Tax transformation package in Parliament: Reduction in corporate tax

A new legislative proposal containing comprehensive changes to tax regulations has been submitted to the Grand National Assembly of Turkey. AK Party Group Chairman Abdullah Güler shared the details of the 15-article package, stating, "We are implementing a reduction in corporate tax rates." Güler also noted that, in order to increase voluntary tax compliance, the path has been cleared for assets such as cash, gold, and foreign currency held abroad to be brought into the economy by July 31, 2027.

DEFERRAL PERIOD FOR PUBLIC RECEIVABLES EXTENDED

The first article of the proposal aims to provide convenience in the collection of public receivables. Within this scope, the deferral period for tax and other public debts is being increased from 36 months to 72 months. The debt amount that can be deferred without requiring collateral is being raised from 50 thousand liras to 1 million liras.

TAX ADVANTAGE FOR FOREIGN EARNINGS

The regulation provides tax advantages for bringing foreign earnings into Turkey. For individuals benefiting from the exemption within the scope of the Income Tax Law, the tax rate to be applied to asset transfers occurring through inheritance during the exemption period has been set at 1 percent.

Furthermore, earnings and revenues obtained from abroad by natural persons who have newly settled in Turkey and have not had tax liability in the last three years will be exempt from income tax for a period of 20 years.

SHARE INCENTIVE FOR TECHNOLOGY EMPLOYEES

The tax exemption for shares given to employees in techno-entrepreneurship companies is being expanded. The exemption limit is being increased from one time to two times the annual gross salary. The period required for these shares to be disposed of with full exemption is being reduced from 12 years to 6 years.

If the shares are sold within 2 years, the entire exemption will be collected from the employer along with late interest; if sold between 2 and 4 years, 75 percent will be collected; and if sold between 4 and 6 years, 25 percent will be collected.

The legislative proposal introduces the concept of a "Qualified Service Center" into the legislation. This status will be granted to capital companies that operate in at least three countries and derive 80 percent of their annual revenue from related companies abroad. These centers are intended to provide services such as financial consulting, strategic management, and technology consulting from Turkey.

INCOME TAX EXEMPTION INTRODUCED FOR WAGES

An income tax exemption will be applied to the wages of personnel working in qualified service centers. Accordingly, the portion of wages not exceeding three times the gross minimum wage will be exempt from income tax. This limit will be applied as five times in the Istanbul Financial Center. Additionally, documents issued regarding these wages will also be exempt from stamp duty.

NEW REGULATION IN CORPORATE TAX

Within the scope of the proposal, it is permitted to deduct discounts provided for transit trade, qualified service centers, and earnings within the scope of the Istanbul Financial Center from the "domestic minimum corporate tax" base. Thus, it is aimed to preserve the effect of existing incentives.

ASSET PEACE APPLICATION IS IN EFFECT

A new asset peace regulation is being introduced to bring the unregistered assets of natural and legal persons, both domestic and abroad, into the economy. For declarations made until July 31, 2027, a tax will be applied at rates ranging from 0 to 5 percent, depending on the duration the assets are held in financial instruments. If the conditions are met, no tax audit will be conducted for these assets.

The path is being cleared for companies with a techno-entrepreneurship badge to receive investment through convertible debt instruments. Additionally, ventures with "Digital Company" status will be exempt from chamber registration fees and dues for three years from their establishment.

Incentives for the Istanbul Financial Center are also being expanded. The income tax exemption provided to personnel with international experience is being extended to cover all participating institution employees.

In addition to this, the duration of the 100 percent corporate tax reduction applied to financial service export earnings is being extended from 2031 to 2047. The exemption period for financial activity fees is being increased from 5 years to 20 years.

News Source: 12punto