1% Corporate Income Tax Reduction for Exporters and Manufacturers

  Circular No: 2022 / 98

 

Date: 30.05.2022

As it is known, the corporation income tax rate is 20% in Turkey. This rate was 22% for fiscal years 2018, 2019 and 2020 temporarily.

According to the Amendment of the Law on Collection Procedures of Public Receivables No. 7316 and Other Certain Laws, the rate of corporation income tax is applied at the rate of 25% for the 2021 tax year and 23% for the 2022 tax year.

Turkish Law No. 7351, published in the Official Gazette dated 22.01.2022, set forth 1% decrease in the corporation tax rate on specified income.

On 14.05.2022, "The Communiqué Amending the Corporation Tax General Communiqué", which introduces clarifications and further details on 1% reduction in the corporation tax rate on income generated from manufacturing and exportation activities, was published in the Official Gazette numbered 31835.

According to the mentioned regulation;

• Corporate income tax is applied with 1% reduction for the income exclusively generated from export activities.
• Corporate income tax is applied with 1% reduction for the income exclusively generated from manufacturing activities for those companies who hold industrial registration certificate. However, in order for manufacturing companies to apply 1% reduced corporation tax rate, they are required to meet both conditions at the same time;

to have an industrial registry certificate; and

to actually engage in manufacturing activities.

 

Corporate taxpayers who use the calendar year as the accounting period will be able to benefit from this application for their earnings from manufacturing and export activities as of 01.01.2022, provided that they meet the conditions specified in the Communiqué. 

Corporate taxpayers who have been assigned a special accounting period, will be able to apply 1% reduction to their earnings from the beginning of the special accounting period starting in the 2022 calendar year.

Therefore, the corporate income tax rate will be applied to the income within this scope is as follows;

For Fiscal year 2022 (23% - 1% )          22%
For Fiscal year 2023 (20% - 1% )          19%

In other words, while the tax rate for other companies is 23% in 2022, for manufacturers and exporters it will be 22% for the portion of their income resulting from exporting and manufacturing activities.

If the corporation tax exemption is applied to the income from manufacturing and export activities, the corporation tax rate will not be applied with 1% reduction for the manufacturing and export earnings subject to the exemption.

If the manufacturing, export and other earnings are accounted together, in other words if these activities carried out together it is essential to determine separately the revenue, expense and cost elements related to the income to which the reduction will be applied. 

Kind Regards,

 


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