NEWSLETTER-2020-metin

302 NEWSLETTER 2020 • If the acquires shares are disposed with a value lower than the purchase price, withholding tax will be applied over the difference between the acquisition and disposal price (to be withheld on the disposal date) • If the acquired shares are not disposed within two years star- ting from the date of purchase or not redeemed by decreasing the capital, withholding tax will be applied over the differen- ce between the purchase price and the nominal value of the shares (to be withheld on the termination date of the 2 years period). The referred withholding tax cannot be offset from any other taxes. Additionally, the President is granted authorization to reduce the withholding rate to zero or to increase it up to one fold, individually or together, depending on whether (i) the company’s shares are traded in Borsa Istanbul, (ii) the ratio of the traded shares in the total shares, (iii) the repurchases shares are among the shares traded in Borsa Istanbul, (iv) whether they are repurchased from the fully liable companies and (v) the total amount of the annual sales revenue and other income of the fully liable capital company. The Reasoning of the New Withholding Tax Regime In the reasoning of the regulation, it is stated that the aim of this new rule is to prevent full liable equity companies to distribute divi- dend to its shareholders in a tax free way. Accordingly, it is stated that the new withholding tax regime is regulated as a “tax security tool”. Criticism points alleged against the regulation TCC does not qualify the payments made in relation to share buyback transactions as dividend. Therefore, it is seen that, this new regulation creates another inconsistency between the TCC and the tax legislation just like the capital replenishment fund applications. This new regulation creates another inconsistency within the ITC due to the fact that it re-evaluates a gain item, already defined as “capital gain” in terms of shareholders, as dividend payment. Additionally, it should be noted that the referred 15% withholding tax will be in the