background image
Turkish Parliament Considering Draft Bill Providing Corporate Tax Reduction for Industrial Companies and Exemption on Mutual Fund Dividends — Orbitax Tax News & Alerts

The Turkish parliament has published draft Bill 2/4058 containing various measures, including certain measures proposed earlier by Turkish President Recep Tayyip Erdoğan to address the devaluation of the Turkish lira and to support business and investment.

One of the main measures is a 1% reduction (discount) in the corporate tax rate for companies holding an industrial registration certificate that are engaged in production and export activities. The 1% discount is based on the standard 20% corporate tax rate under the Corporate Tax Law, meaning qualifying companies will enjoy a 19% corporate tax rate. Note, the standard corporate tax was temporarily increased to 23% in general for 2022, which is not affected by the reduction measure.

Another important measure provides a corporate tax exemption on dividend income obtained from mutual funds, other than venture capital investment funds/trusts (which are already exempt). However, the exemption for mutual funds will not apply where a fund's assets are comprised of foreign currency and/or gold and other precious metals, or capital market instruments based on such assets.

These measures are to apply from 1 January 2022 or from a special non-calendar accounting period beginning during the 2022 calendar year.