The “General Communiqué of Law No. 7440 on the Restructuring of Taxes and Some Other Receivables (Serial No: 3)” (the “Communiqué”) has been published in the Official Gazette dated April 15, 2023, with the number 32164, and it has entered into force on the date of its publication.
This Communiqué introduces an additional tax obligation for companies that are subject to corporate income tax. Accordingly, the earthquake tax will be collected at a rate of 10% on the deductions and exemptions made in the declarations of companies' revenues for the year 2022.
As part of this, it has been decided that an
additional tax of 10% will be levied on the exemption and deduction amounts made from the corporate income as well as the taxable bases subject to reduced corporate income tax,
without being associated with the period income, which are indicated in the corporate income tax return for the year 2022 by corporate income taxpayers. Additionally, a
one-time additional tax at a rate of 5% will be imposed on
the exemption gains related to corporate income tax exemptions and foreign-sourced gains that are proven to bear a tax burden of at least 15%.
The calculated tax in question will not be taken into account as an expense or deduction; it will not be offset against any corporate income tax, provisional tax, taxes withheld at source, or taxes paid abroad, if applicable.
The corporate income taxpayers in the 11 provinces affected by the earthquake, as well as the Gürün district of Sivas, have been excluded from this earthquake tax scope.
It is recommended to file a lawsuit in Tax Courts for the annulment of the relevant provision of the law concerning the earthquake tax, on the grounds that it is contrary to the Constitution.
In this regard, the recommended course of action is as follows:
- The tax return should be submitted with a reservation of objection (it is advised to submit it on the last day to gain time).
- Payment should be made first, prioritizing the payment of the first installment.
- Within 30 days, a lawsuit should be filed with the authorized Tax Court, requesting the transfer of the case to the Constitutional Court. The Tax Court should await the decision of the Constitutional Court regarding the annulment of the relevant provision of the law before ruling on our objection. This process usually takes between 1 to 2 years.
A regulation has been issued regarding the implementation of the law, and it is beneficial to apply to the Constitutional Court. As Constitutional Court decisions do not have retroactive effect, companies that have paid the tax but have not filed a lawsuit will not be affected by a possible annulment decision by the Constitutional Court. Therefore, for all companies submitting an "earthquake tax" declaration to benefit from a possible annulment decision, they need to file a lawsuit through the Tax Court, requesting the transfer of the case to the Constitutional Court.
Göktürk Şahin, Managing Associate
Nur Duygu Bozkurt Kadirhan, Senior Associate
Mustafa İriboz, Trainee Lawyer