Taxation of Emission Premiums
Under Law No. 7440
20 April 2023
Taxation of Emission Premiums under Law No. 7440
Author: Av. Ertuğrul Aksoy
Law No. 7440 on the Restructuring of Certain Debts and Amendments to Certain Laws was published in the Official Gazette on March 12, 2023. Accordingly, an additional tax of 10% is levied on certain discounts and exemptions that were previously exempt from additional tax, and calculated over certain discounts and exemptions that were discounted in the 2022 fiscal period tax return by corporate taxpayers, while a rate of 5% applies to some other discounts and exemptions.
Under the first paragraph of article 5 (ç) of the Corporate Tax Law (“CTL”) No. 5520, emission premiums, defined as the portion exceeding the par value of shares issued by joint-stock companies at the time of establishment or capital increase, are exempt from corporate tax. With the new regulation, even though emission premium payments are not actually a gain, institutions that benefit from this exemption are subject to an additional tax of 10% on their exempt income.
As of February 6, 2023, taxpayers subject to corporate tax in Adana, Adıyaman, Diyarbakır, Elazığ, Gaziantep, Hatay, Kahramanmaraş, Kilis, Malatya, Osmaniye and Şanlıurfa provinces, as well as Gürün district of Sivas province, are exempt from additional tax.
The additional tax rates, along with emission premiums, can be summarized as follows, according to the amended provisions:
|
CTL |
Content |
Rate (%) |
|
Art. 5/1-a (3) |
The profit shares obtained from venture capital investment trust fund units subject to full corporate tax, the profit shares obtained from venture capital investment partnerships and an income arising from the return of units to the fund. |
5 |
|
Art. 5/1-ç |
The portion exceeding the nominal value of shares issued by |
10 |
|
Art. 5/1-e |
75% of gains arising from the sale of investment fund units that are a source of exempt income under the scope of article (a) and from the sale of immovable properties held for at least two full years, up to the same duration as the shareholding period of the affiliated shares and founding certificates, usufruct rights, and pre-emptive rights in the assets of the company, and 50% of gains from the sale of immovable properties held for at least two full years. |
10 |
As a result, it is considered that the additional taxes introduced by this regulation will significantly affect the ventures in Turkey, domestic and foreign investors considering investing in these ventures, and the Turkish entrepreneurial ecosystem.
