Details on Increasing the Deduction Rates for Corporate Tax Has Been Announced

The “Communique (serial no. 307) on Amending the General Income Tax Communique (serial no. 301)” (hereinafter referred to as the “Communique”) has been published on the Official Gazette on the date of 15.03.2019 by the Ministry of Treasury and Finance (Revenue Administration). A regulation is made with the Communique regarding the raise of the deduction limit to be considered in the deduction provisions in the annual income and corporate tax declarations as of 01.01.2019.

As is known, 5% of tax reduction was brought as of 01.01.2018 for the taxpayers who pay their taxes on time (compatible tax-payers) with the 6824 numbered and 08.03.2017 dated Law. Related regulation is placed in the Article 121 of the Income Tax Law.

The last regulation (for further details see the 7162 numbered Law) made about this subject was increased the limit of deduction from 10-TL to 250-TL to be followed by the compatible tax payers to benefit from the tax deduction. You may reach our article includes detailed explanations on the subject here.

Explanations are made with the 15.03.2019 dated Communique regarding the increase of the deduction limit to be considered in evaluating the deduction conditions. According to this:

• In determining whether to benefit from tax deduction in income and corporate tax declarations of which belongs to 2018 and to be provided in 2019 and following periods, the deductions up to 250-TL for each declaration shall not mean the breach of the provision of paying the taxes on time which are accrued on the declarations.
• If the taxes to be deleted in case the determined conditions are realized by postponing regarding the related tax law, are not met and paid within 15 days as of the end of the postponing duration set forth in the law, then the provision of paying the accrued taxes on time shall not be deemed breached.

The example given in the Communique as follows:

EXAMPLE:

“(L) A.Ş., has paid the corporate tax on due date which is accrued upon the corporate tax declaration that is given on 25/4/2019 that belongs to the 2018fiscal period..

(L) A.Ş., has submitted all declarations regarding 2016, 2017 and 2018 on time and paid its accrued taxes on time except for the 33,90-TL tax accrued on the withholding tax return of which belongs to May 2017.

According to this, provided that other conditions are fulfilled, not paying the 33,90-TL of tax accrued regarding the withholding tax return on May 2017, shall not prevent (L) A.Ş. to benefit from tax deduction.”

You may reach the full Turkish text of 307 Serial Numbered General Communique on the Income Tax Law here.