The Draft Bill to introduce Pillar Two rules into Turkish legislation was submitted to the Turkish Grand National Assembly

On July 16, 2024, the "Draft Bill on Amendments to Tax Laws and Other Laws" was submitted to the Turkish Grand National Assembly. The Bill also includes the "Global Minimum Corporate Tax" regulation in line with the Pillar Two Global Anti-Base Erosion (GloBE) rules. Multinational enterprises (MNEs)  which have consolidated revenue greater than 750 mil Euro at least in 2 years over 4 last years will be within the scope of "Global Minimum Corporate Tax". MNE Groups with

an effective tax rate below 15% would be required to pay top-up tax in their ultimate parent entity’s jurisdiction (assuming that Pillar Two rules are enforced in this jurisdiction) to bring the Group’s effective tax rate up to 15%.

The Draft Bill includes 13 articles related to the Global Minimum Top-Up Corporate Tax that will be added to Turkish Corporate Income Tax Law. In these articles; subject of the tax, definitions of main concepts (e.g. ultimate parent entity, MNE group, safe harbour, covered tax, consolidated revenue, net tax expense etc.), the enterprises that are exempted, calculation of the tax burden, tax base, substance based carve-out rules, applicable tax rate, taxation period, declaration, assessment, payment of Global Minimum Corporate Tax and certain other matters regarding the implementation are regulated.

The regulations envisaged to be included in the Bill are compatible with the OECD GloBE model rules. Turkey is expected to implement the "Income Inclusion Rule" (“IRR”) in 2024 and "Undertaxed Payment Rule" (“UTPR”) in 2025, similar to many OECD member jurisdiction.

Additionally, the Draft Bill also includes the "Domestic Minimum Top Up Tax" and defines taxation period, declaration, assessment and payment of Domestic Minimum Top Up Tax.

Additional announcements will be made regarding the content of the Draft Bill and further developments.