E-newsletter Concerning The Modification On The Web Company Revenue – Gross sales Taxes: VAT, GST

27 April 2022

Bener Law Office

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Brief explanations regarding the changes in tax legislation
of the Law No. 7394 published in the Official Gazette dated April
5, 2022 are as follows:

A. Capital completion

Net corporation profit is defined in the article 6 of the
Corporate Tax Law. Article 376 of the Turkish Commercial Code No.
6102, includes provisions regarding capital loss and debt.

It is ensured that the amounts transferred by the shareholders
of the company, whose capital is decided to be completed, in an
amount to cover the unrequited portion due to loss pursuant to
Article 376 of the Turkish Commercial Code, are not taken into
account in the determination of corporate income, by adding a new
paragraph to the article with the article 23 of the Law No.
7394.

B. Corporation tax rate

In accordance with the provisional article 13 added to the
Corporate Tax Law, Corporate Tax is applied as 23% for the taxation
period of 2022. In accordance with the article 25 of Law No. 7394,
this rate has been increased to 25% for banks,
companies within the scope of the “Financial Leasing,
Factoring, Financing and Savings Finance Companies Law”
numbered 6361, electronic payment and money institutions,
authorized foreign exchange institutions, asset management
companies, capital market institutions, insurance and reinsurance
companies and pension companies.

This provision is in force to be applied to the company profits
of the 2023 taxation period, and the rate change is applied
to the 2022 profits of the relevant institutions in
accordance with article 26 of the Law No. 7394,

C. Amendments made in the Tax Procedure Law

New regulations have been introduced with the provisional
article 34, which has entered into force within the scope of
article 359 and 367 of the Tax Procedure Law (“TPL”)
regarding the smuggling offenses and penalties and penalties of
some smuggling offenses. You can find our explanations regarding
the new provisions below;

The prison sentences stated in the article 359 of the TPL and,
with upper limit of 3 years have been increased to 5 years; and
those with upper limit of 5 years have been increased to 8
years.
Effective repentance provisions can be applied during
investigation and prosecution stages, depending on the conditions
that if the taxes levied in accordance with the crimes listed in
article 359, the default interest, late fee and half of the fines
are paid, no lawsuit is filed in the tax court and waived if filed,
not applying to appeal and waived if applied, Thus, it is possible
to decrease prison sentences to be imposed in this regard.
In addition to the tax levied, a provision regarding reducing
the prison sentence by 50%, which will be applied when there is no
penalty imposed depending on the original tax, has been
introduced.
In case the smuggling offenses are executed more than once
within one calendar year or taxation period, the provisions of
“successive offence” in article 43 of the Turkish
Criminal Law shall be applied.
It is ruled that the condition of preparing a report and
consideration is not required in order to file a public prosecution
if it is revealed that the act subject to the consideration was
committed by another person other than the person who is being
investigated or prosecuted, or that it was carried out together
with another person, in the investigations and prosecutions carried
out regarding the crimes within the scope of Article 359 of the
TPL, according to the provision added to Article 367 of the
TPL.
A provisional article has been regulated to ensure that
effective repentance and successive offense can also be applied to
cases that are in the judicial authorities or execution phase, in
accordance with the conditions specified in the law.

The issues explained in this section entered into force on April
15, 2022.

D. Other Regulations

Explanations regarding the other regulations made within the
scope of the Law No. 7394 are given below. The effective dates of
the amendments are listed at the beginning of each heading:

July 1, 2022 – The phrase
“(Excluding the profits of those established for the purpose
of operating the portfolio consisting of real estate, real estate
projects and real estate-based rights in terms of their main field
of activity)” has been added to the said sub-paragraph 4, with
the article 22 of the Law No. 7394. In accordance with this
regulation, the profits of infrastructure real estate
investment trusts will not be an exception according
to the aforementioned subparagraph.
April 15, 2022 – Incomes related to the
income obtained by returning mutual fund participation shares to
the fund are exempt from corporate tax. In addition, the incomes
that may arise as a result of valuation of mutual fund
participation certificates according to the stock exchange price
will also be exempt from corporate tax.
April 15, 2022 – In accordance with the
additional article 4 of the Law No. 5651, advertisements given to
those who are subject to advertising ban will not be considered as
an expense in the determination of commercial and corporate
profit.
April 15, 2022 – Doctors who carry out
the practice of medicine by signing a contract with one or more
private health institutions will be considered as
self-employed.
Profits of The Year 2022 – The corporate
tax rate for banks and companies under the Law No. 6361, electronic
payment and money institutions, authorized foreign exchange
institutions, asset management companies, capital market
institutions, insurance and reinsurance companies and pension
companies will be applied as 25%, starting from 2022 profits.
April 15, 2022 – Pursuant to Article 376
of the Turkish Commercial Code, it is ensured that the amounts
transferred by the shareholders of the company, whose capital is
decided to be completed, in an amount to cover the unrequited
portion due to loss, are not taken into account in the
determination of corporate income. Incomes obtained by returning
mutual fund participation shares to the fund, which are included in
sub-paragraphs 3 and 4 of article 5/1-a of the Corporate Tax Law,
are included in the scope of corporate tax exemption.
April 15, 2022 – We consider that the
income obtained from the sale of mutual fund participation
certificates held for more than two years may be subject to
Corporate Tax exemption at the rate of 75%.
May 1, 2022 – In case the residences or
workplaces delivered to foreigners as an exemption from VAT are
disposed of within one year, the tax not collected on time is
collected together with the deferred interest. The period of 1 year
is increased to 3 years.
May 1, 2022 – Good deliveries and
services related to construction works will be exempt from value
added tax until December 31, 2025 for taxpayers holding investment
incentive certificates for the manufacturing industry and
tourism.
April 15, 2022 – Engineering services
provided to taxpayers who manufacture electric motor vehicles
developed for R&D activities in Turkey for the development of
these vehicles and within the scope of investment incentive
certificate will be exempted from VAT until December 31, 2023.
May 1, 2022 – National security
expenditures and investments will be exempted from Value Added
Tax.
May 1, 2022 – The holding period has
been increased from 1 year to 3 years – within the scope of
Value Added Tax exemption applied in real estate sales to
foreigners.
May 1, 2022 – Regulation on VAT
exemption for construction works carried out within the scope of
investments with incentive certificates.
May 1, 2022 – Regulation regarding the
exceptional application in engineering services related to electric
motor vehicles developed in Turkey within the scope of R&D
activities in Turkey.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.