Reduced Corporate Tax Guidelines - Ernst & · PDF file2 Reduced Corporate Tax Guidelines-2015 ... It is ruled in the article 32/A of the Corporate Tax Law no. 5520 ... In cases where

Reduced Corporate Tax Guidelines

Reduced Corporate Tax Guidelines-2015Reduced Corporate Tax Guidelines-20152

Introduction ..................................................................................................................... 31. Legislation and definitions ......................................................................................... 4 a. Definitions ............................................................................................................... 4 b. The Law and other legislation pertaining to reduced corporate tax application............ 42. Completely new investment / extension investment concept .................................... 7 a. Difference in terms of income determination and reduced corporate tax application ... 7 b. Difference in terms of investment type ..................................................................... 73. “Income” element in reduced corporate tax .............................................................. 8 a. Concept of “income” obtained from investment ........................................................ 8 b. Taking into consideration the provisions against Tax Procedures Law in determination of the income ....................................................................................... 8 c. Determination of general joint expenses and other operating incomes and expenses in determination of the “income” ............................................................... 8 d. The case where financial profit is lower than commercial profit .................................. 94. Reduced corporate tax application in extension investments .................................. 10 a. Concept of “undetectable income” in extension investment ..................................... 10 b. Concept of “Following the income in separate accounts” in extension investments ... 11 c. Finding the fixed asset values to be taken into consideration in cases where the income obtained from extension investments cannot be determined separately and the proportioning method is used ..................................................................... 11 d. Revaluated amount of the fixed assets in case that the income obtained from extension investments cannot be determined separately and the proportioning method is used ...................................................................................................... 115. Application of reduced corporate tax to incomes obtained from other activities in the investment period .......................................................................................... 12 a. Conditions of the application .................................................................................. 12 b. Concept of income from other activities .................................................................. 13 c. Beginning and end of the investment period ............................................................ 13 d. Application in case that operation begins partially in the investment period .............. 13 e. Determination of the contribution amount to be used in the investment period in case . that investments are made as bound to more than one incentive certificate .............. 14 f. Reduced corporate tax benefited from in the investment period when the investment has not begun to operate ....................................................................................... 14 g. Reduced corporate tax application in incomes obtained from other activities in terms of the investment expenses incurred in 2015 and 2016 .............................. 146. Other important issues pertaining to reduced corporate tax rate ............................ 17 a. An investment becoming a part of another investment ............................................ 17 b. Transfer of the investment before the operation begins ............................................ 18 c. Transfer of the investment after the operation begins partially or wholly ................... 18 d. Investments that will benefit from the supports of the lower region .......................... 18 e. Investments made in the organized industry zone in the sixth region ........................ 187. Special issues pertaining to investment expenses ................................................... 19 a. Investments that cannot benefit from reduced corporate tax application................... 19 b. Investment expenses that cannot benefit from reduced corporate tax application ...... 19 c. Benefiting from other supports .............................................................................. 19 d. Taking into consideration the intangible fixed asset expenses in calculation of the investment contribution amount ................................................................... 19 e. Initiation period for investment expenses ................................................................ 20 f. Exchange rate differences and interests pertaining to investment loans .................... 20 g. Giving shares to building expenses from lands ......................................................... 20 h. Investments to be made through financial leasing method ....................................... 208. Other issues affecting the investment contribution amounts .................................. 21 a. Revision of the incentive certificate ........................................................................ 21 b. Changes in imported and domestic machinery and equipment lists ........................... 21

Reduced Corporate Tax Guidelines-2015 3Reduced Corporate Tax Guidelines-2015

Introduction

Reduced corporate tax was included in our legislation with the Law no. 5838 published in the (repeated) Official Gazette dated 28.02.2009. The legal regulation pertaining to this application was introduced by addition of the article 32/A to the Corporate Tax Law (CTL).

As of 2009, the investment incentive system in our country has become a system which is based on regions and where the state supports for investments are determined in accordance with the socio-economic development level of cities. In this respect, the support system pertaining to the investments with incentive certificates is directed by the “Decisions on State Supports for Investments” taken by the Council of Ministers.

Firstly, the reduced corporate tax was started to be applied with the Council of Ministers Decision dated 16.07.2009 and no. 2009/15199; regarding this decision, the “Communiqué on Application of the Decision on State Supports for Investments” no. 2009/1 was published in the Official Gazette dated 28.07.2009 and amendments were made and applied with the Council of Ministers Decision no. 2011/1597.

Finally, in line with the development plans and goals stipulated in the annual programs; the “Decision on State Supports for Investments” was published with the Council of Ministers Decision dated 15.06.2012 and no. 2012/3305 in order to direct the savings to investments with high added value, increase production and employment, encourage regional and large-scale investments and strategic investments that will increase the international competition power and have high research and development content, decrease regional development differences, and support investments for clustering and environmental protection and research and development activities. The procedures and principles pertaining to application of the Council of Ministers Decision in question were explained in the “Communiqué no. 2012/1 on Application of Decision on State Supports for Investments”.

Finally, the article 32/A of the CTL which regulates the reduced corporate tax application took its final form with the amendments introduced with the Law no.

While the reduced corporate tax application is the most reasonable support for investors in terms of quantity, it is the most problematic and hesitated incentive element in practice. These problems and hesitations are caused by the fact that the issues are not clear in the laws and secondary legislation and there is no communiqués published by the Ministry of Finance on the issue. Although some of these hesitated issues were clarified within time (or assumed to have been solved in line with the provided views), some problems still exists since there is no clear regulation.

In our “Reduced Corporate Tax Guidelines”, analyses on the reduced corporate tax application which is very important for investments and the problems encountered in practice were handled with the views provided by the authority and our explanations on the issues were provided in this direction. We would like to remind that the views provided as our own understanding, apart from the explanations in the tax rulings, are not binding in any means and the view of the Authority must be obtained for such issues.

Reduced Corporate Tax Guidelines-20154

a. Definitions

Investment contribution rate and amount: The amount of contribution to investment refers to the amount of investments to be covered by the State through the tax not collected by applying reduced corporate tax; and the rate to be obtained by means of dividing this amount by the total investments refers to the rate of contribution to investment and determined by the Council of Ministers.

Investment Incentive Certificate: It is a certificate which includes the characteristic values of the investment and provides the opportunity to benefit from the support elements registered for the investment if it is performed in line with these values and the conditions set, and it is issued for the investments to be performed in line with the goals of the Council of Ministers Decision dated 15.06.2012 and no. 2012/3305.

Completely New Investments: These are investments which includes the main machinery and equipment and auxiliary plants for production of goods and services, includes land-plot and building-construction expenses when necessary and do not have plants in the same production field in the area where the investment will be made or do not have infrastructure integrity with their available plants.

Integration investments: These are investments which are integrated forward or backward to the present plant that will give intermediate goods which are integrant to the final products obtained in the present production lines of the plants manufacturing goods and services and/or will use the final product as the intermediate goods, and are within the same city boundaries or in the same area or within the same plant as a rule considering the subject of investment and the nature of the project.

Modernization investments: These are investments which includes adding parts appropriate for the machinery and equipments running out of their technical and/or economic lives in the production lines of the existing plants or replacing the existing machinery and equipments with new ones, completing the missing parts in the plant and directly upgrading the quality of the final product or changing its model.

Extension investments: These are investments which are aimed for increasing the capacity by adding production lines or machinery and equipments to an existing investment and constitute a whole by creating a mutual infrastructure with the existing plant.

Product diversifying investments: These are investments which have mutual infrastructures with existing plants and are aimed for obtaining different final products with additional investments to be made to the existing machinery and equipments in the same establishment.

b. The Law and other legislation pertaining to reduced corporate tax application

Corporate tax Law:

It is ruled in the article 32/A of the Corporate Tax Law no. 5520 that

“(1) Gains derived from investments for which incentive certificate issued by the Undersecretariat of Treasury and which are specified in the second paragraph of this article, except the investments made as per royalty agreements and investments made in the scope of the Code no. 3996 dated 8/6/1994 and the Code no. 4283 dated 16/7/1997, commitment works, business partnerships and companies operating in

1. Legislation and definitions

Reduced Corporate Tax Guidelines-2015 Reduced Corporate Tax Guidelines-2015 5

finance and insurance sectors, shall be subject to corporate tax at reduced rate until reaching the investment contribution amount as of the fiscal period when the partial or complete operation of the investment began.

(2) In the application of this article, the investment contribution amount refers to the amount of investment costs to be covered by the State through the tax waived by applying reduced corporate tax. The amount to be calculated by dividing this amount by the total investment made refers to the investment contribution rate. The Council of Ministers is authorized to;

…

b) to determine the investment contribution rate, not exceeding 55% for each province group, strategic investments or the places stated in the clause (a), and not exceeding 65% for large-scale investments which exceeds TL 50 million, and to apply the corporate tax rate as reduced by up to 90%,

c) to enable to use 50% of the total investment contribution amount as to be deducted from the investment contribution amount to be calculated according to this article as of the date when the investment begins and to use the investment contribution amount partially as by applying the reduced corporate tax rate for the incomes obtained from the other activities of the company in the period of the investment, and to reduce this rate down to zero or increase it up to 80% for each province group,

…

In extension investments, if the gains derived can be determined by being followed under different accounts in the framework of the integrity of the enterprise, the reduced rate shall be applied to these gains. If the gains cannot be determined separately, the gains to be subject to the reduced rate shall be determined by proportioning the value of the extension investment to the total fixed asset value registered in the company’s assets at the end of the period (including the amounts pertaining to ongoing investments). The registered value of fixed assets in the company’s assets shall be taken into account with their revalued amounts during this calculation. The reduced rate application shall be commenced in the advance tax period when the investment has partially or wholly begun to operate.

…

(6) If the investment is transferred before operating, the transferee establishment benefits from the reduced tax rate provided that it meets the same conditions. In cases where reduced corporate tax is applied before the investment operation is partially or wholly initiated, the taxes not accrued due to application of reduced tax rate as per the clause (c) of the second paragraph are collected together with the delay interest without applying tax loss penalty.

…”

The Council of Ministers Decision dated 15.06.2012 and no. 2012/3305:

The provisions and statements in the article 15 of the relevant Council of Ministers Decision are as follows:

“(1) In large scale investments and investments performed in the scope of regional applications, income or corporate tax is applied at the following rates until reaching to the stipulated investment contribution rates under the article 32/A of the Corporate Tax Law no. 5520.

Regions Regional Investment Applications

Large Scale Investments

Investment Contribution

Rate (%)

Corporate tax or

income tax reduction rate (%)

Investment Contribu-tion Rate (%)

Corporate tax or


1 10 30 20 302 15 40 25 403 20 50 30 504 25 60 35 605 30 70 40 706 35 90 45 90

(2) However, the following reduction rates and investment contribution rates shall be applied in case investment is commenced until (and including) 31.12.2015 in the scope of incentive certificates to be issued as per this Decision.

Regions Regional Investment Applications

Large Scale Investments

Investment Contribution

Rate (%)

Corporate tax or


Investment Contribu-tion Rate (%)

Corporate tax or


1 15 50 25 502 20 55 30 553 25 60 35 604 30 70 40 705 40 80 50 806 50 90 60 90

3) The tax reduction rate and investment contribution rate applicable in all regions for strategic investments are ninety per cent and fifty per cent respectively.

(4) In application of this article, the investment contribution amount means the discounted income or corporate tax that is paid by the state by remission to collect, and the rate to be calculated by dividing this amount to the total investment amount means the investment contribution rate.

(5) As a deduction from the investment contribution amount to be calculated according to this article, reduced income or corporate tax can be applied to the incomes obtained from the other activities of the investor in the investment period, provided that it does not exceed the investment expense


amount and does not exceed the following ratios of the total investment contribution amount;

a) ten percent in the 2nd region, twenty percent in the 3rd region, thirty percent in the 4th region, fifty percent in the 5th region and eighty percent in the 6th region for large-scale investments and investments within the scope of the regional incentive applications,

b) eighty percent in the 6th region and fifty percent in the other regions for the strategic investments.

(6) Investments made in connection to land, building land, royalty, spare parts and expenditures which are not part of depreciation, also institutions that operate under Law No. 5520 in the finance and insurance field, joint ventures, investments realized under Law No. 4283 on Establishing and Operating Electric Power Plants and Sale of Energy through the Build-Operate Model and Law No. 3996 Regarding the Realization of Certain Investments and Services by the Build-Operate-Transfer Model and royalty contracts shall not benefit from tax discount support.

(7) Reduced rates are not applied in taxations performed through withholding.

(8) Among the privileged investments defined in the article 17 of this Decision, the tax reduction support for those whose fixed investment amount is TL 1 billion and above is applied by adding 10 points to the investment contribution rate effective for the 5th rates.”

The provisions and statements in the temporary article 5 added to the relevant Council of Ministers Decision with the Council of Ministers Decision no. 2015/7496 provided below.

“(1) Within the scope of the incentive certificates issued as per this decision, the reduced income or corporate tax for the investment expenses to be incurred between 1/1/2015 and 31/12/2016 can also be applied to the incomes of investors obtained from other activities within the investment period through deduction from the investment contribution amount to be calculated and provided that it does not exceed the investment expenses incurred and provided that the total investment contribution amount

a) Does not exceed 50% in the 1st region, 55% in the 2nd region, 60% in the 3rd region, 65% in the 4th region, 70% in the 5th region and 80% in the 6th region for large-scale and regional investments,

b) Does not exceed 80% in the 6th region and 70% in the other regions for strategic investments.”


a. Difference in terms of income determination and reduced corporate tax application

Completely new investment and extension investment (extension, integration, modernization, product diversifying) concepts are defined in the “Communiqué on Application of the Decision on State Supports for Investments” no. 2012/1 and are stated in the section titled “1.a. Definitions” of our guidelines.

Defining an investment as a completely new investment or extension investment is important in terms of reduced corporate tax application. Because, in completely new investments, it is compulsory to determine the income obtained from the investments separately in the records while an alternative proportioning method can be used where the income cannot be determined in extension investments. In case that the income cannot be determined separately, the income to which reduced rate will be applied is determined by proportioning the investment amount to the total fixed asset amount recorded in the assets of the establishment at the end of the period (including the amounts pertaining to investments in progress). However, use of this alternative proportioning method should not be considered as an optional right. In order for this method to be used, the income obtained from the extension investment must be undetectable (Tax ruling dated 24/02/2012 and no. B.07.1.GİB.4.34.16.01-KVK 32/A-738).

In various tax rulings given by the revenue administration, it has been stated that the modernization investments bound to investment incentive certificates by the Undersecretariat of Treasury/Ministry of Finance have characteristics similar to extension investments (Tax ruling dated 24.02.2012 and no. B.07.1.GİB.4.34.16.01-KVK 32/A-738).

In the article 32/A of the Corporate Tax Law which regulates the reduced tax application, completely new investments and extension investment types are mentioned while other investment types (modernization, integration, product diversifying) are not mentioned. In this respect, we are of the opinion that modernization, product diversifying and integration investments should also be accepted as “extension investments” in terms of determination of the income.

b. Difference in terms of investment type

According to the explanations in the article 9 of the Communiqué no. 2012/1, completely new, extension, modernization and product diversifying investments must be in the same establishment or in the same organized industry zone.

Integration investments must be within the same province or in the same place and in the same plant as a rule by considering the subject of investment and the characteristics of the project.

In ready-wear investments, if the capacity increase exceeds hundred percent due to adding machinery and equipment to the existing plants, these investments are evaluated and completely new investments.

2. Completely new investment / extension investment concept


a. Concept of “income” obtained from investment

The Law article in question and the relevant legislation do not explain accurately what should be understood from the concept of “income” which is obtained within the scope of the completely new investment or extension investment and to which reduced corporate tax will be applied.

In the Accounting Applications General Communiqué series no. 1, the income groups constituting the income statement are stated as follows:

• Gross Sales

• Net Sales

• Gross Sale Profit or Loss

• Operating Profit or Loss

• Ordinary Profit or Loss

• Period Profit or Loss

The legislation is not clear on which of the above-given income groups the investment income to be subject to reduced corporate tax will be separated to. The issue is handled in various tax rulings given by the Revenue Administration.

In the relevant tax rulings, it is stated that the concept of “income” obtained from investments must refer to the balance sheet profit. (Tax ruling dated 28.11.2012 and no. GİB.4.16.16.01-125(ÖZG-12/26)-419)

b. Taking into consideration the provisions against Tax Procedures Law in determination of the income

In the tax ruling dated 28.11.2012 and no. GİB.4.16.16.01-125(ÖZG-12/26)-419 given by the Ministry of Finance, it is stated that income and expense provisions which are not in compliance with the Tax Procedures Law or recorded by companies in accordance with the domestic/international accounting standards should not be taken into consideration in determination of the investment income.

Therefore, in determination of the balance sheet profit pertaining to the investment, this kind of provisions, income and expense accruals must be eliminated while determining the income.

c. Determination of general joint expenses and other operating incomes and expenses in determination of the “income”

While it is possible to determine the revenue from the sales of products obtained from investments and the production costs of these products (Gross Sales Profit), it a separate question how to calculate the balance sheet profit obtained from the investment.

In order to pass from gross sales profit to net sales profit, it is undoubted that the portions corresponding to investments among general joint expenses that cannot be followed up separately on the basis of investments and incomes and expenses arising from other activities should also be taken into consideration. However, in cases the portions corresponding to investments among general joint expenses and incomes and

3. “Income” element in reduced corporate tax


expenses arising from other activities cannot be determined directly, the legislation does not provide any regulation on which objective allocation keys will be used in this allocation process.

In the tax ruling dated 28.11.2012 and no. B.07.1.GİB.4.16.16.01-125(ÖZG-12/26)-419 given by the Revenue Administration, it is stated that when the portion corresponding to extension investments among general joint expenses and other operating incomes and expenses cannot be determined, the incomes and expenses in question can be separated in accordance with the following formula.

Joint expense amount corresponding to investment

Sales costs of products obained from investment

------------------------------------------------------ X Joint expenses Total sales cost

Amount of joint incomes corresponding to investment

Revenue from investment

--------------------------------------------------------- X Joint incomes Total revenue

d. The case where financial profit is lower than commercial profit

The following explanations are made pertaining to the issue in the tax ruling dated 03.04.2014 and no. 17192610-125 (ÖZG-13/7)-91/2277 and the tax ruling dated 14.04.2014 and no. 63611781-125[32/A-2013/4 ]-10 given by Bursa Tax Office Directorate;

"… in case that net corporate income is less than the total income obtained within a period within the scope of two investment incentive certificates issued in accordance with the Council of Ministers Decisions no. 2009/15199 and 2012/3305, application of the reduced corporate tax in accordance with the reduction rates in these incentive certificates, by applying to the net corporate income the rate of the income obtained separately within the both investment

incentive certificates to the total income obtained from these investments,"

This explanation clarifies how to perform the application when the financial profit is lower than the commercial profit due to discounts and exemptions.

Within the scope of the explanations in the tax rulings, the issue can be explained with the following examples.

Example 1:

Commercial Profit : 1000

2009/15199 : 250

2012/3305 : 450

Other : 300

Financial Profit : 600

In this case, the financial profit (TL 600) is lower than the total commercial profit (TL 1.000) and the total income obtained from the investments (300+400 = TL 700). According to the tax ruling, in this a case, the financial profit will be separated in accordance with 250/700 and 450/700 ratios and the reduced tax rates stipulated for the relevant investment will be applied to the bases found.

Considering this tax ruling, we are of the opinion that the calculation must be as follows for the other example.

Example 2:

Commercial Profit : 1000

2009/15199 : 250

2012/3305 : 450

Other : 300

Financial Profit : 800

In this case, since the total balance sheet profit (700) is lower than the financial profit amount (800), we are of the opinion that the reduced tax rates in the respective certificates should be applied to the incomes of 250 and 450 units and 20% standard corporate tax rate should be applied to the remaining income of 100 units.


a. Concept of “undetectable income” in extension investment

As stated above, in the relevant Law article, it is stated that if the income obtained in extension investments can be determined by “being followed up under separate accounts” within the framework of the business integrity, the reduced rate will be applied to this income; and if it cannot be “determined separately”, the reduced rate will be applied to the income to be found through proportioning.

The hesitated points pertaining to the issue are how to separately determine the income within the scope of extension investment, what the condition will be for the income obtained from investments not to be able to be determined separately within the total income and the meaning of following the income in separate accounts.

The biggest problems encountered by companies in practice are that the income obtained within the scope of the new extension investment cannot be determined separately in technical terms, the production, operational and accounting systems in use do not allow such a determination or there is no determination on how to determine the income separately. Due to the uncertainties in question, investors use the method of “proportioning the extension investment amount to the total fixed asset investment amount recorded in the assets of the establishment at the end of the period (including the amounts pertaining to investments in progress) while determining the income to which reduced corporate tax will be applied within the scope of extension investments. However, since the reduced corporate tax base does not accurately reflect the actual income obtained from investments or since the rate is too low due to high amount of fixed assets, this method creates a disadvantage.

According to the view of the Tax Authority, if the gross sales profit from sale of the products obtained from extension investments can be determined, it is assumed that the income from investment can also be determined. In such a case, the balance sheet profit obtained from the investment can be determined by calculating the proportions corresponding to the investment among the general expenses and other incomes and expenses as stated above.

However, determination of how much of the gross sales profit will belong to the extension investment is an important issue that must be calculated separately. Because, considering that all of the income obtained from the product manufactured as a result of the extension investments is obtained from this extension investment would be a wrong and criticized application. The machinery and equipment existing in the establishment before will also have a contribution in production of the relevant product. We see that the Authority put lights on this issue with the explanations stated in the section “6.a. An Investment Becoming a Part of another Investment”. (See 6.a.)

Considering the explanations made with the tax ruling in the relevant section, in cases where other fixed assets which are bound to another incentive certificate, do not have incentive certificates or bound to incentive certificates with consumed contribution amounts in the same establishment, the investment income corresponding to these fixed assets must be separated. Separation can be made in accordance with the ratio of the fixed assets in question to the total fixed assets in the plant.

4. Reduced corporate tax application in extension investments


b. Concept of “Following the income in separate accounts” in extension investments

Considering the explanations made with the tax ruling dated 28.11.2012 and no. GİB.4.16.16.01-125(ÖZG-12/26)-419 given by the Ministry of Finance pertaining to follow-up of the incomes obtained from the investment separately under records, the application will be as follows.

1- The gross sales profit arising from the sales of products manufactured as a result of the extension investment must be calculated and followed up separately and simultaneously in the records.

2- The shares from general joint expenses and other operating incomes and expenses must be calculated and demonstrated in the records by advance tax periods.

c. Finding the fixed asset values to be taken into consideration in cases where the income obtained from extension investments cannot be determined separately and the proportioning method is used

As per the article 32/A of the Corporate Tax Law, in cases where the income obtained from the extension investment cannot be determined separately, the extension investment amount must be proportioned to the total fixed asset amount recorded in the assets of the establishment at the end of the period and the portion of the period profit corresponding to this ratio must be considered as the income obtained from the extension investment.

To formulize this regulation;

Amount of income corresponding to the extension investment to be subjected to reduced rate

Extension Investment ------------------------------------------------------------------ X Total income Total fixed asset amount at the end of period (including extension investment amount)

Since determination of the income amount that can be subject to reduced corporate tax as a result of the proportioning method affects the period for taking back the contribution amount provided for the investment, it is important for the investors. Since the concept of extension investment amount” in the numerator of the formula refers to the expense amount within the scope of the investment certificate which is also accepted as the investment expense in terms of reduced corporate tax, it will be possible and easy to determine it. However, the higher the “total fixed asset amount” in the denominator of the formula is, the lower the coefficient rate will be; and therefore, the income to be subject to reduced corporate tax will be calculated as low at the same rate and this will lead to an unfavorable condition for the investor.

Therefore, in calculation of the income obtained from extension investments through the proportioning method explained in the Law article, there are two important points:

1- What the scope of the fixed assets recorded in the assets of the establishment is and whether the assets to be included within the scope will be taken with their gross amounts before accumulated depreciation or with their net book value in the calculation,

2- What should be understood from the revaluated amounts of these assets.

The Ministry of Finance has tried to clarify the issue within time with the explanations made on the basis of tax rulings regarding the issues above after the Law article became effective.

In these tax rulings*; it is stated that the scope of the fixed assets is the economic assets constituting the depreciation issue as per the article 313 of the Tax Procedures Law and it is explained that the gross amounts before deducting accumulated depreciations of all the fixed assets subject to depreciation will be taken into consideration as the total fixed asset amount in proportioning.

* For example, the tax ruling dated 11.05.2012 and no. B.07.4.DEF.0.40.10.00-007-9

On the other hand, in the Tax Court decisions taken pertaining to the issue in 2014 and 2015, it is ruled that the net book value after deducting the accumulated depreciations of the total fixed assets must be taken into consideration in the formula. However, it should be noted that the issue is currently in the appeal phase and thus the decision is not definite.

d. Revaluated amount of the fixed assets in case that the income obtained from extension investments cannot be determined separately and the proportioning method is used

In various tax rulings given by the Ministry of Finance*, it is stated that in the article 32/A of the CTL, the wording “…the registered values of the fixed assets in the assets of the establishment are taken into consideration with their revaluated amounts during this calculation …” means that the revaluated amounts of fixed assets arising from inflation adjustments made if necessary conditions are met must be taken into consideration and no other revaluation will be made apart from inflation adjustment to be performed if necessary conditions are met.

* For example, the tax ruling dated 11.05.2012 and no. B.07.4.DEF.0.40.10.00-007-9


When the reduced corporate tax application was initiated, the biggest disadvantage of investors was the fact that the reduced corporate tax could only be applied to the income obtained from the investment. In other words, it was not possible to benefit from this incentive before the investment begins to operate and any income is obtained from the investment.

In the clause (c) added after the clause (b) to the second paragraph, article 32/A of the CTL with the article 39 of the Law no. 6322, it is ruled that

“The council of Ministers is authorized to partially grant the investment contribution amount by applying reduced corporate tax rate to the company’s gains derived from other activities in the investment period, not exceeding 50% of the total investment contribution amount and the investment expenditure incurred, to be offset against the investment contribution amount to be calculated as per the related article as of the date of commencement of the investment, to reduce this rate to zero or to increase it to 80% for each province group.”

Together with these new regulations, it has been enabled for investors to benefit from the reduced corporate tax before the operating period and to apply reduced rate also to the incomes obtained from activities apart from the investments within the scope of the incentive certificates.

a. Conditions of the application

In order for the application in question to be performed;

a. The investment must be started

b. The contribution amount used should not exceed the rate determined for the relevant investment among the total contribution amount

c. The contribution rate used should not exceed the investment expense amount as of the period when the application is performed

d. The period when the application is performed must be the investment period.

Accordingly, the investment contribution amount to be used by applying reduced corporate tax rate to the income generated from other activities in the investment period refers to the amount to be detected by first multiplying the total investment amount with the investment contribution rate, and then multiplying this total investment contribution amount by the rate determined for the region in question (in your case it is 50%). This amount may not exceed the amount of investment expenditures incurred as of the said period.

(The tax ruling dated 02.04.2014 and no. 64597866-125[32/A-2014]-30)

5. Application of reduced corporate tax to incomes obtained from other activities in the investment period


b. Concept of income from other activities

In the tax ruling dated 03.04.2014 and no. 17192610-125(ÖZG-13/7)-91/2277 given by Bursa Tax Office Directorate; it is explained that

"… the income obtained within the investment incentive certificates issued as per the Council of Ministers Decisions no. 2009/15199 and 2012/3305 is not evaluated as the income obtained from other activities in application of reduced corporate tax,"

According to this application, it is stated that in the transaction where a certain percentage of the total contribution amount is used by applying reduced corporate tax to incomes obtained from other activities in the investment period in investments with incentive certificates within the framework of the Decision no. 2012/3305, "the income obtained from other activities" does not cover the incomes obtained from investments with incentive certificates pertaining to decisions no. 2009/15199 and 2012/3305.

Accordingly, in application of reduced corporate tax to incomes obtained from other activities in an investment period of an investment with incentive certificate pertaining to the Decision no. 2012/3305, the incomes obtained from investments made as per this Decision and the Decision no. 2009/15199 will not be considered as incomes obtained from other activities and all the other incomes will be included within this scope.

c. Beginning and end of the investment period

In the tax ruling dated 03.04.2014 and no. 17192610-125(ÖZG-13/7)-91/2277 given by Bursa Tax Office Directorate, what should be understood from the investment period in terms of reduced corporate tax is stated as follows:

"Concept of investment period refer to the period from the beginning of the advance taxation period covering the date of actual initiation of the investment to the final day of the advance taxation period covering the date of application to the Ministry of Economy for completion visa; and if the actual completion date of the investment corresponds to an advance taxation period before the date of application to the Ministry of Economy for completion visa, the final day of the advance taxation period covering the actual completion date of the investment should be taken into consideration,"

It would be appropriate to provide an example in order for the issue to be understood better. For example, a taxpayer applied for incentive certificate on 20.02.2013 and incurred expenses amounting to 10% of the fixed investment amount on 18.08.2013. The ending date was stated as 10.02.2014 in the investment incentive certificate and an application was made for completion visa on this date. In this example, it has been assumed that the investment was not completed actually before this date.

As already known, in order to accept an investment as initiated as per the article 24 of the Council of Ministers Decision no. 2012/3305, an expense amounting to at least ten percent

of the fixed investment amount (at least TL 5 million for investments with a fixed investment amount of TL 50 million) must be incurred, as based on the fixed investment amount on the issue date of the investment incentive certificate for the land-plot, infrastructure, building-construction, machinery and equipment (including advances and down-payments) and other investment expenditures after the beginning date of the investment.

Accordingly, the period to be accepted as the period when the investment was initiated in the relevant example will be 1 July 2013 – 30 September 2013 advance taxation period which covers 18 August 2013, the date when the condition for initiating the investment is met. In other words, application of reduced corporate tax to incomes obtained from other activities will begin as of 1 July 2013 and reduced corporate tax will be applied to other operating incomes obtained as of this date.

On the other hand, it is stated in the example that the application to the Ministry for completion visa was performed on 10 February 2014 and the period when the investment ends is 1 January 2014 – 31 March 2014 advance tax period which covers this date. Accordingly, reduced corporate tax can be applied to incomes obtained from other activities until the final day of this advance tax period.

As a result, within the scope of the explanations in the tax ruling, the investment period will be 1 July 2013 - 31 March 2014 period according to the example above.

d. Application in case that operation begins partially in the investment period

In investments made pertaining to the incentive certificate obtained within the framework of the Council of Ministers Decision no. 2012/3305, reduced corporate tax can also be applied to incomes obtained from other activities in the investment period, as to be applied to incomes obtained as of 01.01.2013, provided that a certain percentage of the total investment contribution amount and the investment expense amount are no exceeded. In this way, taxpayers making investments have been provided with the opportunity to benefit from the application as of the investment period and it is aimed to decrease the financing burden in these establishments.

However, as per the article 32/A of the CTL, there was no clear regulation in the legislation regarding that reduced corporate tax can be applied to the incomes obtained from the investment as of the period when the operation partially begins (before the investment is completed) and whether the reduced corporate tax application to incomes obtained from other activities as of the period when the operation partially begins particularly in extension investments will be terminated or not. The following explanations are made in the tax ruling dated 03.04.2014 and no. 17192610-125(ÖZG-13/7)-91/2277 given by Bursa Tax Office Directorate regarding the issue:

"…in case that your investment partially begins to operate, reduced corporate tax is applied to both the income obtained from the operating part and the income obtained from other


activities in consideration of the fifth paragraph, article 15 of the Council of Ministers Decision (2012/3305),"

With these explanations, taxpayers are provided with the opportunity to apply reduced corporate tax to their investment incomes to be obtained after operation partially begins as well as the incomes to be obtained from other activities in the investment period.

e. Determination of the contribution amount to be used in the investment period in case that investments are made as bound to more than one incentive certificate

In investments made pertaining to the incentive certificates obtained within the framework of the Council of Ministers Decision no. 2012/3305, regarding the reduced corporate tax application to incomes obtained from other activities in the investment period, it was an hesitated issue for taxpayers having investments with more than one incentive certificates within the scope of the same Decision which incentive certificate will be of priority in terms of the contribution amount to be spent by applying reduced corporate tax to incomes obtained from other activities, if the investment periods of both incentive certificates conflict

The following explanations are made in the tax ruling dated 03.04.2014 and no. 17192610-125(ÖZG-13/7)-91/2277 given by Bursa Tax Office Directorate regarding the issue.

"…if you have more than one incentive certificate issued in accordance with the Council of Ministers Decision no. 2012/3305 and if your income obtained from other activities to which reduced corporate tax can be applied is inadequate, your company can determine which incentive certificate will be of priority..."

Therefore, taxpayers can freely decide which incentive certificate will be of priority in applying reduced corporate tax to the income obtained from other activities in the investment period and in beginning to use the contribution amount to be spent.

f. Reduced corporate tax benefited from in the investment period when the investment has not begun to operate

In the Law article, it is stated that in cases where reduced corporate tax is applied before the investment operation is partially or wholly initiated, the taxes not accrued due to application of reduced tax rate as per the clause (c) of the second paragraph when the investment is not completed and operation is not initiated are collected together with the delay interest without applying tax loss penalty.

Accordingly, in cases where the investment is not completed and operation is not initiated although reduced corporate tax has been applied within the scope of the conditions stated to incomes obtained from other activities in the investment period, only the principal tax amount and delay interest will be applied for taxes not accrued and tax loss penalty will not be applied.

g. Reduced corporate tax application in incomes obtained from other activities in terms of the investment expenses incurred in 2015 and 2016

With the temporary article 5 added to the Decision no. 2012/3305 with the Council of Ministers Decision dated 8 April 2015 and no. 2015/7436, it has been ruled that within the scope of the incentive certificates issued as per this decision, the reduced income or corporate tax for the investment expenses to be incurred between 01.01.2015 and 31.12.2016 can also be applied to the incomes of investors obtained from other activities within the investment period through deduction from the investment contribution amount to be calculated and provided that it does not exceed the investment expenses incurred and provided that the total investment contribution amount

1- Does not exceed 50% in the 1st region, 55% in the 2nd region, 60% in the 3rd region, 65% in the 4th region, 70% in the 5th region and 80% in the 6th region for large-scale and regional investments,

2- Does not exceed 80% in the 6th region and 70% in the other regions for strategic investments.

With the amendment in question, the contribution amounts that can be benefited from by applying reduced corporate tax to the incomes with incentive certificates which have been issued within the scope of the Council of Ministers Decision no. 2012/3305 and are in progress in 2015 and 2016 and to incomes obtained from other activities in the investment period in the incentive certificates issued within the scope of this Decision as of 2015 have been increased.

This increase is limited to the contribution amount that can be benefited from in the investment period and there is no increase in the total contribution amounts. Besides, this increase is meaningful for the investment expenses incurred in 2015 and 2016 and does not make any difference for the contribution amount that can be used in the investment period for the investments made before this date.

Within the framework of the amendment in question, the contribution rates that can be benefited from in accordance with the dates of the investment expenses incurred in the investment period will be as follows.

Expense Period

1st Region

2nd Region

3rd Region

4th Region

5th Region

6th Region

2014 and before

0% 10% 20% 30% 50% 80%

2015 - 2016 50% 55% 60% 65% 70% 80%

There is no difference for the strategic investment made in the 6th region; and the rate in question for the other regions was increased from 50% to 70%.

We prefer to explain the issue with the following examples in order for the application to be understood better.


Example 1

Type of Investment Privileged Investment

Fixed Investment Amount 1.000.000

Total Investment Contribution Rate 400.000

Investment Period Contribution Rate (1)

50% (1) 2014 and before

Operating Period Contribution Rate (1)

50% (1) 2014 and before


70% (2) 2015 and 2016


30% (2) 2015 and 2016

Reduced Tax Rate 4%

Year

Entitled in the

Previous Period

Expenses of the

Relevant Year

Investment Period

Upper Limit

Contribution Amount

Used

Right Transferred

to the Following

Period

2014 0 100.000 (1)200.000 (2)100.000 (3) 0

2015 0 150.000 (4)180.000 (5)150.000 0

2016 0 750.000 30.000 30.000 0

(1) 50% of the total contribution amount is the upper limit for 2014 and the previous years.

(2) Since the expense amount is lower, this amount was used.(3) Since the income is adequate, there is no amount which is

entitled but not used.(4) 100.000 used in the previous year was deducted from

280.000 which is 70% of the total contribution amount for 2015. (5) Since 2015 expense amount is lower than the remaining

contribution amount, the expense amount was used.

In the above given example, a contribution amount of TL 100.000 was used in the investment period 2014 and the remaining investment period contribution amount was TL 100.000 (=200.000 – 100.000). But for the decision amendment in question, the lower one among the expense amount incurred in 2015 (150.000) and the remaining contribution amount (100.000) could be used. However, due to the amendment, the right for investment period contribution amount was increased by TL 80.000 to TL 180.000, and therefore the contribution amount used increased to TL 150.000 (150.000 < 180.000).

Example 2Type of Investment Privileged Investment

Fixed Investment Amount 1.000.000

Total Investment Contribution Rate

400.000


50% (1) 2014 and before


50% (1) 2014 and beforei


70% (2) 2015 and 2016


30% (2) 2015 and 2016

Reduced Tax Rate 4%

Year

Entitled in the

Previous Period

Expenses of the

Relevant Year

Investment Period Upper Limit

Contribution Amount

Used

Right Transferred

to the Following

Period

2014 0 100.000 (1)200.000

(2) 0 (3)100.000

2015 (3)100.000

150.000 (4)280.000

(5)250.000

0

2016 0 750.000 30.000 30.000 0

(1) 50% of the total contribution amount is the upper limit for 2014 and the previous years.

(2) Since no income occurs in 2014, the entitled contribution amount of TL 100.000 could not be used.

(3) The contribution amount of TL 100.000 which was entitled but could not be used was transferred to the following period.

(4) TL 280.000 which is 70% of the total contribution amount for 2015 was considered as the upper limit.

(5) Since the expense amount of 2015 (150.000) and the entitled contribution amount which is transferred from the previous year (100.000) is lower than the remaining contribution amount, this lower amount (100.000 + 150.000) was used.


İndirimli Kurumlar Vergisi Rehberi-2015 17Reduced Corporate Tax Guidelines-2015

6. Other important issues pertaining to reduced corporate tax rate

a. An investment becoming a part of another investment

One of the biggest problems in terms of reduced corporate tax in extension investments made for model change, modernization, capacity increase etc. was the uncertainty in the application when extension investments within the scope of a new incentive certificate are made before the contribution amount entitled within the scope of an existing investment is used up (due to inadequacy of the income obtained from the investment or the base due to reduction, exemption and loss deduction). In such a case, it was a matter of curiosity whether the contribution amounts that cannot be used up within the scope of the existing incentive certificate can continue to be used and if they will, how a calculation should be made.

Regarding an investment becoming a part of another investment, it is stated in the tax ruling dated 03.04.2014 and no. 17192610-125(ÖZG-13/7)-91/2277 given by Bursa Tax Office Directorate that:

"...it is obvious that there will be no loss of right for taxpayers even though the machinery and equipment in an investment within the scope of an investment incentive certificate become the part of another investment within the scope of another investment incentive certificate. However, in case of such an investment becoming a part of another investment, the incomes obtained from investments within the scopes of separate investment certificates must be determined separately and it is not possible to determine them separately, reduced corporate tax will be applied in accordance with the tax reduction rate in the relevant incentive certificate by considering the ratios of the fixed assets within the scope of the investment incentive certificate."

According to the above-given tax ruling explanations on the issue, it is stated that if fixed assets which are included within the scopes of both the existing incentive certificate and the new incentive certificate are used in a manufacturing plant, when it is not possible to separately determine the incomes pertaining to each incentive certificate, the income obtained from this manufacturing plant can be separated by proportioning the fixed assets pertaining to each incentive certificate used in manufacturing to the total fixed assets used in manufacturing.

For example, while a taxpayer has 100 units of fixed assets used in manufacturing within the scope of the investment certificate (A), he made an extension investment within the scope of the investment certificate (B) which includes 75 units of fixed asset expense for modernization and capacity increase. There are 175 units of fixed assets in total used in the plant as a result of the new investments and 1.000 units of investment income is obtained from this plant.

According to the explanation in the tax ruling, the ratios 100/175 and 75/175 can be used respectively in separation of the investment income of 1.000 units according to the incentive certificates (A) and (B). The tax reduction rates in the incentive certificates (A) and (B) will be applied separately to the investment incomes separated in this way and the corporate tax amounts which are not paid due to these tax reductions will be deducted separately from the contribution amounts entitled for the incentive certificates (A) and (B).


Considering the explanations in the tax ruling, we are of the opinion that in case that fixed assets which are not bound to any incentive certificates or whose contribution amounts are consumed up are also used in the manufacturing plant, the investment income corresponding to such fixed assets must also be calculated with the same logic and 20% standard corporate tax must be applied to the income found.

b. Transfer of the investment before the operation begins

As per the paragraph 6, article 32/A of the Corporate Tax Law, if an investment is transferred before the operation begins, the transferee establishment can benefit from the reduced tax application provided that the same conditions are met.

c. Transfer of the investment after the operation begins partially or wholly

As per the paragraph 6, article 32/A of the Corporate Tax Law, if an investment is transferred after the operation begins partially or wholly, the transferor can benefit from the reduced tax application until the transfer date and the transferee can benefit from the remaining part of the contribution amount after the transfer date provided that the same conditions are met.

d. Investments that will benefit from the supports of the lower region

As per the provision in the article 18 of the Council of Ministers Decision no. 2012/3305, if large-scale investments or investments with incentive certificates issued within the scope of regional incentive applications meet at least one of the following conditions, they can benefit from the tax reduction at the rates for the region lower than their own region.

1- Performance of the investment in an organized industry zone (OIZ).

2- Performance of the investment by an investor which has at least five real and legal person shareholders operating in the same sector or the investment becoming one that will enable integration in the field where joint activities are performed.

Accordingly, for example, a taxpayer investing in the organized industry zone in the 3rd region can benefit from the investment contribution rate and corporate tax reduction rate stipulated for the 4th region.

e. Investments made in the organized industry zone in the sixth region

For the large-scale investments and investments within the scope of the regional incentive applications which will be made in the organized industry regions in the 6th region, the tax reduction support will be applied by adding five points to the investment contribution rate effective in the region.


7. Special issues pertaining to investment expenses

a. Investments that cannot benefit from reduced corporate tax application

Expenditures which are not part of depreciation, also institutions that operate under Law No. 5520 in the finance and insurance field, joint ventures, investments realized under Law No. 4283 on Establishing and Operating Electric Power Plants and Sale of Energy through the Build-Operate Model and Law No. 3996 Regarding the Realization of Certain Investments and Services by the Build-Operate-Transfer Model and royalty contracts shall not benefit from tax discount support.

b. Investment expenses that cannot benefit from reduced corporate tax application

As per the provision regulated under the paragraph 6, article 15 of the Council of Ministers Decision no. 2012/3305; land, plot, royalty, spare part expenses and other expenses not subject to depreciation cannot be taken into consideration in calculation of the investment contribution amount; in other words, they cannot benefit from the tax reduction support.

However, these expenses can be considered as investment expenses in calculation of the minimum investment amount.

c. Benefiting from other supports

In the article 29 of the Council of Ministers Decision no. 2012/3305; it is ruled that the investment expenses benefiting from the support elements within the scope of the relevant Decision cannot benefit from the supports of other public institutions and organizations and applications cannot be made to the Ministry in order to benefit from the supports within the scope of the Decision in question for the investment expenses that will benefit from the supports of other public institutions and organizations.

Inasmuch as, in the tax ruling dated 02.11.2011 and no. B.07.1.GİB.4.25.15.01-2011-KVK-7215-2-10, it is stated that due to the support provided by Kuzeydoğu Anadolu Kalkınma Ajansı for purchase of the machinery and equipment within the scope of the investment incentive certificate, the cost of machinery and equipment in question cannot be subject to the contribution amount to be base to the reduced corporate tax application

d. Taking into consideration the intangible fixed asset expenses in calculation of the investment contribution amount

As per the provision regulated under the paragraph 3, article 5 of the Council of Ministers Decision no. 2012/3305; the ratio of the intangible fixed assets (brand, license, know-how, etc.) which are accepted as the investment expense within the scope of the incentive certificate cannot exceed fifty percent of the total fixed investment amount registered in the incentive certificate.

On the other hand, these expenses within the scope of the limit stated above can be taken into consideration in determination of the investment contribution amount provided that they are subject to depreciation.


e. Initiation period for investment expenses

As per the provision regulated under the paragraph 2, article 7 of the Council of Ministers Decision no. 2012/3305; the investment expenses incurred before the date of application for incentive certificate cannot be included within the scope of incentive certificate. Therefore, in order for the expenses incurred to be included in calculation of the investment contribution amount, they must be performed within the scope of the incentive certificate and incurred before the date of application for incentive certificate.

f. Exchange rate differences and interests pertaining to investment loans

Heading from the fact that the exchange rate differences and the loan interest amount paid that can arise until the end of the capitalization period regarding the loans to be used for financing the investments are expenses that have to be included in the cost amount as per the Tax Procedures Law General Communiqué series no. 163, we are of the opinion that the amounts in question can be taken into consideration in calculation of the investment contribution amount.

In other words, the exchange rate differences and interests arising from the loans used for financing the investments are the cost items of the economic assets subject to investment, they are included within the scope of the investment expenses. For this reason, they should be taken into consideration in calculation of the investment contribution amount.

However, we are of the opinion that the exchange rate difference and interest expenses capitalized intentionally in the periods after the period when the investment is capitalized cannot be taken into consideration in calculation of the investment contribution amount.

On the other hand, the following explanations are made in the tax ruling dated 17.07.2014 and no. 84098128-125(32A-201322)-436 given by İzmir Tax Office Directorate pertaining to the issue.

“Of the interest expenses pertaining to the loans used for financing the investments and the exchange rate differences arising from imports of foreign exchange loans and fixed assets from abroad, the portions incurred until the capitalization date can be added to the costs; and the portions incurred in the periods after capitalization can directly be booked as expense or subjected to depreciation by being added to the costs; and the explanations in the Tax Procedures Law General Communiqués series no. 163 and 334 must be taken into consideration.

On the other hand, interest expenses and exchange rate differences will not change the investment contribution amount that is base to the reduced corporate tax; the investment contribution amount base to the reduced corporate tax as per the incentive certificate of the Ministry of Economy will not increase or decrease due to financing expenses.”

As can be seen, there is no clear explanation in the relevant tax ruling on whether the exchange rate differences and interest expenses arising pertaining to the investment can be considered as investment contribution amount in calculation of the reduced corporate tax. From the above-given explanation,

it can be understood that if the exchange rate difference and interest expenses in question are listed as expense items in the incentive certificate issued by the Ministry of Finance, these expenses can be included within the investment contribution amount; however, it can also be concluded that these expenses cannot be included within the investment contribution amount in question by no means. For this reason, it would be appropriate to obtain a more clear view from the Ministry of Finance.

g. Giving shares to building expenses from lands

Main product/service production buildings and plants, administrative buildings and other building-construction expense items which are purchased or built are included within the investment expenses.

However, land and plot costs are accepted as expenses of investments with incentive certificates but not included in calculation as investment expense in calculation of reduced corporate tax. For this reason, we are of the opinion that if a building is constructed on a land, the land share given to the building for depreciation purposes should not be included in the calculation in terms of reduced corporate tax.

h. Investments to be made through financial leasing method

As per the provision regulated under the paragraph 2, article 5 of the Council of Ministers Decision no. 2012/3305; the total amount pertaining to machinery and equipment subject to financial leasing in investments to be made through financial leasing method must be at least two hundred Turkish Liras for each financial leasing company.

Regarding the investments bound to investment incentive certificates within the scope of the current legislation, the reduced corporate tax application can be benefited from within the framework of the principles stated in the article 32/A of the Corporate Tax Law for the investment goods acquired through financial leasing.

The explanations in the tax ruling dated 30.07.2013 and no. 84098128-176300-453 given pertaining to the issue are as follows:

“In determination of the investment contribution amount, reduced corporate tax application can be benefited from by taking into consideration only the lease amounts paid in the relevant period for the machinery and equipment obtained through financial leasing, and investment contribution amount will be calculated over the lease amounts to be paid in the following periods and the reduced corporate tax application will be benefited from.”


8. Other issues affecting the investment contribution amounts

a. Revision of the incentive certificate

The values registered in the incentive certificate can be changed by the authority issuing the incentive certificate as a result of the evaluation to be performed pursuant to the information and documents submitted in every phase of the investment.

In cases where the fixed investment amount of the incentive certificate increases or decreases by over fifty percent and the other information registered in the certificate are changed, the investors can apply to the authority issuing the incentive certificate and request revision of the certificate.

Among the machinery and equipments obtained after the initiation date of the investment but not included in the machinery and equipment lists, those which are appropriate for the project can be included within the scope of the certificate by being recognized as obtained within the scope of incentive certificate.

The changes in the investment amount which arise from the revision processes as stated above must be taken into consideration in calculation of the reduced corporate tax and thus the investment contribution amount.

b. Changes in imported and domestic machinery and equipment lists

The change requests pertaining to the imported and domestic machinery and equipment lists in the attachment of the incentive certificate are finalized by the authority to which application is made for incentive certificates.

However, the applications for including the used complete plants within the scope of incentive certificates are made to the Ministry.

In cases where the prices in the imported and domestic machinery and equipment lists increase by up to hundred percent or decrease by up to 50%, transactions can be performed directly without any list change.

The above-given list changes and the changes in the investment amount arising from price increases and decreases must be taken into account in calculation of the reduced corporate tax and thus the investment contribution amount.



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Reduced Corporate Tax Guidelines - Ernst & · PDF file2 Reduced Corporate Tax Guidelines-2015 ... It is ruled in the article 32/A of the Corporate Tax Law no. 5520 ... In cases where