Tax Amendments Introduced Through the Law No. 7491

Law No. 7491 on the Amendment of Certain Laws and Decree Laws (Law No. 7491), which includes significant amendments in tax legislation, was published in the Official Gazette dated 28.12.2023 and No. 32413. The significant tax amendments included in the Law No. 7491 are summarized below:

• Article 5/1(b) of the Corporate Tax Law No. 5520 (CTL) is amended to provide a 50% participation income exemption for companies that (i) participate in foreign joint stock and limited liability companies whose legal and business headquarters are not located in Türkiye, provided that the company owns at least 50% of the paid capital of the foreign subsidiary and (ii) the income is transferred to Türkiye by the date of filing the corporate tax return for the accounting period in which the earning is generated, without meeting the other conditions specified in the paragraph.
• Additionally, it is regulated that half of the dividends received by real persons are exempt from income tax, provided that (i) they own at least 50% of the paid capital of joint stock and limited liability companies whose legal and business headquarters are not located in Türkiye and (ii) the dividends are brought to Türkiye until the filing date of the annual income tax return pertaining to the accounting period during which the dividend is received.
• It is regulated that the profits or losses that will arise as a result of inflation adjustment made for FY 2024 and 2025, including provisional tax periods will not be taken into account in the determination of earnings by banks, companies within the scope of Financial Leasing, Factoring, Financing and Savings Financing Companies Law No. 6361, 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 taken into account in the determination of commercial income.
• Under Article 40/1(1) of the ITL, taxpayers used to be able to deduct their lump sum expenses, calculated on the condition that they do not exceed five per thousand of the revenue, for the expenses incurred in relation to export, construction, repair, installation, and transportation works abroad and for which they could not obtain a document, in the determination of commercial income. The referred lump sum expense application is abolished.
• Article 20/B of the Income Tax Law No. 193 (ITL) is amended to expand the scope of the income tax exemption envisaged for social media production and application developers. Through the amendment, income derived by real persons (i) by sharing content such as text, image, audio, and video on their website(s) or on any digital platform; (ii) by sharing videos such as training, recipe, product promotion over the internet and similar electronic media; or (iii) by sharing content such as data processing and development over these media are also included in the scope of the exemption.
• Article 2/2(a) of the Stamp Tax Law No. 488 (STL) is amended to restrict the scope of the stamp tax exemption envisaged for auctions open to international bidders and to apply it only to investments that serve foreign currency inflows and are financed with foreign currency.
• Within amendments made to Articles 41/1 and 46/1 of the VATL, it is stipulated that those who are held responsible for withholding tax must submit their tax returns by the evening of the twenty-first day of the month following the taxation period and pay the tax amounts by the evening of the twenty-third day of the month following the taxation period.
• The scope of the 5% corporate tax deduction application stipulated under Article 32 of the CTL is expanded by including the income of the manufacturer or supplier institutions regarding the export activities carried out through foreign trade capital companies or sectoral foreign trade companies based on an intermediated export contract to the scope of the application.
• With the amendment and addition made to the provisional Article 14 of the CTL, the duration of the exemption applied to currency-protected deposit and participation accounts is extended until 30.06.2024 and the President is authorized to determine the exemption rate.