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Actual income detection on according to international accounting standards should
expanded investments and not be taken into account while detecting the income from
investment. Within that context, in the implementation of
certain special matters reduced corporate tax on expanded investments, taxpayers
should concurrently be registering their sales and costs
In an effort to divert savings towards high value added figures concerning expanded investments as they do for
investments, increase foreign direct investments (FDI), other operations. Besides, taxpayers should be making a
enhance production and employment, to minimize common income-expenditure distribution while creating
divergences on development, raise international competitive their end-term registrations. During that distribution, so as
power, support investments with high technology and to reach the net profit related to the expanded investment,
R&D content; new governmental incentive schemes are income should be distributed in line with the revenue share
introduced continuously. For that purpose, following the and expenditures should be distributed in line with the cost
removal of investment deduction implementation, through rates. Such income refers to ordinary and extra-ordinary
the Law Regarding Amendments on Certain Laws no.5838 incomes while expenditures refer to operational costs,
dated 28.02.2009 concerning the investment incentive ordinary costs, financing costs and extra-ordinary costs.
system aimed at enhancing investments, the Article 32/A –
Reduced Corporate Tax had been added to the Corporate Tax • As per the Corporate Tax General Communique
Law. series no.10, if more than one investment incentive
certificate issued under the Decision no.2009/15199
Tax deduction, with its simplest definition, means the and 2012/3305 exists, the reduced corporate tax will
taxation of income acquired by the investing taxpayers be implemented on the commercial profit figure if the
over those investments less by the government under financial profit exceeds the commercial profit; in the
certain rules. In other words, it can be defined as the circumstance that the financial profit is smaller than the
implementation of corporate tax reduced until the commercial profit, rate of the income acquired separately
contribution amount predicted for that investment is through each document over the total income acquired
reached. For this implementation Turkey is separated into through these investments being applied on corporate
six regions and the implementation of reduced corporate tax tax base, reduced corporate tax will be implemented in
differs according to the development levels of those regions. accordance with the tax deduction rates indicated in these
On the other side, within the implementation of reduced incentive certificates.
corporate tax, investment types are divided into two groups
in general and in that context, a complete new investment • Explanations within the Corporate Tax General
is defined as a newly launched facility while the investments Communique series no.10 indicates that the investment
of modernization, integration, product diversification are period starts from the beginning of the advance tax period
defined as expanding or renewing a facility existing under comprising the actual initiation date of the investment to
the title of expanded investment. Pertaining to that, whether the end of the last day of advance tax period that includes
the complete investment or expanded investment will be the date of application to the Ministry of Economy for
assessed as a regional, high scale, priority, mid-high tech or the purpose of completion visa. On the other hand, in
strategical investment type would be identified pursuant to the circumstance that the actual finalization date of the
the rules indicated in the Council of Ministers Decision no. investment corresponds to an advance tax period prior to
2012/3305 dated 19.06.2012. application date to the Ministry of Economy, the last day
of the advance tax period comprising the investment’s
finalization date must be considered as the date that the
‘The way that the actual income will be detected and certain
special matters concerning the expanded investments’ investment period ends. Operational period may be defined
which are so critical in terms of the implementation of as the completion of investment while partial operation
tax deduction, that is the most significant support on period refers to the investment’s starting operations
investments, are handled within the context of legal partly not completely. On the other side, through the
regulations. The points to be taken into account during the wording added as the sub-clause c to the Article 32/A of
detection of actual income in expanded investments and the Corporate Tax Law and Article 39 of the Law no.6322,
special matters are provided below: as of 01.01.2013, implementation of reduced corporate
tax would be applied over the taxpayers’ other income
• Defining the income concerning expanded investments during investment period. Pertaining to that, provided that
finely is of great importance. The income definition here they meet the required conditions, other income of them
refers to the income groups forming the income statement may also be subject to reduced corporate tax during the
within General Communique on Accounting Practices investment period.
series no.1. Those income groups may respectively be
outlined as follows: gross sales, net sales, profit or loss • Within the scope of Corporate Tax General Communique
from gross sales, operating profit or loss, ordinary profit or series no.10, in the circumstance that the taxpayers
loss and profit or loss for the period. The fact that wording have more than one incentive certificate issued under
of ‘income acquired through the investment refers to the the Decision no. 2012/3305 and income acquired from
profit before tax is explained within the advance rulings other activities during the investment period is not
issued by the Revenue Administration. Also, it’s indicated sufficient, the taxpayer will be able to freely choose the
that income and cost equivalents that are not compliant incentive certificate which would be given priority. Within
with Tax Procedure Law or calculated by companies that context, if reduced corporate tax is applied over

14 Temmuz 2017