Page 10 - VGMayıs_2018

The facility of disguised Revenue Administration’s opinion
capital In fact, previously, the Administration’s opinion on this

topic was in the direction that the VAT corresponding to the
The portion of payables generated by companies through disguised capital could be corrected; while all of the rulings
their partners or related parties of their partners directly released recently indicate that the VAT corresponding to the
or indirectly to be used in the operations that are exceeding disguised capital cannot be subject to a correction.
three folds of its equity at a time within the accounting
period is considered as disguised capital for the concerning Judicial opinion
accounting period. Expenses that are not allowed to be
deducted during the detection of corporate income are The Council of State has decisions in both ways, however the
entirely listed in the Article 11 of Corporate Tax Law. verdicts pointing out the impossibility of a correction have a
Pertaining to the aforementioned article, it is not possible to greater share.
deduct paid or calculated interest over the disguised capital,
exchange differences or similar expenses.

Article 12 of the Corporate Tax Law arranging the This article has been published in the Ekonomist magazine’s
facility of disguised capital indicates that; except the issue 2018/17 dated 29.04.2018.
exchange difference over the disguised capital, interest
and similar payments or calculated amounts would be
deemed as distributed dividend or amount transferred
to the headquarters for limited taxpayers as of the last
day of accounting period in which the terms for disguised
capital were realized for both the borrower and the lender,
during the implementation of income and corporate tax
laws. Regarding the wording contained in the concerning
regulation as “in the implementation of income and
corporate tax laws”; any consensus is not available on
commenting this wording or in other words, whether it has a
validity in terms of VAT implementation or not.

Opinion claiming VAT correction is not required

According to this opinion; the value added tax calculated
in previous periods could not be subject to correction since
the interest calculated over disguised capital turns into
dividend as of the accounting period’s last day and dividends
are not related to the subject of value added tax. Yet, the
7th clause of Corporate Tax Law’s Article 12 both literally
and rationally indicates that except the exchange difference
over the disguised capital, interest and similar payments or
calculated amounts would be deemed as dividend for only
in the implementation of income and corporate tax laws
and amount transferred to the headquarters for limited
taxpayers.

Opinion claiming VAT correction is required

Pursuant to this opinion; except the exchange difference
over the disguised capital, as the requirement of considering
the interest and similar payments or the calculated amounts
distributed dividend as of the last day of accounting period in
which the terms for disguised capital were realized for both
the borrower and the lender is apparent; this outcome should
also be applicable to the transaction taxes and it should not Explanations in this article reflect the writer's personal view on the
be triggering a taxable event. In other words, it must be matter. EY and/or Kuzey YMM ve Bağımsız Denetim A.Ş. disclaim any
responsibility in respect of the information and explanations in the
accepted that “the dividend distribution” clearly indicated in article. Please be advised to first receive professional assistance from
the Corporate Tax Law cannot be qualified as a delivery or the related experts before initiating an application regarding a specific
service in the nature of the ones outlined in the Value Added matter, since the legislation is changed frequently and is open to different
Tax Law. interpretations.

10 Mayıs 2018