The “Draft Bill on Amendments to Tax Laws and Certain Other Laws” (“Draft Bill“), submitted to the Grand National Assembly of Türkiye on July 16, 2024, was accepted by the Plan and Budget Commission on July 18, 2024. The Draft Bill is expected to be discussed and enacted by the General Assembly of the Grand National Assembly of Türkiye within a short period of time.
The Draft Bill initially aimed to impose a minimum corporate tax rate of 10% on all corporate taxpayers, regardless of any deductions or exemptions. This was due to the finding that the effective corporate tax rate, especially for large-scale enterprises, falls below 10% despite the general corporate tax rate of 25% in Türkiye, due to various deductions and exemptions.
This regulation would have meant that corporate taxpayers would be required to pay a minimum of 10% Domestic Minimum Corporate Tax on their commercial balance sheet profits, without taking into account any deductions or exemptions. However, this would have resulted in the removal of the existing corporate tax exemptions for companies operating in Technoparks or those qualified as R&D and design centers, effectively subjecting them to a 10% corporate tax on their earnings.
Therefore, during the discussions of the Draft Bill in the Plan and Budget Commission on July 18th, an amendment was proposed and accepted to prevent the IT sector from being adversely affected by this new tax regulation. The amendment stipulates that (i) earnings from R&D activities carried out in Technology Development Zones (Technoparks) under Law No. 4691, and (ii) R&D, innovation, and design expenditure deductions made in R&D and design centers under Law No. 5746, will be deducted from the Domestic Minimum Corporate Tax base. In other words, these earnings and deductions will not be subject to taxation.
As a result, the existing corporate tax status of companies operating in Technoparks and benefiting from the profit exemption, as well as companies benefiting from R&D and design center profit deductions, will be preserved.
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You can access the full text of the Draft Bill via the following link:
Draft Bill on Amendments to the Tax Laws and Certain Laws
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