In terms of Turkish law, an additional tax was introduced for corporate taxpayers with Article 10 (27) of the Amnesty Law No. 7440 published in the Official Gazette dated March 12, 2023, and numbered 32130. The nature of the additional tax, and the conditions and justifications for being sued, are highly controversial in Turkey. The scope and legal results of this tax are discussed in detail below.
The general scope of additional tax
Taxpayer: Corporate taxpayers.
Declaration time: The tax will be declared with the 2022 Corporate Tax Return in April.
Tax Base: Consists of discount and exception amounts from corporate income and reduced corporate tax base.
Tax Rate: 10% general rate and 5% special rate.
5% will be taken over the amounts obtained from the subsidiaries of the corporations and indicated as the participation income exemption in their declarations and the amounts that are obtained from abroad and are exempt from corporate tax since they carry at least a 15% tax burden.
Payment conditions: The first installment will be paid within the corporate tax payment period (April), and the second will be paid in the fourth month following (August).
Exempted Taxpayers: Institutions in earthquake zones are exempt from this tax.
What is the legal nature of the additional tax?
This is a new tax imposition. This tax, put into effect by the legislator, has been regulated by defining some exceptions and deductions of the previous year as a tax base.
Is there any retroactivity in terms of the tax burden?
The Constitutional Court did not find such regulations unconstitutional in terms of retroactivity in similar cases, based on the public interest. However, retroactive tax laws should be evaluated with the concepts of the rule of law, legal security, and predictability. There is a legal precedent, and the court applied the test standards of the principle of proportionality to the retroactive tax regulation.
How can unconstitutionality be claimed?
After the law enters into force, the two political parties with the highest number of members in the Assembly, or one-fifth of the members, will be able to take the matter to the Constitutional Court within 60 days. However, as far as we can see, no objection was made to this regulation in the Parliament. For this reason, we do not expect this regulation to be brought to the judiciary by the parties that have a group in the Assembly or by the members of the Assembly.
Declaration with reservation
Taxpayers can file a lawsuit by making a declaration with reservation, citing the disproportionate and negative impact of the regulation on them in general or on the basis of the principle of equality, legal certainty, predictability, rule of law, and non-retroactivity. If the court finds the allegation of unconstitutionality serious, it can send the matter to the Constitutional Court and terminate its trial according to the decision made there.
If the court does not refer the matter to the Constitutional Court and rejects the case filed upon the reservation, after the legal process is finalized, the matter can be brought to the Constitutional Court within the framework of individual application. Taxpayers may not file a lawsuit even though the tax return was submitted with an objection.