Global minimum tax Turkey (Türkiye): Developments in taxation

With the introduction of Law No. 7524, Türkiye has added the section “Local and Global Minimum Supplementary Corporate Tax” to the Corporate Data Law No. 5520. This regulates tax liability, tax base and tax rate, as well as exceptions and exemptions for multinational companies covered by the law. The Ecovis experts explain these and other details on the implementation of the tax.

The OECD wants multinational companies above a certain size to pay a minimum rate of 15% tax on their profits in each country in which they operate, to prevent tax avoidance. If companies pay less than 15% tax in one country, the home country of the group of companies or another country in which the group operates can levy this tax.

The subject of local and global minimum supplementary corporate tax

The profits of the affiliated enterprises of multinational business groups whose annual consolidated revenue in the consolidated financial statements of their ultimate parent enterprise exceeds the Turkish lira equivalent limit of EUR 750 million in at least two of the four accounting periods preceding the accounting period in which the income is reported are subject to local and global minimum supplementary corporate tax. Exemptions and exceptions apply, among others, to:

• Real estate investment vehicles: Businesses that are the ultimate main business and are primarily real estate investment funds aiming to provide income to their beneficiaries by investing in real estate and where single-stage taxation is applied on a business or beneficiary basis.
• The earnings of multinational business groups’ affiliated businesses from international maritime transportation activities and, under certain conditions, some other sales and rental income within the scope of this activity are exempt from the local and global minimum supplementary corporate tax.

Who must pay the global minimum supplementary corporate tax

The taxpayer of the institutions generating income at the global level is the ultimate main enterprise, intermediate main enterprise, or partially owned main enterprise in Türkiye which is affiliated with the multinational business unit and other variables.

We support you in calculating the local and global minimum supplementary tax.

Mustafa Bulut, CPA, Partner, ECOVIS DİPLOMAT DENETİM VE YMM A.S., Izmir, Türkiye

Tax rate and base

The global minimum supplementary corporate tax rate is the difference between the country-based tax burden and the minimum corporate tax rate (15%). If the country-based tax burden exceeds the minimum corporate tax rate, no global minimum supplementary corporate tax is calculated.

The country-specific tax burden of a multinational group is calculated by dividing the taxes of its companies in a country by their profits. The global minimum tax base is reduced by 5% of gross wages and 5% of the net book value of fixed assets. The tax is determined by applying the tax rate to this base. For a subsidiary, the tax is calculated by applying the ratio of company to country profits to the determined minimum tax.

Tax period, declaration, date and payment

The tax period for the global minimum supplementary corporate tax is the accounting period, which is the calendar year in Türkiye. The tax period of businesses to which a special accounting period applies is the special accounting period. The calculated tax must be declared and paid by the last day of the fifteenth month following the month in which the accounting period is closed.

Who must pay the local minimum supplementary corporate tax

The taxpayer of the local minimum supplementary corporate tax is the affiliated enterprises and business partnerships that are affiliated with multinational business groups within the scope of Additional Article 1 and are resident in Türkiye.

Tax period, declaration, assessment and payment

The tax period of local minimum supplementary corporate tax is the accounting period. Local minimum supplementary corporate tax is determined by applying the minimum supplementary corporate tax rate to the global minimum supplementary corporate tax base. The calculated tax is declared and paid from the first day to the last day of the twelfth month following the month in which the accounting period closes.

For further information please contact:

Mustafa Bulut, CPA, Partner, ECOVIS DİPLOMAT DENETİM VE YMM A.S., Izmir, Türkiye
Email: mbulut@diplomatymm.com.tr

Efil Çetin, CPA, ECOVIS DİPLOMAT DENETİM VE YMM A.S., Izmir, Türkiye
Email: ecetin@diplomatymm.com.tr