The Law No. 7061 Amending Certain Tax Laws and other Laws ("Law No. 7061") introducing significant changes to several tax laws was published in the Official Gazette No. 30261 on 5 December 2017. The most significant provisions to the tax legislation through Law No. 7061 include:
1. Corporate Income Tax ("CIT")
- The 20% CIT for corporate taxpayers increased to 22% for fiscal years 2018, 2019 and 2020.
- The 75% CIT exemption under Article 5/1-e of the CIT Law for income generated from the sale of real estate held by corporate taxpayers for more than two years decreased to 50%. The CIT exemption rate for the sale of participation shares, founder's shares, dividend shares and preemption rights remains at 75%. This amendment entered into force on 5 December 2017.
- According to Article 5/1-f of the CIT Law, a CIT exemption is available on all income derived from the transfer of real estate, participation shares, founder's shares, dividend shares and preemption rights to banks by corporate taxpayers indebted to banks as well as by their guarantors and pledgers, as part of enforcement of bank's claims ; and on 75% of the income derived by banks from the transfer of these assets acquired within the scope of the CIT Law. The amendment now allows for a CIT exemption on income generated by corporate taxpayers from the sale of the abovementioned assets to financial leasing and financing companies to pay their debts to these companies. The CIT exemption rate of 75% for income derived by banks, financial leasing and financing companies decreased to 50% only for income derived from real estate sales. This amendment enters into force on 1 January 2018.
- Through the amendment made to the Act of Fees, Advance Pricing Agreements regulated under Article 13/5 of the CIT Law are no longer subject to application and renewal fees. This amendment entered into force on 5 December 2017.
- According to the amendment made to the Law on Financial Leasing, Factoring and Financing Companies, the special provisions set aside by financial leasing and financing companies will be considered expenses when calculating the corporate income tax base for the fiscal year in which the company set aside the special provision. This amendment enters into force on 1 January 2019.
2. Value Added Tax ("VAT")
- The amendment states VAT arising from services provided electronically by those without a residence, workplace, headquarters or business center in Turkey to individuals who are not VAT taxpayers must be declared and paid by the service providers. In this sense, the VAT declaration and payment burden will fall on non-residents selling online services to individual consumers in Turkey. The Ministry of Finance is authorized to determine the scope of the services provided electronically as well as principles and procedures related to this VAT practice. This amendment enters into force on 1 January 2018.
VAT exemption under Article 17/4-r of the VAT Law on transfers of real estate and participation shares to banks by those indebted to banks includes the transfer of real estate and participation shares to financial leasing and financial companies. According to the amendment, financial leasing and financial companies transferring real estate and participation shares acquired within the scope of the VAT Law will also be VAT exempt. This amendment enters into force on 1 January 2018.
3. Special Communication Tax
- According to the amendment to Article 39 of the Expenditure Taxes Law, the special communication tax rate of (i) 25% for all establishments, takeovers, transfers and communication services within the scope of mobile electronic communication management of all kinds decreased to 7.5%; (ii) 15% for services relating to the transmission of radio and television broadcasts over satellite and cable platforms decreased to 7.5%; (iii) 5% for the provision of wired, wireless or mobile internet services increased to 7.5%; and (iv) 15% for other electronic communication services not mentioned above decreased to 7.5%. This amendment enters into force on 1 January 2018.
4. Banking and Insurance Transactions Tax ("BITT")
- The amendment to the Article 29-p of the Expenditure Tax Law on the BITT exemption applied to futures and option contracts, and funds received from futures and option contracts, no longer requires the condition of "being carried out in a Turkish exchange." This amendment enters into force on 1 January 2018.
5. Stamp Tax
- A stamp tax exemption is now applicable to papers drawn up by special purpose vehicles incorporated to supply funds in return for securities issued abroad to finance public–private sector cooperation projects and to supply funds to project manager companies, as well as to papers related to their repayments and warranties. This amendment entered into force on 5 December 2017.
6. Tax Procedure Code
- The taxpayers’ residence address stated in the address registration system established by the Law on Civil Registration Services is now added to the "known addresses" listed under Article 101 of the Tax Procedure Code. In addition, according to the amendment to the Article 103 of the Tax Procedure Code, if a notice cannot be served to the taxpayer's known address listed in the law and no other address can be found on the address registration system, the taxpayer can be notified by way of announcement. This amendment enters into force on 1 January 2018.
- The Ministry of Finance is authorized to impose a reporting liability on service provider individuals or legal entities engaged in commercial activities electronically and/or those intermediary service provider individuals and legal entities who supply electronic platforms for others' economic and commercial activities. This amendment entered into force on 5 December 2017.
7. Law on the Collection Procedure of Public Receivables
- As of 1 January 2018, the deadline for filing a lawsuit against payment orders increased to 15 days from 7 days.
8. Other Changes
- In addition to these changes, Law No. 7061 introduces some further amendments to the above laws as well as to the Income Tax Law, Special Consumption Tax Law, Motor Vehicles Tax Law, Inheritance and Transfer Tax Law and Real Estate Tax Law.