A minimum corporate tax rate of up to 15% to be introduced for all companies in Turkey

Treasury and Finance Minister Mehmet Şimşek has announced that work is underway on this new minimum corporate tax rate. According to the details revealed, companies will pay a “minimum” tax rate of between 10% and 15% regardless of their exemptions. Multinational companies with headquarters in different countries will also pay a 15% corporate tax.

Background

The minimum corporate tax was previously implemented in Turkey during the early 1990s and was abolished in 1999. The move to reintroduce this tax is due to the low effective tax rates being paid in practice. Although the corporate tax rate is set at 25%, the effective tax rate, which reflects the actual tax paid relative to declared earnings, has dropped to the 13-15% range due to various exemptions.

New Regulation

The new regulation will require companies to pay a minimum tax regardless of their specific exemptions. This aims to broaden the tax base and increase tax revenues. The minimum corporate tax rate for domestic businesses will be set between 10% and 15%.

Potential Outcomes

If implemented, this regulation may also lead to the reintroduction of the “standard of living” measure for income tax payers, similar to past practices. This measure would aim to ensure more transparent income declarations and increase tax revenues.

This new tax regulation is seen as a step towards ensuring tax fairness and increasing public revenues. Companies and individuals are awaiting further details to understand how they will need to comply with the new rules.