Page 14 - VEGU_Haziran_2018

Hesitated matters concerning
the implementation of
“deduction in cash capital

increases”

So as to strengthen the capital structure of the capital
companies, by adding the “ı” clause to the Article 10 of
Corporate Tax Law in which other deductions to be made
from corporate income for the detection of corporate tax
base; the opportunity of deducting 50 % of the amount to be
calculated over cash capital increases or cash paid portion of
the capital paid in newly established capital companies as per
the average commercial loan interest rate announced by the
CBRT had been provided and the aforementioned regulation
was enacted as of July 2017 period.

On the other side, through the Council of Ministers Decision
no.2015/7910 dated 26.05.2015, the general rate
(50%) identified by the Law has been changed; various
arrangements were made through the Corporate Tax General
Communique series no.9 in order to provide guidance to
the implementation which introduced incentives on cash
capital increases and consequently explanations have been
made about the state of capital advances with the Corporate
Tax General Communique series no.10. However, despite
the aforementioned arrangements, it seems that some
significant uncertainties about the implementation continue
and this leads to some hesitation among taxpayers.

Within that context, in this article certain important points
containing hesitation are tackled concerning if inclusion
of the debt to the shareholders into capital should be
considered as the deduction of balance sheet items in one
another within the implementation of “deduction in cash
capital increase”, the outcome of cash capital increases
after profit distribution in terms of deduction, in what
way the cash capital increases handled through loan/
debt procurement by the shareholder should be detected,
determination and authentication of the expenditures with
investment incentive certificate, how to benefit from the
additional rate, in which circumstances that the passive
income should be taken into account and other hesitated
significant matters related to the land and field investments
left apart from incentives have also been dealt.

Explanations in this article reflect the writer's personal view on the
matter. EY and/or Kuzey YMM ve Bağımsız Denetim A.Ş. disclaim any
responsibility in respect of the information and explanations in the
article. Please be advised to first receive professional assistance from
the related experts before initiating an application regarding a specific
matter, since the legislation is changed frequently and is open to different
interpretations.

14 Haziran 2018 Haziran 2018