DEVELOPMENTS IN TAXATION IN TURKIYE (TURKEY) 22.01.2025
LOCAL AND GLOBAL MINIMUM SUPPLEMENTARY TAX
OECD aims to ensure that multinational enterprises of a certain size pay a minimum level of tax on their profits in the countries where they operate, thereby reducing the incentive to shift profits. In multinational companies, the summary of income services, the effective tax rate recorded in each country was below 15%, the profits arising in those countries are subject to a tax. The model, in the event that the tax is not collected, gives the right to collect this tax in the country where the group headquarters is located, and if the country where the group headquarters is located does not collect a supplementary tax, it can be collected as a tax by the countries where the group is included.
In this context, the fifth section titled “Local and Global Minimum Supplementary Corporate Tax and Temporary Articles” was added to the Corporate Data Law No. 5520 by Law No. 7524 on 02.08.2024, and this section includes regulations regarding the subject, taxpayers, tax base, tax rate, exceptions and exemptions of the local and global minimum supplementary corporate tax to which multinational enterprises within the scope of the Law are subject, and other matters regarding the implementation of the said tax.
The subject, taxpayer, declaration, and payment issues of the Local and Global Minimum Supplementary Corporate Tax that will be valid for the profits earned in 2024 and subsequent taxation periods are briefly as follows:
The subject of Local and Global Minimum Supplementary Corporate Tax:
The profits of the affiliated enterprises of multinational business groups whose annual consolidated revenue in the consolidated financial statements of their ultimate parent enterprise exceeds the Turkish lira equivalent limit of 750 million euros in at least two of the four accounting periods preceding the accounting period in which the income is reported are subject to local and global minimum supplementary corporate tax.
Exemptions and Exceptions:
- Real estate investment vehicles: Businesses that are the ultimate main business and primarily real estate investment funds, aim to provide income to their beneficiaries by investing in real estate and where single-stage taxation is applied on a business or beneficiary basis,
- The earnings of multinational business groups’ affiliated businesses from international maritime transportation activities and, under certain conditions, some other sales and rental income within the scope of this activity are exempt from local and global minimum supplementary corporate tax.
Taxpayer of Global Minimum Supplementary Corporate Tax:
The taxpayer of the institutions generating income at the global level is the ultimate main enterprise, intermediate main enterprise or partially owned main enterprise in Turkey, which is affiliated with the multinational business unit and other variables.
Global Minimum Supplementary Corporate Tax Rate and Base:
The global minimum supplementary corporate tax rate is the difference between the country-based tax burden and the minimum corporate tax rate (15%). If the country-based tax burden exceeds the minimum corporate tax rate, the global minimum supplementary corporate tax is not calculated.
A multinational group’s country-based tax burden for each accounting period is determined by dividing the total of the adjusted covered taxes of its affiliated enterprises in that country by the total country-based earnings of its affiliated enterprises in that country. The global minimum supplementary corporate tax base is determined by deducting 5% of the annual gross wages of the employees of the affiliated enterprises in that country and 5% of the net book value of their tangible fixed assets from the total net country-based earnings.
The global minimum supplementary corporate tax for a country is determined by applying the global minimum supplementary corporate tax rate to the global minimum supplementary corporate tax base. The global minimum supplementary corporate tax of a subsidiary is determined by multiplying the ratio found by dividing the enterprise-based profit of the subsidiary by the country-based profit by the global minimum supplementary corporate tax calculated for the relevant country within the scope of the fourth paragraph.
Taxation Period, Declaration, Date, and Payment of Global Minimum Supplementary Corporate Tax:
The taxation period of the local minimum supplementary corporate tax is the accounting period is calendar year in Türkiye. The taxation period of those to whom a special accounting period is assigned is the special accounting period. The calculated tax is declared and paid by the last day of the fifteenth month following the month in which the accounting period is closed.
Taxpayer of Local Minimum Supplementary Corporate Tax:
The taxpayer of the local minimum supplementary corporate tax is the affiliated enterprises and business partnerships that are affiliated with multinational business groups within the scope of Additional Article 1 and are resident in Turkey.
Taxation Period, Declaration, Assessment, and Payment of Local Minimum Supplementary Corporate Tax:
The taxation period of local minimum supplementary corporate tax is the accounting period. Local minimum supplementary corporate tax is determined by applying the minimum supplementary corporate tax rate to the global minimum supplementary corporate tax base. The calculated tax is declared and paid from the first day to the last day of the twelfth month following the month in which the accounting period closes.
For further information please contact:
Mustafa Bulut, CPA, Partner, ECOVIS DİPLOMAT DENETİM VE YMM A.S., Izmir, Türkiye
Email: mbulut@diplomatymm.com.tr
Efil Çetin, CPA, ECOVIS DİPLOMAT DENETİM VE YMM A.S., Izmir, Türkiye
Email: ecetin@diplomatymm.com.tr