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One-Time Additional Tax for Earthquake

ADDITIONAL TAX FOR CORPORATION TAXPAYERS UTILIZING DISCOUNTS AND EXEMPTIONS IN 2022

According to the approved version of the Law Proposal on the Restructuring of Certain Receivables and Amendments to Some Laws in the Grand National Assembly of Turkey, for the year 2022, an additional tax of 10% on the base amount (5% for participation gain exemption) will be paid as a one-time payment for exemptions on technopark profits, R&D discounts, and similar exemptions and discounts utilized.

“(27) For corporate taxpayers, through their corporation tax returns for the year 2022, exemptions and discount amounts deducted from corporate earnings and the base amount subject to reduced corporation tax will incur an additional tax at a rate of 10% without linking it to the period's earnings. For the exemption regulated in subparagraph (a) of the first paragraph of Article 5 of Law No. 5520 and for exempted earnings obtained abroad that have a tax burden of at least 15%, a 5% additional tax will be calculated. The first installment of this tax will be paid within the corporation tax payment period, and the second installment will be paid in the fourth month following this period.”

This tax is introduced to mitigate the adverse effects caused by the Kahramanmaraş earthquake, meet the urgent needs of affected citizens, and fund the reconstruction of the region.

In the 2022 corporation tax return, a one-time additional tax of 10% will be levied on the amounts shown in the sections “exemptions and discounts to be deducted even if there is a loss” and “exemptions and discounts to be deducted in case of profit” which are deducted from corporate earnings, and on the base amount subject to reduced corporation tax under “Article 32/A of the Corporate Tax Law.”

However, the additional tax will not apply to the following exemptions and discounts:

Cooperatives’ patronage refunds exemption (KVK. Article 5/1-i),
Exemption on gains from sale-lease-back transactions (KVK Article 5/1-j),
Exemption on gains from the sale of assets and rights for the issuance of lease certificates (KVK. Article 5/1-k),
Exemption on gains from KKM accounts (KVK. Provisional Article 14),
Sponsorship expenses (KVK. Article 10/1-b),
Donations and aids with a receipt (KVK. Article 10/1-c),
Donations and aids for the construction or continued operation of schools, healthcare facilities, dormitories, children’s homes, orphanages, retirement homes, and care and rehabilitation centers (KVK. Article 10/1-ç),
Donations and aids for cultural and tourism purposes (KVK. Article 10/1-d),
Donations and aids to campaigns initiated by the President (KVK. Article 10/1-e),
Donations and aids to the Turkish Red Crescent and Green Crescent (KVK. Article 10/1-f),
Venture capital fund (KVK. Article 10/1-g),
Discount for protected workplaces established under the Law on Disabled Persons (KVK. Article 10/1-h),
Investment discount exemption (GVK. Provisional Article 61),
Donations and aids deductible from corporate earnings as per relevant laws.

5% Additional Tax on Participation Gain Exemption:

An additional tax of 5% will be calculated on the participation gain exemption and exempt earnings obtained abroad that have a verified tax burden of at least 15%.