The Law No. 7456 on Amendment of Certain Laws and the Decree Law No. 375 on the Additional Motor Vehicles Tax for the Compensation of the Economic Losses Caused by the Earthquake Disaster enters into force by publishing in the Official Gazette dated July 15, 2023
Below is a summary of the significant tax-related amendments to Law No. 7456.
Corporate Income Tax Rate Increased by 5 Points
The general corporate income tax rate is raised from 20% to 25% in Article 21 of the Law No. 7456. The 25% rate that is currently applied to the earnings of banks, companies subject to Law No. 6361, electronic payment and money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies, and pension companies is increased to 30%.
The amendments will be implemented beginning with tax returns due after October 1, 2023, for the accounting period of 2023 and succeeding accounting periods. In addition, the new rates will apply to taxpayers’ subject to the special accounting period for accounting periods beginning in 2023 and subsequent years.
Corporate Income Tax Discount Rate Has Been Amended
With the Law No. 7456, the 1-point discount applied to the corporate income tax rate of exporting corporations exclusively on their earnings from exports is increased to 5 points.
Corporate Tax and VAT Exemption for Real Estate Sales of Corporations Has Been Abolished
Pursuant to the Corporate Income Tax Law No. 5520, 50% of the gains arising from the sale of immovable properties that have been in the assets of corporations for at least two years are exempt from corporate income tax and the sale is exempt from VAT, provided that other conditions stipulated under the law are also met; however, the corporate income tax and VAT exemption is repealed for the immovable properties that are included in the assets of corporations after the effective date of the law.
On the other hand, the corporate income tax exemption rate of 50% for the sale of immovable properties that are already in the assets of the corporations as of the effective date of the law has been reduced to 25%. Besides, Article 8 of the Law No.7456 stipulates that VAT exemption will continue to apply to the sale of immovable properties that are already in the assets of corporations as of July 15, 2023.
Tax-Free Transfer of Immovable Properties Through Partial Spin-off Has Been Abolished
As per Article 20 of the Law No. 7456 the practice of transferring immovable properties at their book value through partial spin-off has been repealed, effective from January 1, 2024.
Exemption for the Income Derived from Certain Funds Has Been Abolished
It is also repealed the exemption for the dividends earned by corporations from other mutual fund participation shares subject to full taxation and the income arising from the return of participation shares to the fund, valid for those acquired after the publication date of the Law.
Additional Motor Vehicle Tax Has Been Introduced
Additional Motor Vehicles Tax equal to the Motor Vehicles Tax accrued for the year 2023 as a one-off for the vehicles registered in the relevant registry as of July 15, 2023 and to be registered for the first time until December 31, 2023.
The additional Motor Vehicle Tax can be paid in two equal installments, the first installment until the end of the month following the publication of the Law (August 2023) and the second installment until the end of November.
In addition to the aforementioned, the Law No. 7456 also envisages regulations regarding the powers granted to the President regarding the Recycling Participation Fee collected in accordance with the Environmental Law and the determination of the Special Consumption Tax rate applied to certain goods in accordance with the Special Consumption Tax Law.
The full text of the Law No. 7456 referred to in this reminder is available at this link.