Page 14 - VeGuKasim_2017

Vergide Gündem
English Translation

Planned amendments to the tax legislation

through the Draft Law approved in Planning
and Budget Commission

The Draft Law containing amendments to several laws, mainly certain tax laws and
legislative decrees had been presented to the Grand National Assembly of Turkey
on 27 September 2017. Negotiations on the Draft within Parliament Planning and
Budget Commission were completed during the past few days. It is expected to pass
into law this month following negotiations at the General Assembly and published in
the Official Gazette afterwards if approved by the President.

In this article, the significant amendments planned for the tax legislation will be
emphasized based on the Commission Report.

• Regulation proposing an increase on the tax rate applied over the 3rd income
bracket to 30 % from 27 % has been removed off the draft’s text during the
negotiations in the Commission.

• The rate taken into account for lump sum expense applicable to the taxpayers
declaring rental income (real property income) is proposed to be reduced to 15 %
from 25 %. This provision will be effective for the declaration of income acquired
as of 1 January 2017.

• For the wage earners seeing their net income lowered under TL 1.404,06 for
the months September, October, November and December of 2017 caused by
the income tax tariff, opportunity of compensating the amount remaining under
TL 1.404,06 through additional minimum living allowance is introduced. This
regulation will be effective from 1 September 2017.

• Regulation requiring an increase in corporation tax rate just for banks, financial
institutions and insurance companies from 20 % to 22 % has been extended
to include all corporate taxpayers during the negotiations at the Commission.
Pertaining to that, corporate taxpayers will be subject to a corporation tax rate of
22 % over their income acquired through the taxation periods for the years 2018,
2019 and 2020. This provision will be effective from the date of publication.

• Regulation requiring withholding tax on distributable profits of fully amenable
corporations that are not added to the capital or distributed has been removed off
the Draft’s text during the negotiations at the Commission.

• The current 75 % exemption rate applied over the income derived by corporate
taxpayers from the sale of immovable property (real estate) held for at least two
years is proposed to be reduced to 50 %. This provision will be taking effect as of
the publication date of the Law.

• The duty fee that should be paid during application and renewal related to the
advance pricing agreements is planned to be eliminated. This regulation will be
enacted as of the Law’s date of publication.

• All special provisions reserved by financial leasing and financing companies
are proposed to be considered as expenditure during the corporation tax base
assessment for the concerning year. The aforementioned regulation excludes

14 Kasım 2017