The General Communiqué No: 301 on Income Tax was published in the Official Gazette dated December 23, 2017 and numbered 30279 made explanations on the application of tax deduction to compliant taxpayers.

Who are within the scope of this Communiqué?

Those who are taxpayers of income tax due to their commercial, agricultural or professional activity and (excluding those operating in the finance and banking sectors, insurance and reinsurance companies, retirement companies and pension investment funds) and those who meet the conditions stated in the second paragraph of this Article, 5% of the tax calculated on tax returns is deducted from the income or corporation tax that has to be paid.

Is there any monetary limitation for discount?

Calculated discount cannot be more than 1 million Turkish Lira.

How can the tax payer benefit from the tax rate reduction?

In order to benefit from this discount;

  • The year in which the redemption is to be calculated and the last two years preceding this year are given in the statutory period of the tax declarations and remitted on time (Regret filing in the last 2 years is not taken into account as violation)
  • There should not be any tax investigation
  • The date on which the discount will be calculated does not include any outstanding debts over the 1,000 original Turkish liras (including tax penalties)

Taxpayers who benefit from tax deductions within the scope of this article are subject to deduction in the relevant taxation period in case of later determination that they do not fulfill the prescribed conditions, the unpaid tax shall be assessed without applying tax penalty.

If the amount to be deducted is more than the taxable amount to be paid, the remaining amount may be deducted from other taxes accrued on the taxpayer’s statement within a full year following the date on which the annual income or the corporate tax return is to be issued. Amounts that cannot be deducted during this period are refused and not refundable.

Can the tax payer utilize the tax rate deduction in case of the presence of any other income?

In the case of declaring commercial, agricultural or professional gain together with other income elements, the tax reduction amount to be utilized by income taxpayers shall be determined on the basis of income tax calculated on the basis of the ratio of the profits declared due to commercial, agricultural or professional activity in the total income tax base.

When will this amendment be in force?

This Communiqué shall enter into force on the date of publication to be applied in the annual income or corporate tax declarations to be filed from 1/1/2018.

For more information, please kindly refer to the official announcement in below or feel free to consult any of Deloitte professionals listed in below.

The General Communiqué No: 301 (Turkish)

Contributed by: B.Şamil YETİŞ of Tuzel, E:, W: