Regulations, including amendments on tax legislation, of Law numbered 7491.

The regulations containing amendments to the Tax legislation, of Law No. 7491 published in the Official Gazette dated December 28, 2023 are called to your attention below:

- On the condition that at least 50% of paid-in capital of entities which are in nature of joint stock and limited company and not having a registered office and headquarters in Türkiye is owned by individuals and dividend earned accordingly is transferred to Türkiye until the date on which the related annual income tax declaration should be submitted, 50% of such dividends shall be exempt from income tax. It shall be applicable for profits obtained as January 1, 2023.

- The lump sum expense application will be discontinued to be applied to earnings earned as of January 1, 2024.

In order to benefit from discount regarding earnings obtained from certain services provided in Türkiye and exclusively used abroad (such as architecture, engineering, software, call center, education and health) to persons who are not resident in Türkiye and to those whose workplace, registered and legal offices are abroad, the requirement to transfer all of such income to Türkiye until the submission of income/corporate tax return and discount rate is increased to 80% from 50%. It shall be applicable for income and profits obtained as January 1, 2023.

If the requirement of owning at least 50% of the paid-in capital of the foreign subsidiary and transferring the profit to Türkiye by the date on which the corporate tax return for the calendar year in which the profit is earned are required to be submitted, 50% of dividends obtained shall be exempt from corporate tax without seeking any additional requirements. It shall be applicable for income and profits obtained as January 1, 2023.

The duration of the corporate tax exemption applied to foreign exchange indexed deposit and participation accounts, which will expire on December 31, 2023, is extended until June 30, 2024. (Effective Date: December 28, 2023)

- Corporate tax rate of 25% will not be taken into account for companies within the scope of Law No. 6361, electronic payment and money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies in terms of profit/loss difference income determination sourcing from inflation adjustment made in 2024 and 2025 accounting periods. (Effective Date: December 28, 2023)

- Those who are held responsible for withholding taxes will submit their VAT returns by the evening of the 21st day of the month following the taxation period and pay such taxes by the evening of the 23rd day. It shall enter into force as of January 1, 2024.

- It is clearly written in the Special Consumption Tax Law that deliveries made from within the country to free zones are not within the scope of export exemption. (Effective Date: December 28, 2023)

- Housing loans used directly or through cooperatives by those who own registered houses as of the date of use of the housing loans, and money received due to insurance related to these loan transactions are excluded from the scope of BITT exemption. (Effective Date: December 28, 2023)