Domestic minimum corporate tax

Legal regulation

With Article 36 of the Law dated 28/7/2024 and numbered 7524, the following Article 32/C titled "Domestic minimum corporate tax" was added to the Corporate Tax Law.

"(1) Corporate tax calculated in accordance with the provisions of Articles 32 and 32/A cannot be less than 10% of the corporate income before deducting discounts and exemptions.

(2)       When calculating the domestic minimum corporate tax, the following exemptions and deductions are deducted from the corporate profit mentioned in the first paragraph:

a)         Subparagraphs (a), (ç), (i), (j) and (k) of the first paragraph of Article 5 and the exempt earnings listed in subparagraph (d) except for the earnings obtained from the immovables they own,

b)         Article 10, paragraph one; discounts within the scope of subparagraphs (g) and (h),

c)         Earnings exempted from tax under the Law No. 4490 dated 16/12/1999 on the Turkish International Ship Registry Law and the Decree Law No. 491 and the Free Zones Law No. 3218 dated 6/6/1985,

ç) R&D and design discounts that can be deducted from the corporate tax base and the earnings exemption within the scope of Law No. 4691.

(3)       From the domestic minimum corporate tax calculated within the scope of the first paragraph, the tax not collected due to the application of the reduced rate in accordance with the sixth, seventh and eighth paragraphs of Article 32 and the tax not collected in the relevant accounting period in accordance with the provision of Article 32/A due to the use of the investment contribution amounts in the incentive certificates obtained from the Ministry of Industry and Technology before the effective date of this article are deducted and the domestic minimum corporate tax to be paid is determined.

(4)       This article shall also apply to advance/provisional tax periods.

(5)       The provisions of this Article shall not apply to organizations for three accounting periods that commence their activities for the first time starting from the accounting period in which they commence their activities.

(6)       The phrase "corporate income before deductions and exemptions" in this article refers to the amount found by adding the legally non-deductable expenses to the commercial balance sheet profit at the end of the accounting period.

(7)       The President is authorized to reduce the rate in the first paragraph to zero or increase it up to one times, separately or together, by sectors, fields of activity, business lines or production areas, and the Ministry of Treasury and Finance is authorized to determine the procedures and principles regarding the implementation of the article."

Thus, a tax security institution has been introduced for the determination of the corporate tax to be calculated by corporate taxpayers.

This article entered into force on the date of its publication to be applied to the earnings obtained in 2025 and the following taxation periods, and to the earnings obtained in the special accounting period starting in the calendar year 2025 and the following taxation periods of the corporations subject to special accounting period.

Taxpayers of the minimum corporate tax

The taxpayers of the minimum corporate tax are the taxpayers listed in the Corporate Tax Law.

Limited taxpayer corporations, which are obliged to declare their earnings in Turkey through corporate tax returns, are also subject to minimum corporate tax.

In addition, the declaration of the earnings and revenues that are subject to withholding tax under Article 30 of the Corporate Tax Law is left to the discretion of limited taxpayers. In the event that limited taxpayer corporations file a declaration for the aforementioned income and revenues, these corporations will also be subject to minimum corporate tax.

Taxpayers to whom the minimum corporate tax will not apply

Minimum tax provisions will not be applied to corporate taxpayers exempt from corporate tax and corporations starting their activities for the first time for three accounting periods starting from the accounting period in which they start their activities.

For example, a company established in 2025 will not be subject to minimum corporate tax in 2025, 2026 and 2027. A company established in 2023 will not be subject to minimum corporate tax in the 2025 accounting period and a company established in 2024 will not be subject to minimum corporate tax in the 2025 and 2026 accounting periods.

Companies established through merger, transfer, change of type and partial and complete division of companies will not be considered as companies starting operations for the first time.

According to Article 113 of the Income Tax Law titled "Revenue-based earnings determination", minimum tax will not be applied to corporate taxpayers who are taxed on a revenue basis.

Minimum corporate tax application and calculation

The corporate tax calculated by applying the rate determined by the provisions of paragraphs one to nine of Article 32 of the Corporate Tax Law and Article 32/A to the earnings of the corporations within an accounting period shall not be less than 10% of the corporate income before deducting deductions and exemptions.

Minimum corporate tax will be applied to the earnings of taxpayers with a calendar year accounting period in 2025 and the following taxation periods, and to the earnings of taxpayers subject to special accounting period in the special accounting period starting in 2025 and the following taxation periods.

Minimum corporate tax calculation will also be made for the advance/provisional tax periods.

They will calculate their corporate taxes by taking into account the provisions of Articles 32 and 32/A of the Corporate Tax Law.

In the same tax returns, they will add their legally non-deductable expenses to the commercial balance sheet profit/loss. If this amount is greater than zero, the exemptions and deductions stated in section "32.5.5." which are outside the scope of minimum corporate tax will be deducted from this amount. If there is a remaining amount, minimum corporate tax will be calculated by applying 10% rate to this amount.

The phrase "corporate income before deducting deductions and exemptions" in the article refers to the amount calculated by adding non-deductable expenses to the commercial balance sheet profit or loss at the end of the accounting period. Minimum corporate tax calculation will be made in cases where the sum of the commercial balance sheet profit and non-deductable expenses or the sum of the commercial balance sheet loss and non-deductable expenses is greater than zero.

Prior year losses deducted in the tax returns will not be deducted from the minimum corporate tax base and will be taken into account in the calculation of the minimum corporate tax. In accordance with the 298th repeating article of the Law No. 213 and the provisional 33rd article, in periods when the financial statements are subject to inflation adjustment, the values resulting from the inflation adjustment will be taken into consideration in the calculation of minimum corporate tax.

From the calculated minimum corporate tax;

-           Pursuant to the sixth, seventh and eighth paragraphs of Article 32 of the Corporate Tax Law, two points applied to the earnings of corporations whose shares are offered to the public at a rate of at least 20% to be traded for the first time in the Borsa Istanbul Equity Market, five points applied to export earnings, and the tax not collected due to the one-point reduced rate application applied to the earnings obtained exclusively from production activities of corporations holding an industrial registry certificate and actually engaged in production activities,

-           The tax not collected in the relevant accounting period (in accordance with the provision of Article 32/A of the Corporate Tax Law) due to the use of the investment contribution amounts in the incentive certificates obtained from the Ministry of Industry and Technology before 2/8/2024 (the date Article 32/C of the Corporate Tax Law entered into force),

will be deducted and the minimum corporate tax payable will be determined.

In the determination of the investment contribution amount within this scope, the investment amount registered in the existing investment incentive certificates before 2/8/2024 will be taken into account, and the increases as a result of the revisions made in the investment incentive certificate after this date will not be included in the calculation. After 2/8/2024 (including this date), the tax not collected in the relevant accounting period in accordance with the provision of Article 32/A of the Corporate Tax Law due to the use of investment contribution amounts within the scope of newly obtained incentive certificates will not be deducted from the calculated minimum tax.

In cases where the sixth, seventh and eighth paragraphs of Article 32 and Article 32/A of the Corporate Tax Law are applied to the same income, all of the taxes not collected due to reduced rate applications can be deducted from the minimum corporate tax.

In the event that the amount remaining after deducting the tax amounts not collected due to the reduced rate applications by taking into account the provisions of Articles 32 and 32/A of the Corporate Tax Law from the minimum corporate tax calculated as stated above exceeds the tax amount calculated upon the taxpayer's declaration, minimum tax will be calculated up to the excess amount.

Corporate tax paid by withholding for the accounting period and advance/provisional taxes paid can be deducted from the calculated minimum tax.

Taxpayers are also required to calculate the minimum corporate tax in their declarations due to liquidation, merger, transfer and full division of companies.

Corporations that are entitled to tax deductions under Article 121 of the Income Tax Law will be able to use these rights for the minimum corporate tax calculated.

Exemptions and deductions deducted from corporate income in domestic minimum corporate tax calculation

The exemptions in Law No. 5520 (Corporate Income Tax Law- CIT Law) and in other laws that are deducted from the minimum corporate tax base are as follows

a)         Exemption for participation income (Article 5/1-a of CIT Law)

b)         Exemption for emission premium income (Article 5/1-ç of CIT Law)

c)         Exemption of earnings of investment funds and trusts (excluding earnings from immovables) (Article 5/1-d of CIT Law)

ç) Exemption of return earnings (Article 5/1-i of CIT Law)

d)         Gain exemption for sale-leaseback transactions (Article 5/1-j of CIT Law)

e)         Exemption of income from asset leasing transactions (Article 5/1-k of CIT Law)

f)          Income from the operation of ships registered in the Turkish international ship registry is exception (Article 12 of Law No. 4490)

g)         Exemption of earnings obtained in free zones (Provisional Article 3 of Law No. 3218) ğ)          Exemption of earnings obtained in technology development zones (Provisional article 2 of Law No. 4691)

The deductions in Law No. 5520 (Corporate Income Tax Law- CIT Law) and other laws that are deductable from the minimum corporate tax base are as follows

a)         325/A of Law No. 213, deduction on amounts set aside as venture capital fund (Article 10/1-g of CIT Law)

b)         In accordance with the Law No. 5378 on Disabled Persons dated 1/7/2005 and numbered 5378, sheltered workplace in-direction (Article 10/1-h of CIT Law)

c)         R&D and design allowance (Article 3 and 3/A of Law No. 5746) (Provisional Article 1/c of Law No. 6550) (Article 10/1-a of CIT Law)

For the valuation differences between Turkish Accounting Standards/Turkish Financial Reporting Standards and Tax Procedure Law, which are shown in the "Other deductions" or "Other deductions and exemptions" lines of the corporate tax (recorded in these lines of the declaration for the purpose of calculating the tax base correctly) minimum corporate tax will not be calculated.

Within the scope of tax treaties in force, in cases where Turkey has no right to levy tax due to the fact that the taxation right is located in the relevant country, or in cases where such earnings should be exempted in Turkey, the amounts obtained and included in the corporate income and deducted from the tax base in the "Other deductions" and "Other deductions and exemptions" lines of the declaration will not be subject to the minimum corporate tax. In addition, earnings that are exempted from corporate tax pursuant to other bilateral or multilateral international agreements in force are also not the subject of minimum corporate tax.

Exemptions and deductions not deducted from corporate income in the calculation of domestic minimum corporate tax

All gains generated by corporate taxpayers are included in the corporate income, and the deductions and exemptions set out in Law No. 5520 (Corporate Income Tax Law- CIT Law) and other laws are subject to deduction in the determination of the income or taxable base by being shown in the "Exemptions and deductions to be deducted even if there is a loss" and "Exemptions and deductions to be deducted in the presence of earnings" sections of the corporate income tax return.

The exemptions in Law No. 5520 (Corporate Income Tax Law- CIT Law) and other laws that cannot be deducted from the minimum corporate tax base are as follows

a)         Exemption for foreign participation income (Article 5/1-b of CIT Law)

b)         Exemption for gain on sale of participation shares abroad (Article 5/1-c of CIT Law)

c)         Exemption of earnings of investment funds and trusts (earnings from immovable properties) (Article 5/1-d of CIT Law)

ç) Exemption from gain on sale of immovable property, participation shares and funds (Article 5/1-e of CIT Law)

d)         Exemption for the gains on the sale of immovable property or participation shares of those who are indebted to banks, financial leasing or financing companies or the SDIF (Article 5/1-f of CIT Law)

e)         Exemption for foreign branch earnings (Article 5/1-g of CIT Law)

f)          Exemption for foreign construction, repair, installation and technical services (Article 5/1-h of CIT Law)

g)         Education and training income exemption (Article 5/1-ı of CIT Law)

ğ) Earnings exemption for management companies in the taxation of foreign fund earnings (Article 5/A of CIT Law)

h)         Exemption of gain on sale of industrial property rights (Article 5/B of CIT Law)

ı) Exemption of earnings from currency-protected deposit and participation accounts (Temporary Article 14 of CIT Law)

i)          Exemption of gains arising from the disposal of warehouse receipts issued under the Agricultural Products Licensed Warehousing Law (Provisional Article 76 of Law No. 193)

j)          Exemption for the earnings of research infrastructures from R&D and innovation activities (Provisional Article 1/a of Law No. 6550)

k)         Other exemptions included in the Special Laws and required to be included in the minimum tax base

The earnings of investment funds and trusts from their immovable properties within the scope of the subparagraph (d) of the first paragraph of Article 5 of the CIT Law are within the scope of the minimum corporate tax.

Earnings derived by investment funds and trusts from immovable property, including commercial property, are earnings derived directly from immovable property, such as earnings from the purchase and sale of immovable property, rental income, earnings from the transfer and assignment of rights attached to immovable property, income from immovable construction projects, and income from the operation of immovable property.

The deductions in Law No. 5520 (Corporate Income Tax Law- CIT Law) and other laws which cannot be deducted from the minimum corporate tax base are as follows

a)         Deduction for sponsorship expenses (Article 10/1-b of CIT Law)

b)         Discount on donations and grants (Article 10/1-c of CIT Law)

c)         Deduction for donations and grants related to the construction of educational and health facilities and dormitories (Article 10/1-ç of CIT Law)

ç) Discount on donations and aids for culture and tourism purposes (Article 10/1-d of CIT Law)

d)         Discount on donations to aid campaigns initiated by the President (Article 10/1-e of CIT Law)

e)         Discount on cash donations and aids made to the Red Crescent Society and the Green Crescent Society (Article 10/1-f of CIT Law)

f)          Software, engineering, education and health services provided abroad (Article

10/1-ğ of CIT Law)

g)         Interest deduction arising from cash capital increase (Article 10/1-ı of CIT Law)

ğ) Earnings arising from İstanbul Finance Center (Article 10/1-i of CIT Law)

h)         Investment allowance exemption (repealed Article 19, provisional Article 61 and provisional Article 69 of Law No. 193)

ı) Techno-initiative capital support discount (Article 3/5 of Law No. 5746)

i)          Technocenter capital support discount (Provisional Article 4 of Law No. 4691)

j)          Other deductions in CIT law and other Laws in other laws should be shown in the

The  exemptions and deductions appearing in "Other discounts and deductions" or "Other deductions" sections of the tax return will also be included in the scope of minimum corporate tax.

In the calculation of minimum corporate tax, prior year losses will not be deducted from the corporate income and will be taken into account in the calculation of minimum corporate tax.

Example 1: (A) A.Ş.'s commercial balance sheet profit for the 2025 accounting period is 1.000.000 TL and its legally non-deductable expenses are 200.000 TL. Accordingly, the minimum corporate tax of the corporation will be calculated as follows:

Since the calculated corporate tax of (A) A.Ş. is higher than the minimum corporate tax due to the absence of deductions and exemptions and prior year losses, the calculated corporate tax will be considered as TL 300.000.

Example 2: (B) A.Ş.'s commercial balance sheet loss for the 2025 accounting period is 1.000.000 TL and its legally unacceptable expenses are 1.200.000 TL. Accordingly, the minimum corporate tax of the corporation will be calculated as follows:

Since the calculated corporate tax of (B) A.Ş. is higher than the minimum corporate tax due to the absence of deductions and exemptions and prior year losses, the calculated corporate tax will be considered as TL 50.000.

Example 3: (C) A.Ş.'s commercial balance sheet profit for the 2025 accounting period is 4.000.000 TL and its legally unacceptable expenses are 800.000 TL. In the same accounting period, the taxpayer organization, in accordance with the provision of Article 5 of the Law No. 5520 (Corporate Income Tax Law- CIT Law); 2.000.000 TL from the participation income exemption,

TL 800.000 from the exemption of gain on sale of participation shares and TL 500.000 from the exemption of gain on technology development zones within the scope of Law No. 4691. The aforementioned Institution also,

TL 100.000 R&D deduction and TL 200.000 cash capital interest deduction calculated due to the cash capital increase are deducted from the declaration. The company's prior year loss that can be deducted through the declaration is TL 400.000.

Accordingly, the minimum corporate tax of the said corporation will be calculated as follows.

Since the calculated corporate tax of (C) A.Ş. is lower than the minimum corporate tax, the calculated corporate tax will be considered as TL 220.000.

Example 4: (D) A.Ş.'s commercial balance sheet profit for the 2025 accounting period is TL 12,500,000 and its legally unacceptable expenses are TL 500,000. The company obtained an investment incentive certificate for its investment in 2021 and completed the investment in 2024. In the corporate tax return of the taxpayer corporation for the 2025 accounting period, the tax base subject to reduced corporate tax due to this investment is TL

4.000.000 and the reduced tax rate is

5%. On the other hand, the real estate registered in the assets of the corporation was transferred to the bank in this period due to the debt to (A) Bank and a gain of TL 4.000.000 was obtained from this transaction. The corporation also deducted R&D allowance amounting to TL 2.000.000 and investment allowance amounting to TL 1.000.000 carried forward from previous periods.

Accordingly, the minimum corporate tax of the said corporation will be calculated as follows.

(D) A.Ş.'s minimum corporate tax will be TL 300.000 as a result of deducting the tax of TL 800.000, which is not collected according to the incentive certificate within the scope of Article 32/A, from the minimum corporate tax calculated as TL 1.100.000. Since the corporate tax of (D) A.Ş., which is calculated as TL 700.000 according to its declaration, is higher than the minimum corporate tax, no additional tax will be paid due to the minimum corporate tax application.

Example 5: (E) A.Ş.'s commercial balance sheet profit for the 2025 accounting period is 15.000.000 TL, the profit exemption from exchange rate protected deposit accounts is 5.000.000 TL and prior year losses are 5.000.000 TL. Within the scope of the investment incentive certificate obtained by the company before 2/8/2024, the company has the right to apply a reduced corporate tax rate of TL 2.000.000 for this investment in its corporate tax return for the 2025 accounting period and the reduced tax rate is 5%.

Accordingly, the minimum corporate tax of the said corporation will be calculated as follows.

(E) A.Ş.'s minimum corporate tax will be 1.100.000 TL as a result of deducting the 400.000 TL tax not collected according to the incentive certificate within the scope of Article 32/A from the minimum corporate tax calculated as 1.500.000 TL. Since this amount is higher than the corporate tax calculated as TL 850.000 according to the declaration of (E) A.Ş., the calculated corporate tax 1.100.000 TL will be taken into consideration.

Example 6: (F) A.Ş.'s commercial balance sheet profit for the 2025 accounting period is 10.000.000 TL and its legally unacceptable expenses are 1.000.000 TL. The company's earnings from exports, which will be subject to a reduced rate of 5 points according to the relevant provisions, is 2.000.000 TL. On the other hand, the exempt income of the corporation from its branch operating in the free zone is TRY 1.000.000 and the exempt sales income of industrial property rights is TRY 4.000.000. The corporation also deducted TL 2.000.000 cash capital interest deduction from its tax base.

 Accordingly, the minimum corporate tax of the said corporation will be calculated as follows.

(F) A.Ş.'s minimum corporate tax will be calculated as TL 900.000 as a result of deducting the tax of TL 100.000, which is not collected due to the 5-point discount granted to exporting companies within the scope of the seventh paragraph of Article 32 of CIT Law, from the minimum corporate tax calculated as TL 1.000.000. In this case, since the calculated corporate tax of (F) A.Ş. is the same as the minimum corporate tax, tax to be paid will be 900.000 TL.

Example 7: (G) Gayrimenkul Yatırım Ortaklığı A.Ş.'s current balance sheet profit for the 2025 accounting period is 5.000.000 TL and all of its earnings are exempt from tax in accordance with subparagraph (d) of the first paragraph of Article 5 of the CIT Law. TL 3.000.000 of this profit consists of sales and rental income from the immovable properties registered in the assets of the corporation. Accordingly, the minimum corporate tax of the said corporation will be calculated as follows:

(G) Real Estate Investment Trust A.Ş. has no corporate tax calculated due to the exemption. Since the calculated minimum corporate tax is TL 300.000, the corporate tax to be paid will be considered as TL 300.000.

Example 8: (H) A.Ş.'s commercial balance sheet profit for the 2025 accounting period is 7.000.000 TL and industrial property rights exemption sales gain is 4.000.000 TL. Taxpayer organization in the same accounting period;

- Pursuant to subparagraph (b) of the first paragraph of Article 5 of CIT Law, 1.000.000 TL benefited from the exemption of foreign participation income and 150.000 TL corporate tax was paid in Country (A) on this gain.

- According to subparagraph (h) of the first paragraph of Article 5 of CIT Law, the Company has earned TL 800.000 in Country (B) and paid TL 50.000 corporate tax in this country.

In this context, since 10% tax has already been calculated on foreign exempt earnings with a tax burden of 10% or more, these exempt earnings should be deducted from the minimum tax calculation. On the other hand, for the exempt earnings that do not carry a 10% tax burden, the portion of the earnings corresponding to the tax burden they carry can be deducted from the minimum tax base.

Accordingly, the domestic minimum corporate tax will be calculated as follows:

Since the calculated corporate tax of (H) A.Ş. is lower than the minimum corporate tax, the calculated corporate tax and the amount to be paid will be considered as TL 550.000.

Pursuant to subparagraph (b) of the first paragraph of Article 5 of CIT Law, since the tax burden in Country (A) related to the exemption of TL 1.000.000 foreign subsidiary income exceeds 10% (150.000/1.000.000 = 15%), the foreign subsidiary income is excluded from the minimum tax calculation.

Based on the provision of subparagraph (h) of the first paragraph of Article 5 of the CIT Law, TL 500.000 of the tax of TL 50.000 paid abroad on the income of TL 800.000, which is within the scope of the exemption, calculated by taking into account the minimum tax rate (50.000/0,1) will not be subject to minimum tax application, and minimum tax will be calculated on the remaining TL 300.000.