Several changes within the Tax Laws are anticipated with the New Legislative Proposal.

In order to compensate for the economic losses of the 06.02.2023 earthquake, legislative proposal regarding the additional motor vehicle tax, changes in some Laws and in the legislative decree no.375 is submitted to the National Assembly.[1]

°  Corporate Income Tax (CIT) rate is increased to %25, while the banks and financial institutions will be subject to the 30% rate. %5 reduced CIT rate will be applied for the export incomes of exporters.

The general CIT rate will be 25%. However, banks, institutions within the framework of Law no.6361 (dated 21.11.2012), electronic payment/money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reassurance companies and pension companies will be taxed at 30% for their corporate incomes. 1% reduced CIT rate for the export incomes of exporters was in place. With the proposal, 5% reduced CIT rate will be applied.

Projected Enforcement Date: On the date of publication of the Law, starting with the tax returns that will be submitted from 1/10/2023 onwards, for the corporate earnings of 2023 and the following years. For the companies with special accounting periods, the change will be in place with the speacial accounting period starting in 2023 and the following years.

   °   A one-time additional motor vehicle tax is introduced for the registered vehicles and the new vehicles that will be registered till the end of 2023.

Additional motor vehicle tax will be collected from the vehicles at the lists numbered (I), (I/A), (II) and (IV) in articles no.5, no.6 and temporary article no.8 of the Motor Vehicles Tax (MVT) Law (no:197) which are registered as of the date of the publication of the Law, and the vehicles that will be registered for the first time till 31.12.2023. This tax will be collected for once and at the amount of 2023 motor vehicle tax.

The exemptions in the article no.4 of the MVT Law will be applicaple for the additional MVT as well.

The payments will be made in two equal installments: first installment will be paid till the end of the month following the publication month of the Law, the second installment will be paid till the end of November for the registered vehicles. For the cars that will be registered for the first time, additional MVT will be paid with the MVT of these vehicles at once.

      Projected Enforcement Date: On the date of publication of the Law

      ° The President is authorized to increase the amounts at List no.(1) annexed to Environment Law no.2872 twofold or to decrease to half.

      Projected Enforcement Date: On the date of publication of the Law

       ° The VAT exemption for the sale of immovables is repealed. A temporary article is added to VAT Law for the immovables present in the company records before the enforcement date of the Law.

The term “immovables” is removed from the VAT Law article no.17/4-(r). With this removal, the VAT exemption for the sale of immovables (existing in the company records for at least 2 years) is cancelled. Immovables present in the company records before the enforcement date of the Law will continue to benefit from the exemption (as long as the conditions in the article no.17/4-(r) are met).

      Projected Enforcement Date: On the date of publication of the Law

    ° Changes in the Special Consumption Tax (SCT) Law

The legislative authority article (no.12/2) is changed. The President is given a new permission for changing the limits for the items in the lists no.(I) and no.(III) annexed to Special Consumption Tax (SCT) Law no. 4760. This new authority is given for making decisions in a timely and flexible manner  according to the social, economic and financial needs.

In order for the fixed tax amounts of the items in the list no.(I) not to be affected from inflation, these amounts will be updated with the January and July domestic producer price index.

      Projected Enforcement Date: On the date of publication of the Law

    ° Daily amount of 16,66 TRY, monthly amount of 500 TRY minimum wage support  will be provided for the July-December 2023 period.

Temporary article no.96 is added to the Social Insurances Law (no.5510) and with this article the employers depicted in the Law are provided minimum wage support for the July-December 2023 period. These amounts will be set off from the insurance premiums to be paid by the employers.

Projected Enforcement Date: To be applicable from 1/7/2023, on the date of publication of the Law

    ° The Corporate Income Tax (CIT) exemption for the earnings from Investment Funds/Partnerships other than venture capital funds/partnerships is cancelled.

Corporate earnings from venture capital funds/partnerships continue to be exempt from CIT. However, the earnings derived from other investment funds/partnerships acquired after the date of the publication of Law will not be exempt from CIT.

Projected Enforcement Date: Article 8-(a) at the publication date of the Law for the participation shares acquired from publication date, Article 8-(b) at the publication date of the Law.

    ° The immovables will not be subject to tax exempt partial split.

Article 19/3-(b) of CIT Law no. 5520 gives permission to partial split without tax. Participation shares, manufacturing plants and service operations continue to be subject to partial splits under certain conditions, however immovables can no longer be partially splitted.

Projected Enforcement Date: at 1/1/2024

   ° The CIT exemption for the sale of immovables is repealed. The exemption rate for the sale of immovables present in the company records before the enforcement date of this Law is lowered from 50% to 25%.

The earnings from the sale of immovables can no longer benefit from the CIT exemption. However, with the temporary article no.16 added to the CIT Law, immovables present in the company records before the enforcement date of this Law can continue to benefit from the exemption. The exemption rate for the sales after the enforcement date of the Law is 25 %.

      Projected Enforcement Date: On the date of publication of the Law