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Vergide Gündem
English Translation

Is additional tax compliant with the

Constitution?

“Additional tax” (also known as “earthquake tax”) has been created in order to
generate required sources to eliminate the impact of earthquake and development
of the region covering Kahramanmaraş and nearby provinces according to Law
numbered 7440 entered into force through being published on Official Gazette
dated March 12, 2023.

A portion of entities subject to corporate tax has been covered by the additional tax
liability according to above regulation. Additional tax has been legalized with two
different rates as follows depending upon being “domestic” and “foreign” based
on “deductions and exemptions in corporate tax and other laws” demonstrated on
2022 Corporate Tax return.

a. Domestic source exemptions and deductions:

• 10% without being associated with income of the period based on amounts
subject to Reduced Corporate Tax and exemption and deduction amounts subject
to deduction from corporate income on corporate tax return,
• 5% based on exempted income (including participation shares)

b. Foreign source exemptions and deductions:

Pursuant to subparagraph (b) of paragraph one of article 5 of the Corporate Tax
Law, 5% based on exempted income which are certified to have at least 15% of tax
burden and gained from overseas.

Additional tax and contradiction to Constitution claims

Existence of certain exemptions and deductions under Corporate Tax Law (such
as participation income exemption, emission premium exemption) in scope of
“additional tax” has been criticized in terms of tax technique and some of the
taxpayers declared their respective corporate tax returns for 2022 with mental
reservation and filed lawsuits on tax courts subsequently. Court of first instance,
which deemed such contradiction to constitution claim considerable for the lawsuit
filed by a taxpayer making corporate tax declaration with reservation for avoiding
additional tax accrued and forwarded additional tax regulation to Constitutional
Court. Constitutional Court has rejected the claim through finding the regulation
in question appropriate according to article 2,3, 13, 35 and 73 of the Constitution
on March 14, 2024. Decision numbered 2024/82 of Constitutional Court has been
published on Official Gazette dated March 19, 2023.

What are the justifications for such claim?

The justification for the application made to Constitutional Court is explained as
follows in the petition for lawsuit: “The additional tax envisaged by the contested
rule covers some of the taxpayers of the corporate tax, and the rule regarding
the additional tax violates the principle of generality and equality in taxation by

Mayıs 2024 May 2024 7