New Incentive For IPOs: Corporate Tax Reductions – Tax


New Incentive For IPOs: Corporate Tax Reductions

24 November 2020

Esin Attorney Partnership

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Recent Development

The Law on the Restructuring of Certain Receivables and
Amendments to Certain Laws No. 7256 published in the Official
Gazette No. 31307 on November 17, 2020 introduced several
amendments to the tax legislation. Please see our Legal Alert about
these changes

One of these changes is particularly important for Turkish
capital markets. The amendment
(“Amendment“) to Article 32 of the
Corporate Tax Law No. 5520 provides tax rate reductions for
companies going public on the Borsa Istanbul Stock Market.

What Does the Amendment Say? 

According to the Amendment, the corporate tax rate applied to
the corporate income of companies going public on the Borsa
Istanbul Stock Market will be applied with a two (2) point discount
(instead of the default 20% rate) for five accounting periods,
starting from the first accounting period in which the offering was
made, provided that the shares representing no less than 20% of the
total share capital of the issuer are being offered.

In the event that the above free float rate requirement cannot
be maintained during the five year period, the taxes that were not
accrued due to the rate deduction will be collected along with the
applicable default interest, but without the tax loss penalty.

The tax rate reduction will not apply to banks, leasing
companies, factoring companies, financing companies, payment and
electronic money institutions, authorized foreign exchange
institutions, asset management companies, capital market
institutions, insurance and reinsurance companies, and pension


The Amendment aims to incentivize IPOs by offering a significant
tax expenses advantage for companies considering a public offering
of their shares.

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.


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