Tax on corporate transactions in Turkey: overview

A Q&A guide to tax on corporate transactions in Turkey.

The Q&A gives a high level overview of tax in Turkey and looks at key practical issues including, for example: the main taxes, reliefs and structures used in share and asset sales, dividends, mergers, joint ventures, reorganisations, share buybacks, private equity deals and restructuring and insolvency.

To compare answers across multiple jurisdictions, visit the Tax on Corporate Transactions: Country Q&A tool.

The Q&A is part of the global guide to tax on corporate transactions. For a full list of jurisdictional Q&As visit www.practicallaw.com/taxontransactions-guide.

Orhan Yavuz Mavioglu and Ali Yurtsever, ADMD Law Office
Contents

Tax authorities

1. What are the main authorities responsible for enforcing taxes on corporate transactions in your jurisdiction?

The Ministry of Finance and the Revenue Administration are the main authorities responsible for enforcing taxes on corporate transactions.

Pre-completion clearances and guidance

2. Is it possible to apply for tax clearances or obtain guidance from the tax authorities before completing a corporate transaction?

Taxpayers can request a tax ruling from the relevant local tax office for tax-related issues that are unclear or complex. However, those tax rulings are merely the opinion of the relevant Tax Office and therefore are not binding. If a transaction is executed based on a tax ruling, that ruling provides protection against any potential tax penalty and delayed interest payments (but not in relation to any tax principal due). There is no formal procedure for a ruling; a simple petition to the relevant tax office would be sufficient.

Disclosure of corporate transactions

3. Is it necessary to disclose the existence of any corporate transactions to the tax authorities?

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.

 

Main taxes on corporate transactions

Transfer taxes and notaries' fees

4. What are the main transfer taxes and/or notaries' fees potentially payable on corporate transactions?

Stamp tax

Key characteristics. Documents that include monetary commitments such as agreements and undertakings are subject to stamp tax. The documents are subject to stamp tax independently from the transactions that the documents cover.

Triggering event. The triggering event for stamp tax on documents executed in Turkey is the signing of the document. For documents executed outside of Turkey, stamp tax will arise when those documents are either submitted to the relevant governmental bodies or used in Turkey and a benefit is derived as a result.

Liable party/parties. The signatories of the document that is subject to stamp tax are jointly and severally liable for payment. However, the agreement may provide that only one of the parties is liable.

Stamp tax on documents concerning transactions between governmental authorities and persons must be paid by the persons concerned.

Stamp tax on documents drawn up abroad and in foreign embassies, legations and consulates in Turkey must be paid by the person who either:

  • Submitted the documents to the relevant governmental authorities.

  • Provided the authorities with the formalities of transfer of endorsement, effectively transferring such documents to a real person or an entity in Turkey.

  • Benefited from those documents.

Applicable rate(s). The tax is levied either as a fixed tax or a proportional rate over the quantifiable tax base, depending on the nature of the documents. The applicable proportional and fixed taxes are set out in Table 1 attached to the Stamp Tax Law (Law No. 488, Official Gazette dated 11 July 1964, No. 11751). Although the rate differs depending on the nature of the documents, the standard rate is 0.948% and the maximum amount is TRL1,487,397.70.

Land registry and notary fees

Key characteristics. The transfer of real property, establishment of a mortgage and other transactions concerned with land trigger land registry and notary fees.

Triggering event. Transactions which must be registered with the land registry and cadaster offices (Tariff 4, attached to the Fees Act, Law No. 492, Official Gazette dated 17 July 1964, No. 11756) are subject to land registry fees. The requirement to register triggers the fees. The notary transactions listed in Tariff 2 attached to the Fees Act are subject to notary fees.

Liable party/parties. Tariff 4 of the Fees Act lists the transactions subject to fees, and the parties responsible for paying. Where the transaction is not listed in the tariff, one of the following is responsible for paying, depending on the type of transaction, and unless otherwise agreed between the parties:

  • The acquirer of the proprietary right or limited rights in rem.

  • The mortgagor.

  • The person in whose name a registration is made on the cadastral transactions register.

  • The person with the right to register a bare ownership under a legacy.

  • The person in whose favour any transaction is made.

The notary fee is paid by the party that requests the execution of the transaction subject to the notary fee.

Applicable rate(s). The rate of the land registry fee differs, depending on the transaction to be executed. Applicable rates are set out in Tariff 4 of the Fees Act. The notary fees are payable either as a proportion based on the transaction value, or as a fixed sum, depending on the nature and character of the transaction. The fees are set out in Tariff 2 of the Fees Act.

Corporate and capital gains taxes

5. What are the main corporate and/or capital gains taxes potentially payable on corporate transactions?

Corporate income tax

Key characteristics. Corporate income tax is charged on corporate income generated by commercial entities. The last date to submit a corporate income tax return is the 25th of the fourth month following the fiscal year end.

Triggering event. The corporate income generated by commercial entities is calculated based on the commercial income provisions of the Income Tax Code (Law No. 193, Official Gazette dated 1 June 1961, No. 10700) regardless of the source of that income.

The provision of services and the sale of goods are subject to corporate income tax in the financial year in which the income is accrued.

Liable party/parties. Earnings of the following corporations are subject to corporate income tax:

  • Companies with share capital, joint stock companies, limited liability companies and limited companies with shares which are founded under the Turkish Commercial Code.

  • Co-operatives founded under Co-operatives Law No 1163 or co-operatives founded under their special laws and similar foreign co-operatives.

  • Public economic enterprises, that are state economic enterprises that are commercial, industrial and agricultural organisations, which:

    • are not capital companies or co-operatives;

    • have continuous business activity; and

    • are owned by or affiliated with central and local administrations, municipalities, and other public organisations.

  • Economic entities owned by foundations and associations. Economic entities run by foundations or associations are commercial, industrial and agricultural organisations that are not covered by the first two bullet points, which:

    • have continuous business activity;

    • are owned by or affiliated with foundations or associations and similar foreign enterprises.

    Unions are treated as associations and congregations are treated as foundations.

  • Joint ventures established between entities subject to corporation tax and individuals to render work with the objective of sharing profits under joint responsibility.

Applicable rate(s). The current corporate income tax rate is 20%. All resident and non-resident companies that earn commercial or professional income and that therefore must file an annual corporate income tax return, must also file an advance corporate income tax return at 20% on the basis of the actual quarterly profits paid during the year. This is offset against the final taxes calculated on the annual corporate income tax return. Any excess payment can be offset against other tax liabilities, and in the absence of those liabilities is refundable within one year.

Withholding tax

Key characteristics. Taxes are collected through withholding from certain payments made by tax-registered entities in Turkey (see below, Applicable rate(s)).

Triggering event. The payment of the income that is subject to corporate income tax to the relevant parties. The tax is deducted from the payment made and paid to the relevant tax office.

Liable party/parties. Certain payments made to resident and non-resident companies that are liable to corporate income tax (see Question 8, Corporate income tax).

Applicable rate(s). There is no withholding tax on payments to resident companies, except for:

  • Progress payments to contractors, both domestic and foreign, within the scope of construction work spanning more than one calendar year, must pay withholding tax at the rate of 3%.

  • Interest on all types of bonds and bills at the rate of 10%.

  • Capital gains derived from the sale of bonds and bills issued on or after 1 January 2006 and from the sale of stocks quoted in Istanbul Stock Exchange that are purchased on or after 1 January 2006 and held for less than one year at the rate of 10%.

  • Interest on bank deposits and income from a repurchase agreement at the rate between 10% and 18%, depending on the maturity period and currency.

Withholding tax is charged on the following payments to non-resident companies:

  • Progress payments to contractors for construction work of more than one year (see above).

  • Professional fees at 20%.

  • Rentals and royalties at 20%.

  • Dividends at 15% and interest at 10% (see Question 9).

  • Sales proceeds of copyrights, patents, trade marks and so on at 20%.

Value added and sales taxes

6. What are the main value added and/or sales taxes potentially payable on corporate transactions?

VAT

Key characteristics. All goods and services that are supplied or rendered in Turkey within the scope of commercial, industrial, agricultural, and professional activities are subject to VAT. Each person and/or entity, can set off (and neutralise) their input VAT (VAT payable on their sales) from their output VAT (VAT receivable on their purchases/expenses) on their monthly VAT returns.

Triggering event. The main triggering taxable events are (Article 1, VAT Code):

  • Delivery of goods and provision of services in the scope of commercial, agricultural and self-employment related activities.

  • The importation of goods and services.

Liable party/parties. The party delivering goods or providing services is responsible for declaring and paying the VAT to the relevant tax office by submitting a VAT return. The seller must issue an invoice, including the VAT based on the sale price, the total of which is paid by the consumer.

Applicable rate(s). The main VAT rate is 18%. Exemption rates of 8% and 1% are also applicable to certain services and goods, including:

  • Raisins, dried figs, walnuts and certain other snacks.

  • Wheat, barley and certain other dry legumes.

  • Newspapers.

Banking and insurance transactions tax

Key characteristics. Taxpayers are banks, insurance companies and bankers. Banks and insurance companies are exempt from VAT, but are subject to banking and insurance transactions tax on the gains that they receive from their transactions. The taxation period is each month of the calendar year. Taxpayers declare their taxable transactions up to the evening of the 15th day of the following month.

Triggering event. The collection of money as interest, commission or expenditure by banks and insurance companies (by cash or on account) triggers the payment.

Liable party/parties. Banks, insurance companies and bankers.

Applicable rate(s). Rates of 1% and 5% are applicable. The standard rate for banking and insurance transactions tax is 5%. However, the tax rate is applied as 1% from the principal amounts paid on foreign currency loans borrowed from abroad with an average maturity period of between one and two years.

Other taxes on corporate transactions

7. Are any other taxes potentially payable on corporate transactions?

There are no other taxes that are potentially payable on corporate transactions.

Taxes applicable to foreign companies

8. In what circumstances will the taxes identified in Questions 4 to 7 be applicable to foreign companies (in other words, what "presence" is required to give rise to tax liability)?

Corporate income tax

If both the legal and the business headquarters of a company are located outside Turkey, the company is regarded as a non-resident entity. If either of them is located within Turkey, the company is regarded as a resident entity. Resident entities are subject to tax on their worldwide income, whereas non-resident entities are taxed solely on the income derived from activities in Turkey. For the taxation of non-commercial income such as royalties and intellectual property payments, no permanent representative or fixed place of business is necessary as tax payments are made through withholding tax (see below, Withholding tax).

Non-resident entities with a permanent establishment in Turkey must file annual corporate income tax and quarterly advance corporate income tax returns (see Question 5, Corporate income tax).

Withholding tax

Non-resident companies subject to corporate income tax are subject to withholding tax. The rate of withholding tax varies, depending on the source of the income (see Question 5, Withholding tax: Applicable rates).

VAT

Non-resident taxpayers that have a permanent establishment in Turkey must register with the relevant local tax office and are subject to VAT (see Question 6, VAT). If a non-resident operates outside of Turkey without having either a fixed place of business or a permanent representative in Turkey, only the importation of goods will be subject to VAT in Turkey, which will be payable when the goods are cleared through customs.

Stamp tax

Transactions executed by non-residents in Turkey can be subject to stamp tax in Turkey (see Question 4, Stamp tax).

 

Dividends

9. Is there a requirement to withhold tax on dividends or other distributions?

Dividend distributions to individuals and non-resident corporations are subject to withholding tax at the rate of 15%. This rate may be reduced for foreign shareholders if a tax treaty is present.

Dividend distributions to resident entities and branches of non-resident entities are not subject to withholding tax. A share capital increase by the company using retained earnings is not considered to be a dividend distribution, and dividend withholding tax does not apply. For non-resident entities operating in Turkey (branches, and other type of permanent establishments such as permanent representatives and agents) withholding tax only applies to the portion of the profit that is transferred to the headquarters or the principal which is repatriated from Turkey.

 

Share acquisitions and disposals

Taxes potentially payable

10. What taxes are potentially payable on a share acquisition/share disposal?

Share acquisitions are subject to corporate income tax and VAT (see Questions 5, 6 and 8). The share transfer agreement is also subject to stamp tax at the rate of 0.948% of the highest value indicated in that agreement. A resident company buying shares in another entity cannot depreciate the value of shares for tax purposes.

The acquisition of shares by a foreign entity has no immediate Turkish income tax consequences except for potential stamp tax on the share transfer agreement (see Question 4, Stamp tax).

Exemptions and reliefs

11. Are any exemptions or reliefs available to the liable party?

Corporate income tax exemption

Income derived from the sale of participation shares that have been held for at least two years within the company's assets is exempt from corporate income tax, provided that the amounts obtained from the sales of those shares are deposited within the company capital within two calendar years following the transaction. This exemption does not apply to companies whose main field of activity is real estate commerce.

There are two types of capital company in Turkey: the joint stock company, which is suitable for large operations, and the limited liability company (other company types are available in Turkey but rarely used in practice). Capital gains derived by individuals on the sale of shares of a joint stock company that were held for more than two years are fully exempt from personal income tax; if they are held for less than two years, they are subject to personal income tax at the usual rates. This exemption does not apply to capital gains arising from transfer of participation rights in a limited liability company.

VAT exemption

Share transfers by an individual are out of the scope of Turkish VAT.

Where the transferor is a corporate entity (for example, a company or a branch) in Turkey, the transaction may be subject to VAT. Transfers of shares in joint stock companies are exempt from VAT, however, the sale of participation shares in limited liability companies by a Turkish entity can potentially attract Turkish VAT at 18%, unless the participation shares are held for a period of more than two years.

Stamp tax exemption

Transactions that are exempt from corporate income tax (see above, Corporate income tax exemption) are also exempt from stamp tax.

Tax advantages/disadvantages for the buyer

12. Please set out the tax advantages and disadvantages of a share acquisition for the buyer.

Advantages

Tax exemptions are provided for the sale and transfer of shares (see Question 11). Income generated though the sale of the founder's shares (that is, shares given to the original subscribers of a company), preferred shares or pre-emptive rights will also be exempt from corporate income tax. Share transfers realised by individuals are also exempt from VAT (see Question 11)

Disadvantages

Share transfers realised by corporations are subject to 18% VAT In this case, transfer of shares (in joint stock companies) are exempted from VAT. However, sale of participation shares (participation shares are shares other than share certificates such as partnership interests in limited liability companies and ordinary partnerships and the shares of joint stock companies attached to share certificates or temporary share certificates) by a Turkish entity attract Turkish VAT at 18%, unless the participation shares are held for a period of more than two years.

The tax risk associated with the company whose shares are acquired transfers to the purchaser. There is, therefore, a potential need for post-acquisition structuring if non-core assets are also acquired with the company.

Tax advantages/disadvantages for the seller

13. Please set out the tax advantages and disadvantages of a share disposal for the seller.

Advantages

The net amount to be earned from the sale and transfer of shares can be increased through tax exemptions (see Question 11).

Disadvantages

There are no notable tax disadvantages for the seller on a share disposal.

Transaction structures to minimise the tax burden

14. What transaction structures (if any) are commonly used to minimise the tax burden?

Partial spin-off, full spin-off, merger and share exchange are the most commonly used vehicles used to minimise tax burden on the transfer of real estate and participation shares. However, the Turkish Commercial Code does not contain any provisions regarding company spin-offs and share exchanges. A brief definition and tax incentives for those transactions were created under Articles 38 and 39 of the Corporate Tax Law No. 5520. Following those articles, a Communiqué Regarding Principles and Procedures for Partial Spin-off Transaction of Joint Stock Companies and Limited Liability Companies was published in the Legislative Journal No. 25231 dated 16 September 2003. The Corporate Tax Law was abolished by Corporate Tax Law No. 5520, and it is not clear whether the Communiqué is still in effect. However, in practice, the provisions of the Communiqué are applied to company spin-offs. Therefore, if the transfer of real estate and participation shares is executed by way of spin-off or tax-free merger, the transfers can be exempt from corporate income tax, VAT, stamp tax and other applicable fees (Article 20, Corporate Tax Law No.5520 dated June 13, 2006 ).

Partial spin-off

A partial spin-off concerns the transfer from a company of real property or shares that are (Article 19(3)(b), Corporate Tax Law No.5520 dated June 13, 2006 :

  • Held in another entity for at least two years.

  • Included in the balance sheet or production or service business of a full-fledged taxpayer company.

The transfer must be made to an existing or to-be-incorporated taxpayer company as capital-in-kind in return for the acquisition of the transferee company's shares, either by the transferor company or its existing shareholders.

Partial spin-off transactions are exempt from corporate income tax, VAT, stamp tax and other applicable fees (see Questions 4 to 6).

Full spin-off

A full spin-off is where all the assets, receivables and debts of a Turkish-resident company are transferred into two or more companies on their book values, and the transferor company dissolves without liquidation following the full spin-off (Article 19(3)(a), Corporate Tax Law No.5520 dated June 13, 2006 ). The shares of the transferee companies are transferred to the shareholders of the transferor company, either proportionally or disproportionately, on the basis of the equity held by the shareholders.

Full spin-off transactions are exempt from corporate income tax, VAT, stamp tax and other applicable fees (see Questions 4 to 6).

Tax-free merger

A tax-free merger is a structuring model where two or more companies merge into one of the companies, and the other companies cease to exist without liquidating. The assets of transferor corporations are transferred at their book values, and new shares are issued by the merged company to be distributed to the shareholders of both companies in return for their share capital (see Question 21).

Merger transactions are exempt from corporate income tax, VAT, stamp tax and other applicable fees (see Questions 4 to 6).

Share exchange

A share exchange is a structuring model where a Turkish-resident equity company acquires the shares of another equity company, by taking over control of its management and the majority of its shares. In return, it transfers its own participation shares to the transferring shareholders of the acquired company.

Share exchanges are exempt from corporate income tax and VAT (provided that issued share certificates are exchanged).

 

Asset acquisitions and disposals

Taxes potentially payable

15. What taxes are potentially payable on an asset acquisition/asset disposal?

An asset acquisition can only be done via a Turkish company or a Turkish branch of a foreign company. In principle, asset acquisitions are subject to corporate income tax, VAT, stamp tax and other applicable fees (see Questions 4 to 6). The excess of the purchase price over the fair value of the assets being transferred represents the goodwill (see Question 16, Goodwill).

Exemptions and reliefs

16. Are any exemptions or reliefs available to the liable party?

Reduced VAT and VAT exemption

The ordinary rate of VAT on the transfer of assets through an asset purchase agreement is 18%, depending on the type of assets being transferred. Real estate properties that are included in the asset purchase agreement could potentially be exempt from VAT if held for a period of more than two years. The buyer has the right to deduct VAT incurred on the asset deal from VAT generated from its sales. However, the full recovery of VAT can take time, depending on the VAT generation of the acquiring entity, which may lead to an additional cashflow problem on asset purchase transactions.

Although the 18% rate applies to the purchase or sale of real estate bigger than 150 square metres, only 1% VAT applies to real estate smaller than 150 square metres in size.

Real property transferred through a partial spin-off, full spin-off or merger transaction is exempt from VAT (see Question 14). In the case of asset acquisition, the tax attributes are not transferred to the purchaser and the seller retains the right to offset its existing tax losses and VAT credits against its taxable profits and VAT obligations stemming from the asset sale.

Corporate income tax exemption

The sale of assets of an entity is subject to corporate income tax on the gains realised from the sale. Losses arising from the sale of assets are available for immediate deduction or carry-forward. With respect to sale of certain fixed assets (for example, real estate property), 75% of the gains realised from those sales can be exempted from corporate income tax provided that the following conditions are met:

  • The real property which is the subject of the sale has been recorded on the seller's balance sheet for at least two years.

  • The cash proceeds are collected within two calendar years following the year in which the sale is executed.

  • 75% of the sale price which will benefit from the exemption must be placed in a special reserve account that cannot be:

    • transferred to another account (other than a share capital account);

    • distributed.

Stamp tax

The transfer of real property through partial-spin off, full spin-off and merger transactions is exempt from stamp tax and other applicable fees (see Question 14).

Goodwill

In the case of an asset acquisition, the goodwill amount (the positive difference between the purchase price and the fair value of the assets subject to the transfer) can be capitalised by the buyer and depreciated for tax purposes over a period of five years (see Question 15). The goodwill can also be written off, provided that its value does not exceed a certain amount stipulated by the relevant legislation.

Tax advantages/disadvantages for the buyer

17. Please set out the tax advantages and disadvantages of an asset acquisition for the buyer.

Advantages

As the cost of the assets acquired is subject to amortisation, it creates a tax benefit in future years for the buyer. In addition, previous tax liabilities will not be inherited by the buyer, making it possible for the buyer to acquire a part of a business without inheriting those liabilities.

Disadvantages

When a real property is transferred, the purchaser and the seller of the real property are jointly and severally liable for the payment of the real estate taxes accrued in relation to the real property. There may be a potential need to re-negotiate the contracts and renew the relevant licences, which involves more transaction costs, such as stamp duty.

Where a business transfer is executed, the tax risk will be transferred to the purchaser.

Tax advantages/disadvantages for the seller

18. Please set out the tax advantages and disadvantages of an asset disposal for the seller.

Advantages

The amount obtained by the seller through an asset disposal is generally greater than on a disposal of shares.

Disadvantages

There are no notable tax disadvantages for the seller on an asset disposal.

Transaction structures to minimise the tax burden

19. What transaction structures (if any) are commonly used to minimise the tax burden?
 

Legal mergers

Taxes potentially payable

20. What taxes are potentially payable on a legal merger?

A merger under the Commercial Law provisions is considered to be a taxable merger if the specific requirements for a tax-free merger under Articles 18 to 20 of the Corporate Tax Law No. 5520 dated June 13, 2006 are not satisfied. In a taxable merger, the assets of the absorbed company are deemed to have been transferred at market value to the absorbing company, which leads to taxable capital gains. In that case, corporate income tax, VAT and stamp tax are potentially payable (see Questions 4 to 6).

Exemptions and reliefs

21. Are any exemptions or reliefs available to the liable party?

A merger is deemed to be a tax-free merger and therefore benefits from tax exemptions if:

  • Both the absorbing and absorbed companies are tax residents in Turkey.

  • The absorbing company incorporates all assets and liabilities of the absorbed company into its balance sheet, for example, by transferring the whole balance sheet of a company on the basis of book values.

  • Other relevant procedural and filing requirements set out by the legislation are satisfied.

In a tax-free merger, the absorbed company is subject to the usual taxation rules for profits realised up to the date of the merger transaction, but the gains arising from the merger itself are included within the taxable base. The merger is exempt from corporate income tax, VAT, stamp tax and other applicable fees on merger transactions (see Question 14).

Transaction structures to minimise the tax burden

22. What transaction structures (if any) are commonly used to minimise the tax burden?
 

Joint ventures

Taxes potentially payable

23. What taxes are potentially payable on establishing a joint venture company (JVC)?

Establishing a JVC involves numerous applicable fees and tax liabilities, including:

  • General registration fees, which comprises:

    • fees for publication in the Trade Registry Gazette;

    • payment of 0.04% of the share capital of the company to the Competition Board.

  • Notary fees, including the notarisation of company articles of association along with other relevant documents (see Question 4, Land registry and notary fees).

There are no additional taxes applicable for incorporation.

Exemptions and reliefs

24. Are any exemptions or reliefs available to the liable party?

There are no exemptions or reliefs available.

Transaction structures to minimise the tax burden

25. What transaction structures (if any) are commonly used to minimise the tax burden?

No particular transaction structures are used to minimise the tax burden since there are no additional tax liabilities and the fees payable are not significant (see Question 23).

 

Company reorganisations

Taxes potentially payable

26. What taxes are potentially payable on a company reorganisation?

There are no specific taxes payable on company reorganisations.

Exemptions and reliefs

27. Are any exemptions or reliefs available to the liable party?

Not applicable (see Question 26).

Transaction structures to minimise the tax burden

28. What transaction structures (if any) are commonly used to minimise the tax burden?

Not applicable (see Question 26).

 

Restructuring and insolvency

29. What are the key tax implications of the business insolvency and restructuring procedures in your jurisdiction?

When a company goes bankrupt and enters into a liquidation procedure, the financial period is replaced by the liquidation period. The period between this date and the end of the calendar year, as well as every calendar year following this date, shall be considered as liquidation periods. When liquidation is finalised, the final liquidation profit or loss is computed and the liquidation returns, which were previously filed, are corrected and, if necessary, overpaid taxes are refunded. The company will be subject to the usual taxation rules during the liquidation period and must maintain all legal bookkeeping and filing obligations as for a normal company, including filing tax returns to the relevant tax office, and paying taxes accrued over the income derived through liquidation transactions. If, at the end of the whole liquidation period, the company has accrued a profit, the company pays corporate income tax at 20% on the taxable base.

It is possible to reorganise a solvent company through a full or partial spin-off or division (see Question 14).

 

Share buybacks

Taxes potentially payable

30. What taxes are potentially payable on a share buyback? (List them and cross-refer to Questions 4 to 7 as appropriate.)

See Questions 4 and 5.

Exemptions and reliefs

31. Are any exemptions or reliefs available to the liable party?

See Questions 4 and 5.

Transaction structures to minimise the tax burden

32. What transaction structures (if any) are commonly used to minimise the tax burden?

See Questions 4, 5 and 14.

 

Private equity financed transactions: MBOs

Taxes potentially payable

33. What taxes are potentially payable on a management buyout (MBO)?

MBOs can trigger corporate income tax, VAT and stamp tax. The tax rates will differ depending on where the parties to the share sale agreement reside (see Questions 4 to 6).

Exemptions and reliefs

34. Are any exemptions or reliefs available to the liable party?

There are no special tax regimes and/or exemptions available and the standard taxation rules apply (see Questions 4 and 5).

Transaction structures to minimise the tax burden

35. What transaction structures (if any) are commonly used to minimise the tax burden?

There are no special tax regimes and/or exemptions available and the standard taxation rules apply (see Questions 4 and 5).

 

Reform

36. Please summarise any proposals for reform that will impact on the taxation of corporate transactions.

There are currently no issues before Parliament that would affect the taxation of corporate transactions in Turkey.

 

Online resources

Revenue Administration

W www.gib.gov.tr

Description. This is the website of the Revenue Administration. It has Turkish-language copies of some of the legislation referred to in this Q&A, including the Corporate Income Tax Law and the VAT Law. Some English-language resources are available.



Contributor profiles

Orhan Yavuz Mavioglu, Managing Partner

ADMD Law Office

T +90 212 269 56 61
F +90 212 269 56 69
E yavuz.mavioglu@admdlaw.com
W www.admdlaw.com

Professional qualifications. Turkey, Lawyer

Ali Yurtsever, Associate

ADMD Law Office

T +90 212 269 56 61
F +90 212 269 56 69
E ali.yurtsever@admdlaw.com
W www.admdlaw.com

Professional qualifications. Turkey, Lawyer


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