It is expected that the rules regarding the implementation of the incentive for a 2-point reduction in corporate tax for corporations that are offered to the public at least 20% to be traded on the Borsa Istanbul Equity Market for the first time are expected to be announced soon.
According to the information obtained from the Revenue Administration (RA), the draft communiqué prepared by the institution regarding the implementation of the aforementioned regulation, which was enacted in Law No. 7256 published last year, was updated by taking into account the opinions of the relevant institutions.
According to the draft communiqué, which is planned to be published soon, the corporate tax rate will be applied to the earnings of the institutions that are offered to the public at a rate of at least 20% for the first time to be traded on the Borsa Istanbul Equity Market, starting from the first fiscal period when the shares are offered to the public for the first time, the corporate tax rate will be applied with a 2-point discount.
Banks, leasing companies, factoring companies, financing companies, payment and electronic money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies will not be able to benefit from the discount application.
In order to benefit from the discounted rate application, the shares must be offered to the public for the first time after 17 November 2020 on the Borsa Istanbul Equity Market and at least 20% public offering must be realized.
DURING 5 ACCOUNTING PERIOD, “AT LEAST 20%” CONDITIONS WILL BE MAINTAINED
The discount will be applied from the temporary taxation period when the public offering condition is met. No correction will be made for the temporary taxes calculated over the legal rate in the temporary taxation periods past the date of the public offering.
In order to benefit from the discounted rate application, the public offering of “at least 20%” will have to be maintained for 5 fiscal periods starting from the fiscal period in which the IPO took place for the first time.
In case of violation of this condition, taxes not accrued on time due to the application of reduced tax rate will be collected with delay interest without imposing a tax loss penalty.
In addition, within the scope of this provision, if the institutions benefiting from the reduced rate are liquidated for the first time within 5 fiscal periods as of the fiscal period in which the public offering took place, they are dissolved by transfer or full division, taxes that are not accrued on time due to the aforementioned deduction will be collected with default interest, without imposing a tax loss penalty.
The corporate tax application at the said reduced rate will be aimed at the earnings of the taxpayers using the normal fiscal period as of January 1, 2021, and the earnings of the taxpayers using the special fiscal period in the special fiscal periods starting from the 2021 calendar year.
Source: Sabah / Translated by Irem Yildiz