Turkey published Law No. 7417 in the Official Gazette on 5 July 2022, which contains various measures. The main tax-related measures of the law generally entered into force on the date of publication.
One of the key tax measures of the law concerns the corporate tax rate for financial sector companies, including banks, financial leasing companies, asset management firms, insurance companies, and others. Law No. 7394, published in April 2022, provided for a temporary increase in the corporate tax rate to 25% on financial sector companies for the 2022 tax period. Law No. 7417 makes the 25% rate for financial sector companies permanent by providing that the rate also applies for the 2023 tax period and subsequent periods.
Another important measure concerns the notional interest deduction for capital increases. This includes that the right to benefit from the notional interest deduction is limited to five accounting periods starting from the period in which the decision regarding a capital increase is recorded in the trade registry or, for a newly established company, the period in which the establishment agreement is recorded in the trade registry.
The law also provided for another voluntary disclosure (amnesty) scheme for certain domestic and foreign assets, including cash, gold, foreign exchange, securities, and other capital market instruments. Assets declared will be subject to tax at a rate of 1% if declared by 30 September 2022, 2% if declared by 31 December 2022, and 3% if declared by 31 March 2023. However, an exemption is provided where assets are transferred to Turkey and held for at least 1 year in an account opened for this purpose.
Lastly, the law amends the Tax Procedure Law to authorize the Ministry of Finance to issue regulations to require the submission of information on ultimate beneficial owners (real beneficiaries) of legal entities and unincorporated persons. Details of these requirements will be published once available.