TAV IT

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TAV Airports Holding Annual Report 2008
TAV AIRPORTS HOLDING AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2008
(Amounts expressed in Euro unless otherwise stated)
Income withholding tax:
In addition to corporate taxes, companies should also calculate income withholding taxes on any dividends distributed, except
for companies receiving dividends who are resident companies in Turkey and Turkish branches of foreign companies. The rate of
income withholding tax is 10% starting from 24 April 2003. This rate was changed to 15% with the code numbered 5520 article 15
commencing from 21 June 2006. After the resolution, declared in official gazette in on 23 July 2006, this rate was changed to 15%
thereafter. Undistributed dividends incorporated in share capital are not subject to income withholding taxes.
Withholding tax at the rate of 19.8% is still applied to investment allowances relating to investment incentive certificates obtained
prior to 24 April 2003. Subsequent to this date, companies can deduct 40% of the investments within the scope of the investment
incentive certificate and that are directly related to production facilities of the company. The investments without investment
incentive certificates do not qualify for tax allowance.
Investment incentive certificates are revoked commencing from 1 January 2006. If companies cannot use investment incentive
due to inadequate profit, such outstanding investment incentive can be carried forward to following years as at 31 December 2005
so as to be deducted from taxable income of subsequent profitable years. However, companies can deduct the carried forward
outstanding allowance from 2006, 2007 and 2008 taxable income. The investment incentive amount that cannot be deducted from
2008 taxable income will not be carried forward to following years.
The tax rate that the companies can use in the case of deducting the tax investment incentive amount in years 2006, 2007 and
2008 is 30%. If the Company cannot use the investment incentive carried forward, the effective tax rate will be 20% and the
unused investment incentive will be cancelled.
As the management of the Group planned not to use the investment incentives, the consolidated Group companies resident in
Turkey have used 20% corporate tax rate in 31 December 2008 (31 December 2007: 20%).
Transfer pricing regulations:
In Turkey, the transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the heading of “disguised
profit distribution via transfer pricing”. The General Communiqué on disguised profit distribution via Transfer Pricing, dated 18
November 2007 sets details about implementation.
If a taxpayer enters into transactions regarding sale or purchase of goods and services with related parties, where the prices are not
set in accordance with arm’s length principle, then related profits are considered to be distributed in a disguised manner through
transfer pricing. Such disguised profit distributions through transfer pricing are not accepted as tax deductible for corporate income
tax purposes.