Application of Domestic Minimum Corporate Income Tax in Türkiye Starting from 2025

The basis of the regulation is the Law No. 7524 published in the Official Gazette dated August 2, 2024, and numbered 32620, which amends the Tax Laws and Other Laws and the Decree Law No. 375. With Article 36 of this Law, Article 32/C titled "Domestic Minimum Corporate Income Tax" has been added to the Corporate Income Tax Code.

No. There is no specific duration foreseen for the application.

Corporate income taxpayers are included in the scope.

Those who are not corporate income taxpayers are not included in the scope.

Institutions that are exempt from corporate income tax are also not included.

Newly established institutions will not be subject to minimum tax application for three accounting periods starting from the accounting period in which they commence operations. Therefore, for institutions starting operations in 2025 and subsequent years, there will be a three-year advantage regarding minimum tax application; however, for companies established in 2024, minimum corporate tax will not be applied in 2025 and 2026, while for those established in 2023, it will not be applied only in 2025.

As is known, the income earned by limited taxpayers in Türkiye are taxed in different ways depending on the type of income. In other words, while some earnings must be declared through a corporate income tax return, others are declared through the declaration of special returns, and some profits are taxed at the source through withholding. For these profits that are taxed at the source, limited taxpayers can voluntarily submit a corporate income tax return, based on their discretion.

In summary, limited taxpayers who are required to declare their profits through a corporate income tax return, as well as those who have their earnings earned in Türkiye taxed at the source but choose to voluntarily declare them via a corporate income tax return, are included in the minimum tax scope.

Especially for those who bear the tax burden, meaning those whose earnings are taxed at the source on gross basis; may consider that the tax cost will be much lower if their earnings are taxed on net basis through the declaration of a corporate  income tax return. For these limited taxpayers, the application of minimum tax is an important issue to consider for 2025 and beyond.

Minimum tax will be applied to profits earned in 2025 and subsequent taxation periods for those whose accounting period is the calendar year; for those subject to a special accounting period, it will be applied to profits earned in the special accounting period starting in the calendar year 2025 and subsequent taxation periods.

Therefore, the minimum tax application will enter our lives for the first time for profits earned in 2025.

Yes.

If you benefit from the following exemptions specified in the Corporate Income Tax Code and other laws in your corporate income tax return, these exemptions will continue to be considered as exemptions in the calculation of the minimum corporate income tax base (in other words, these exemptions will not be rejected and will not cause a taxable base under the minimum tax application):

• Exemption for participation income (Corporate Income Tax Code Article 5/1-a)
• Exemption for emission premium income (Corporate Income Tax Code Article 5/1-ç)
• Exemption for income from investment funds and partnerships (excluding gains from real estate) (Corporate Income Tax Code Article 5/1-d)
• Exemption for return income (Corporate Income Tax Code Article 5/1-i)
• Exemption for income from sale-leaseback transactions (Corporate Income Tax Code Article 5/1-j)
• Exemption for income from asset leasing transactions (Corporate Income Tax Code Article 5/1-k)
• Exemption for income from operating ships registered in the Turkish International Ship Registry (Law No. 4490 Article 12)
• Exemption for income earned in Free Zones (Temporary Article 3 of Law No. 3218)
• Exemption for income earned in Technology Development Zones (Temporary Article 2 of Law No. 4691)

If you benefit from the following deductions specified in the Corporate Income Tax Code and other laws in your corporate income tax return, these deductions will continue to be considered as deductions in the calculation of the minimum corporate income tax base (in other words, these deductions will not be rejected and will not cause a taxable base under the minimum tax application):

• Deductions for amounts allocated as venture capital funds (Corporate Income Tax Code Article 10/1-g)
• Protected workplace deduction (Corporate Income Tax Code Article 10/1-h)
• RD and design deduction (Law No. 5746 Article 3 and 3/A) (Temporary Article 1/c of Law No. 6550) (Corporate Income Tax Code Article 10/1-a)

Yes.

Essentially, the inability to deduct these expenses from the tax base, which are made by companies within the scope of voluntariness and social responsibility, may have a negative impact on the expenses, and we will observe together in the near future.

Yes.

Minimum tax will not be calculated on exempt foreign sourced income that has a ETR of minimum 10%. For exempt foreign sourced income with a ETR below 10%, the portion of earnings corresponding to the ETR will be deducted from the minimum tax base. In other words, based on the minimum ETR of 10%, the tax cost will be grossed up to reach the foreign sourced exempt income, the exceeding amount will be subject to minimum tax.

Yes.

Companies established as a result of these transactions will not be considered as newly established companies.

No.

Article 113 of the Income Tax Code states that taxpayers engaged in urban passenger transportation activities, who obtain all their revenues from these activities through electronic fare collection systems, may request that 10% of their gross revenue from these activities be considered as their taxable income.

Although the application is limited, this regulation is also applicable to corporate income taxpayers, and therefore, minimum tax application does not apply to them.

For the accurate calculation of the corporate income tax base, the following amounts written in these lines of the return will not be considered in the calculation of minimum corporate income tax. In other words, these amounts will not constitute a tax base for minimum corporate income tax application:

• Valuation differences between Turkish Accounting Standards/Turkish Financial Reporting Standards and the provisions of the Tax Procedures Code
• Foreign exchange gains arising from the appreciation of the Turkish Lira in relation to debts considered as thin capitalization
• Cancellation of provisions for severance pay
• The right to deductions under Article 121 of Income Tax Code, which is offset against tax payables and considered as income

Yes.

No tax will be levied under minimum tax on profits for which Türkiye does not have the right to tax under the relevant tax treaty. Additionally, if profits are exempt from tax in Türkiye under the tax treaty for the purpose of elimination of double taxation, these profits will continue to be exempt from minimum tax as well.

In this context, it remains important for taxpayers to determine in which country they are full tax residents, whether they are eligible to benefit from the relevant tax treaty provisions, the income earned is covered under which article of the treaty, how double taxation is eliminated regarding these income, and when and how taxpayers fulfill their documentation obligations in the relevant states.

Yes.

Tax will not be levied under minimum tax on income for which Türkiye does not have the right to tax or that are exempt from tax in Türkiye under the relevant agreement.

On one hand, corporate income tax (and advance corporate income tax) will continue to be calculated as per Articles 32 and 32/A of the Corporate Income Tax Code.

On the other hand, starting from 2025, minimum tax will additionally be calculated. The law stipulates that the calculated corporate income tax cannot be less than 10% of the corporate profit before deductions and exemptions.

The calculation can be summarized as follows:

1. The commercial profit or loss at the end of the relevant accounting period will be considered
2. Non-deductible expenses will be added
3. If this amount is greater than zero, only the amounts allowed as deductions and exemptions in the minimum tax calculation (if any) will be deducted ( as elaborated in detail above)
4. 10% of the resulting amount will be calculated as minimum corporate income tax
5. Corporate taxpayers benefiting from the discounted rate incentives listed below will identify the corporate tax amounts not collected in the relevant period and deduct them from the minimum tax calculated at 10%

• The tax not collected due to a 2-point reduction applied to corporate profits that are publicly offered for the first time on Borsa Istanbul with at least a 20% rate
• The tax not collected due to a 5-point reduction applied to export profits
• The tax not collected due to a 1-point reduction applied to profits obtained exclusively from production activities by companies holding an industrial registration certificate and engaged in actual production activities
• The tax not collected in the relevant accounting period due to the use of investment contribution amounts from Investment Incentive Certificates obtained from the Ministry of Industry and Technology before the implementation date of the Minimum Corporate Tax on 02/08/2024

6. The corporate income tax calculated by taxpayers in the usual manner will be compared with the minimum tax determined in the above manner, and the higher amount will be taken as the basis.

If the minimum tax calculated as described above is higher than the calculated corporate income tax, the minimum tax will be taken as the basis, and withheld taxes and advance corporate income taxes paid will be deducted from this amount to arrive at the payable minimum tax amount in the relevant period.

Yes.

No.

In the General Communiqué of Corporate Income Tax Code No. 23, it has been regulated that the carry-forward tax losses considered in tax calculations will not be deducted from the minimum tax base.

However, this provision has been suspended by the decision of the Council of State's 3rd Chamber dated 10/02/2025, E:2024/5700. It is particularly important for taxpayers with carry-forward tax losses to follow developments related to this issue. The decision of the Council of State regarding the Administration's appeal will be significant.

In periods when financial statements are subject to inflation adjustment, the values arising from inflation will be taken into account in the minimum tax calculation.

Corporate income taxpayers benefiting from reduced rate incentives will generally continue to have their rights protected. Specifically, the taxes not paid during the relevant period will be deducted from the minimum tax amount. However, August 2, 2024, is a critical date regarding the implementation of minimum tax in relation to the reduced rate application under investment incentive certificates.

In existing investment incentive certificates granted before August 2, 2024, any increases in investment amounts resulting from revisions made after this date will not be considered  in the minimum tax calculation. Additionally, tax amounts not collected due to the use of contribution amounts for investments under new incentive certificates obtained after (including) August 2, 2024, will also not be considered in the minimum tax calculation.

Yes.

It is aimed that the corporate income tax calculated by corporate income taxpayers (under Article 32 and 32/A of the Corporate Income Tax Code does not fall below 10% of the taxable base determined under the minimum corporate income tax application.

Essentially, the minimum tax application is based on increasing the taxable base by disregarding many exemptions and deductions and collecting tax at a rate of 10% on this determined base. This allows us to receive signals about the Tax Administration's approach to exemptions and deductions and which ones they consider more effective.

As you may recall, under Pillar 2, a global minimum tax rate of 15% was established, and a basis for calculating the ETR for multinational companies with annual revenues exceeding €750 million was introduced for each country in which they operate.

In Article 32/C of the Corporate Income Tax Code, where the minimum tax regulation is elaborated, it is stated that the rate set at 10% may be reduced to as low as 0% or increased up to 20% by the President based on sectors, activities, business lines, or production areas either individually or collectively.