Page 8 - VGMayis_2022

Vergide Gündem
English Translation

A brand-new tax planning instrument for

“Liraization”

In corporate tax systematic, income, obtained by a resident entity from an affiliate,
is exempted from taxation in order to prevent double taxation. Therefore, in line with
general principle, income from entities whose income is exempted from corporate
tax are not covered by “affiliate income” exemption. Such exemption regarding
the principle in question was breached in previous years through “resident venture
capital mutual fund participation shares and dividends obtained from shares of
venture capital investment partnerships”.

Mutual funds have also been covered in the framework of liraization policy. The
exemptions below are granted to corporate taxpayers according to article 22 of Law
numbered 7394, entered into force on 15.4.2022.

Return of fund certificate to the fund and exemption regarding
valuation income

Regulation regarding the exemption of resident venture capital mutual fund
participation shares and dividends obtained from shares of venture capital
investment partnerships from corporate tax is stipulated under subclause (3) of
subparagraph (3) of paragraph 1 of article 5 of Corporate Tax Law. Regulation
regarding dividends obtained from other resident mutual fund participation shares
(excluding income from mutual funds with assets in foreign currency and gold and
other precious metals and capital market instruments based on them) is stipulated
under subclause (4) of aforementioned article of the Law.

Income arising from returning of mutual fund’s participation shares, mentioned in
above subclauses of Law numbered 7394, is covered by corporate tax exemption.

In addition, gains from appreciation, arising from valuation of such mutual fund
certificates based on stock exchange price (fair value) according to article 279 of Tax
Procedure Law, are also exempted from tax.

Exemption in terms of income from sales of fund participation
shares, held more than two years

75% of income, arising from sales other resident mutual fund participation
shares, held more than two years, except for resident venture capital mutual fund
participation shares and mutual funds including foreign currency assets and gold
and other precious metals and capital market instruments based on them in their
portfolio, is covered by the exemption in question according to another amendment
made through Law numbered 7394.

It is obligatory according to new regulation that exemption regarding income should
be applied within the period in which the sales is made and portion of sales income
benefitting from such exemption should be kept under a special fund account under
liabilities of balance sheet of the respective entity until the end of fifth year following
the year in which the sales is made. In addition, it is required to collect sale price
until the end of second year following the sales period at the latest and income
subject to exemption should not be transferred to another account except for capital

8 May 2022