Page 8 - VGEkim_2018

Vergide Gündem
English Translation

Assessment on the uncertainties about

tax deduction introduced for the compliant
taxpayers

Through the repetitive Article 121 added to the Income Tax Law by Article 4 of the
Law no.6824, the opportunity of tax deduction has been introduced for compliant
taxpayers to be applied in the annual income and corporate tax returns that should
be submitted as of 01.01.2018.

The aforementioned opportunity of tax deduction will be benefitted by;
• Income taxpayers due to commercial, agricultural or professional activities,

• Corporate taxpayers excluding the ones dealing with activities within finance and
banking sectors, insurance and reinsurance companies, pension companies and
pension investment funds.
The concerning taxpayers would be able to deduct 5 % of the calculated income and
corporate tax from the income and corporate tax that should be paid by them as
long as they meet the conditions indicated below.

So as to benefit from tax deduction;
• Submission of the tax returns for the year that the deduction will be calculated
and last two years prior to that year within the legal period (Tax returns submitted
following the expiration of the legal period with the purpose of correction or due
to repentance concerning a timely submitted return are not deemed as violation
of this requirement.),
• Payment of the taxes accrued on tax returns within the legal period (Missing
payments up to TL 10 in terms of each tax return are not deemed as violation of
this requirement.),
• Any assessment handled additionally, ex-officio or administratively in terms of the
tax types subject to declaration should not exist concerning the indicated period
(In the circumstance that the assessments are entirely ruled out through a final
judicial resolution or reconciliation and correction terms of the Tax Procedures
Law, this condition will not be deemed as violated.),
• As of the date that the tax return in which the deduction will be computed is
submitted, any payables overdue exceeding 1.000 TL for taxes (including tax
penalties) should not exist.

Unfortunately, there are a number of deficiencies in this implementation which was
introduced with good purposes to ensure voluntary compliance. The lack of clear
terms within the Law such as 3 years or 5 years regarding their total operating
background for the newly established several-year-old companies although
they comply with all the requirements causes uncertainties in implementation.
Also, many taxpayers are excluded from the scope due to very small amount of
assessments. Concerning the assessment, moderation of the provisions by imposing
a restriction on the size of the taxpayer may undoubtedly be a more appropriate
practice. So as to make the tax deductions more effective, we are of the opinion
that changes should be made to cover more favourable taxpayers by addressing
wider audiences. So that the negative impacts of the frequent tax amnesties in
our country over taxpayers declaring and paying taxes in a timely manner will be
eliminated to some extent.

Ekim 2018
8 Ekim 2018