parliament Plus Earthquake Tax

We had shared the details of the bill regarding the tax base increase and Tax/SSI debt restructuring with you on January 31, 2023.

The bill was discussed in Parliament on March 8 and 9, adopted, and enacted.

It will enter into force upon publication in the Official Gazette.

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Our fees for the tax base increase declarations and earthquake tax declaration

- Corporate Tax / Income Tax base increase … 1,500 TRY + VAT

- VAT base increase … 2,000 TRY + VAT

- Withholding tax base increase … 2,000 TRY + VAT

- Cash/shareholders' current account correction … 1,000 TRY + VAT

- Inventory correction … 1,500 TRY + VAT

- Fixed asset correction … 1,500 TRY + VAT

- Earthquake tax … 1,000 TRY + VAT

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The draft law and the text of the law adopted by Parliament are largely the same, with only a few differences

1- The year 2022 was included in the tax base increase

2- Additional taxes were introduced due to the earthquake

3- Facilitations were provided for the earthquake region

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1- The year 2022 was included in the tax base increase. If it is desired to benefit from the 2022 tax base increase

- The minimum increase amount for 2022 is 500,000 TRY and the tax base increase rate is 25%

- It cannot be less than the 2021 Corporate Tax base plus 122.93%

- It cannot be less than the 2022 Provisional Tax base plus 40%

- In the event that the 3rd Provisional Tax return has not been filed, the rates of 40% will be applied as 100% and 300%

- All losses belonging to the year 2022 cannot be deducted from the profits of the following years starting from 2023

- Provisional taxes that cannot be offset against the taxes calculated in the annual returns for this year by income or corporate taxpayers who make a tax base increase for 2022 will not be refunded

- If it is desired to benefit from the 2022 tax base increase for payroll withholding tax and VAT as well, 2% of the tax base must be paid

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2- Additional tax was introduced due to the earthquake

- It will be a one-time payment

- Corporate taxpayers will pay; income taxpayers are out of scope

- A 10% tax will be calculated over the deductions and exemptions included in the 2022 Corporate Tax return (it will not be calculated over the corporate tax base, only those with exempt income will pay)

- It will be paid in 2 installments in April and August

- Taxpayers in areas where the earthquake disaster occurred are exempt from the tax

- Earthquake taxes will be considered as Non-Deductible Expenses (NDE) and will not be included in the tax calculation

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Deductions and exemptions subject to tax

- Affiliation earnings exemption

- Emission premium

- Free zone earnings

- Technopark earnings

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Deductions and exemptions exempt from tax

- Investment allowance

- Technopark R&D center micro and small enterprise

- Sponsorship expenses

- Donations and contributions

- Venture capital fund earnings

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3- Facilitations were provided for the Earthquake Region

- Application and payment installment periods to be made according to the Tax Procedure Law (VUK) will be extended by 1 month

- The fair rental value basis will not be applied to real persons with a residence

- No income tax withholding will be made on payments made by insurance and pension companies and from the individual pension system to the heirs of those who died in the earthquakes

- Inheritance and transfer tax will not be levied on assets transferred by inheritance to the heirs of those who died in the earthquakes

- Taxes and SSI premiums will not be calculated for in-kind assistance made by employers in addition to their current wages between February 6 and July 31, 2023, and cash assistance not exceeding 50 thousand liras, to individuals and their families affected by the earthquake

- In the event that the books and documents that must be kept and retained according to laws are destroyed in the earthquake, the application period to the competent court will be extended until July 31, 2023.

- No fees will be charged for certain transactions at trade registry offices

- In places where force majeure is declared; taxpayers with receivables may set aside provisions in their passive accounts for these receivables upon the determination lawsuit filed.

- Taxes, tax penalties, delay interest, and delay surcharges regarding buildings demolished, heavily, or moderately damaged in the earthquakes, and vehicles rendered unusable due to heavy damage, will be written off.

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