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an investment with more than one incentive certificate;
income from each investment should be identified
separately, their own reduced tax rate should be applied
on each of them and own contribution amount must be
applied for each incentive certificate.

• In case one investment is utilized within another
investment, in other words, if decomposition is not
available in terms of implementing reduced corporate tax
on expanded investments handled with the purpose of
model change, modernization, capacity increase, in an
advanced ruling issued in relation to whether the unused
contribution amounts within existing incentive certificate
will be carried on using and if carried on using, the way
how it should be calculated, it’s indicated that “in a
production facility, in case fixed assets that are included
both in the existing investment certificate and the new
incentive certificate are used, in the circumstance that
income concerning each incentive certificate cannot be
calculated separately, decomposition may be applied over
the income acquired through this production facility by
proportioning fixed assets under each incentive certificate
used in production to the total fixed assets used in
production.
• Financing costs concerning the loan for investment,
which have to be capitalized, should be included in the
contribution amount.
• Equivalents for income and expenditures contrary to
Tax Procedure Law should not be taken into account in
detection of investment income.

• Shares allocated to buildings from lands used in investment
should be subject to depreciation, however they should not
be included in the contribution amount.
• Fields, lands, royalty, spare parts and other expenditures
that are not subject to depreciation should not be taken
into account in terms of the contribution amount.
• Amounts from the completed investments that are unused
and transferred to other years could be raised through
revaluation rate.
Consequently, within the implementation of reduced
corporate tax on expanded investments; although
a resolution seems to be reached through applying
proportioning over fixed assets, those proportioning
methods may prove disadvantageous for taxpayers. In that
case, for the taxpayers’ turning the situation advantageous
for themselves, manufacturing, operational and accounting
systems used should be designed so as to provide
opportunity for actual detection of income from expanded
investments.

In our view, during the implementation of reduced corporate
tax on expanded investments, detection of the actual income Explanations in this article reflect the writer's personal view on the
acquired from these investments exactly will be the most matter. EY and/or Kuzey YMM ve Bağımsız Denetim A.Ş. disclaim any
appropriate solution both for proper functioning of this responsibility in respect of the information and explanations in the
system and also for avoiding taxation risks that may arise. article. Please be advised to first receive professional assistance from
the related experts before initiating an application regarding a specific
matter, since the legislation is changed frequently and is open to different
interpretations.
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