Exemptions Exemption for resident joint-stock companies to dispose of foreign participation shares • 75% or more of the total assets excluding cash assets for at least one year in a continuous manner as of the date of acquisition and the corporate earnings, which are gained by a joint-stock company as a fully liable taxpayer consisting of at least 10% of the capital of each of the companies that are not fully taxpayers or limited liability companies, arising from the exclusion of the foreign participation shares kept in the assets for at least 2 full years have been exempted from the corporation tax. Exemption for premium on issued shares • If the joint stock companies’ shares that are released in the establishment phase or when they increase their capital are sold out by them for a price that is higher than nominal value, the profits generated from the said transaction are exempted from corporate income tax. Exemption related to the earnings of investment funds and investment trusts established in Turkey • The earnings of securities investment funds or investment trusts arising from portfolio management, • The earnings arising from the portfolio management of investment funds or investment trusts based on gold and precious metals traded on the stock exchanges established in Turkey, • The earnings of venture capital investment funds or trusts, • The earnings of real estate investment funds or trusts, • The earnings of pension investment funds, Earnings of housing financing funds and asset financing funds are exempt from corporate income tax provided that investment funds or trusts are established in Turkey.
Exemption for Business Offices and Permanent Establishments located abroad Following conditions are required in order to have corporate tax exemption for corporate income obtained through business offices or permanent establishments located abroad; • According to the tax laws of the country, at least 15% of income and corporate tax-related total tax burden, • Transferring the profit of the relevant accounting period until the tax declaration is due, • If the principal activity of the participating company is finance, inclusive of financial leasing, provision of insurance services or investment in securities, having similar corporate tax rate with Turkey. Participation Exemption Following incomes are exempt from corporate income tax: • The profits gained from the participation in the capital of another corporation which holds fully liable taxpayer status, • Dividends obtained from founding shares and other usufruct shares that enable another institution subject to full tax liability to participate in profit, • Profit shares of investment fund participation shares and venture capital investment trusts which are subject to full taxpayer fund • The participation shares of other funds and investment trusts and the dividends from shares cannot be benefited from the participation exemption. The regulation covers the dividends from shares obtained by the corporations only by participating in the capital of the corporations subject to full taxpayer status. There is no difference in applying the exemption whether the corporation receiving the dividend is subject to full or limited taxpayer status.
Partners Burçin Gözlüklü, Ph.D.
Partners Ramazan Biçer Partner, In