Special Communication Tax as Deductible Expense

The increasing rate of Special Communication Tax ("SCT") turns the referred tax liability into a serious cost item for companies.

Under Article 39/6 of the Expenditure Tax Law No. 6802, being the legal basis of SCT, it is regulated that SCT cannot be taken into account as a deductible expense during corporate and income tax application and it cannot be set off from any other taxes. Considering the above mentioned regulation and the recent rulings of the Revenue Administration, taxpayers were in the tendency to do not take the SCT amounts as a deductible expense regardless of the fact whether they are actually the taxpayers of STC or not.

However, in a current decision dated 2020 and held by 3rd Chamber of the Council of State, it was concluded that the tax calculated over the service fee included in the invoices issued on behalf of companies that are not SCT taxpayers can be considered as a deductible expense in the determination of the corporate tax base.

In the light of this current Council of State’s decision, we believe that taxpayers may consider (i) declaration with reservation and/or (ii) correction procedures for the deduction of SCT amounts as an expense.