310 NEWSLETTER 2021 Definitions Pursuant to the Draft Communiqué, financing expense refers to all kinds of interest, commission, maturity difference, dividend, exchange difference, and discounts given to factoring institutions, and similar expenses and cost elements arising from the period of use of foreign liabilities. In another words, in order for the limitation to be applied, “the foreign liabilities must have a maturity date” and “the financing expenses must arise from the lifetime of the foreign liability”. Through the Updated Draft Communiqué, it is regulated that if the sales price includes a maturity difference, a part of the sales price will not be subject to the application of the limitation on financing expense deduction, unless financing expense is calculated for accounts “sellers” etc. in the balance sheet. According to the Updated Draft Communiqué, foreign liabilities is the sum of short-term liabilities and long-term liabilities on the balance sheet. In other words, foreign liabilities consist of not only financial debts, but also trade debts; no distinction is made between domestic-foreign / related-unrelated debt. This definition gives rise to debates in terms of the principle of legality of tax. While the definition of foreign liability is not included in the tax law, it may be deemed contrary to the principle of legality of the tax that its scope is kept so wide against the taxpayer by an administrative regulation, and the issue is open to discussion.4 Pursuant to the legal regulation, amongst the financing expense and cost elements, those added to the cost of investment are excluded from the scope of the expense limitation. While the definition of the investment is not provided in the Draft Communiqué, in the updated Draft Communiqué, investment is defined as the assets subject to all fault/files/fileadmin/user_upload/Tebligler/Taslaklar/5520/18_serno_kvgenteb_ taslak.pdf (Access date: 24.04.2021). 4 Sağlam, Erdoğan: Finansman Gider Kısıtlamasına İlişkin Tebliğ Taslağı Hakkındaki Değerlendirmelerim, 26.03.2021, https://t24.com.tr/yazarlar/erdogan-saglam/finansman-gider-kisitlamasina-iliskin-teblig-taslagi-hakkindakidegerlendirmelerim,30367 (Access date: 25.04.2021); Ergin, Numan Emre: Finansman Gider Kısıtlamasında Detaylar Netleşiyor, Ama…, https://www. dunya.com/kose-yazisi/finansman-gider-kisitlamasinda-detaylar-netlesiyorama/616007 (Access date: 25.04.2021).
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