Expected Changes with the New Amendments in the Omnibus Law

Following the local elections on March 31, 2024, the tightening policies in fiscal policy accelerated. The Omnibus Law Proposal includes new regulations concerning almost every sector.

• A "local minimum corporate tax application" is foreseen for resident companies in Türkiye.

Corporate Tax will not be less than the minimum tax calculated as 10% of the corporate income before deducting discounts and exemptions, or the higher of the minimum tax calculated as 10% by accepting 2% of the declared revenue as the tax base.

• A "Minimum Income Tax Application" is foreseen for taxpayers subject to commercial earnings based on the balance sheet and operating account basis, and professional earnings.

If the taxable income declared in the annual returns of commercial and professional taxpayers is less than 5% of their revenue, tax will be calculated on the difference according to the tariff.

For those earning professional income, if there is a difference of more than 20% between their declared income and the data determined during the revenue controls, an explanation will be requested, and if the explanation is not deemed sufficient, assessment will be made based on the revenue determined during the controls.

• It is foreseen to regulate the Corporate Tax Law regarding the "Minimum Corporate Tax Application" of 15% for multinational companies under the OECD agreement.

A "Global Minimum Corporate Tax" will be applied to multinational companies. The tax rate is set at 15%.

• Taxation of stock market gains and stock market transaction tax will be included in the Omnibus Law, which will be on the agenda in the fall. However, a 50% dividend distribution obligation is introduced to continue the corporate tax exemption for REITs and VCTs.

The holding period for shares will be increased from 2 years to 5 years, including the sale of partnership shares. The exemption for participation share sale gains and VAT exemption will be abolished. Acquired rights will be preserved, but the VAT exemption rate will be reduced from 75% to 25%.

In mergers, transfers, and divisions, the VAT to be transferred and the right to a refund can be deducted by the new company according to the scope of the tax inspection. If the deductible VAT cannot be deducted through deduction for 5 calendar years, it will be removed from the records at the end of the relevant period and considered an expense in determining income or corporate tax after a tax inspection.

• Cryptocurrency transactions will be subject to transaction tax.

• The free zone exemption will be limited to exports.

The corporate tax rate for YID and KÖI project gains will be increased by 5 points, from 25% to 30%.

The period of the SCT exemption for the purchase of vehicles by disabled and handicapped people is increased from 5 years to 10 years.

• In reconciliations, only penalties will be subject to reconciliation, excluding the principal tax.

The scope of withholding tax in Corporate Tax is being expanded.

• New regulations will be introduced for special irregularity penalties.

If it is determined that rental payments are made in cash, a penalty of 10% of the rental amount, not less than 6,500 TL, will be imposed.

A special irregularity penalty of a minimum of 30,000 TL and a maximum of 20 million TL, equivalent to 10% of the amount in question, will be imposed on those who use and allow others to use someone else's IBAN number.

Those who use someone else's POS device will be fined 90.000 TRY for each detection for those keeping books on a balance sheet basis and 45.000 TRY for those keeping books on an operating account basis.

• With a change to be made in the Income Tax Law, stock options given to employees of "tech start-up companies" will be exempt from tax based on the holding period of these shares; 25% of the gain if held for 3-6 years, 75% if held for 7-12 years, and 100% if held for more than 12 years.

If the proposal is accepted, the latest updates will be published again.

Should you have any queries or need further details, please contact your customer representative.