NEWSLETTER-2020-metin

320 NEWSLETTER 2020 to the transferor company shareholders, the capital decrease by the transferor company will be taxed. However, this statement in the draft text has not yet come into force. In summary, the regulation on the taxation of capital decreases has not been included in the law, nor has it been able to take its place in Communiqué No. 1. Positive Judicial Decisions on Capital Decreases in Partial Spin-Offs As we mentioned in the previous section, the regulation regarding the taxation of a capital decrease, which is a natural result of a partial spin- off, as well as a capital decrease as a separate transaction, is not included in any law or communiqué. However, in accordance with the principle of legality in the Constitution, and which is emphasized in every area, it is not possible to impose a tax burden on taxpayers in this manner by com- menting in cases that are not explicitly written into the law. Especially, and in accordance with Article 20 of the CTL, it has been decided that the partial spin-off process should be carried out tax-free; the same result is attributed to a capital decrease transac- tion, which is the natural extension of this transaction. In this context, a capital decrease transaction that is due to partial spin-off must be interpreted by evaluating the letter of the tax laws, the purpose of the issue, etc. To the contrary, taxation on a capital decrease as a result of a partial spin-off is contrary to both the principle of legality and the purpose of the provision. As well, it is observed that in recent judicial decisions, parallel decisions 3 have been rendered in line with this view. These deci- sions state that it was not legally possible to expand the gap in the law through comments since there is no provision in the tax laws regard- ing the priority of the inflation correction positive differences account, other capital reserves account, and previous year profits account in the 3 The decision of the 12th Tax Court, K. 2018/2946, 15.11.2018 and K. 2018/2945, 15.11.2018.