NEWSLETTER-2020-metin

300 NEWSLETTER 2020 Withholding Tax Regime Envisaged for Share Buybacks* Att. Canan Doksat The Law on the Restructuring of Certain Receivables andAmend- ments to Certain Laws No. 7256 (“Law No. 7256”) published on the Official Gazette No. 31307 on November 17, 2020 introduced several amendments to the tax legislation including restructuring of public receivables and wealth amnesty. Apart from this, one of the major amendments introduced by the Law is the amendment made under Article 94 of Income Tax Law no. 193 which introduces a new with- holding tax regime for the share buyback transactions to be conducted by full liable equity companies. Within this scope, in this Newsletter Article, the new withholding tax regime will be evaluated in terms of its reasoning and problematic issues that may come up during the implementation of this new rule. Share Buybacks within the Scope of Turkish Commercial Code No. 6102 (“TCC”) Before mentioning the withholding tax regime introduced by Law No. 7256, the rules for share buyback introduced by the TCC should be considered briefly and in general terms. As a rule, it is forbidden for a joint stock company to buy back its own shares as per the TCC. Specific cases where the company is allowed to buy back its own shares are share buybacks through the de- cision of the general assembly (Article 379 of TCC), share buybacks in order to prevent a close and serious loss (Article 381 of TCC), share buybacks in exceptional cases (Article 382 of TCC) and gratuitous acquisition (Article 383 of TCC). As a rule, for a joint stock company to buy back its own shares within the scope of the TCC, the board of directors must be authorized * Article of November, 2020