Corporate Tax Deduction of 1 Point for Earnings from Export and Production

Procedures and Principles for the 1-Point Reduction in Corporate Tax on Earnings from Exports and Production Have Been Determined

With Law No. 7351 published in the Official Gazette dated January 22, 2022, and numbered 31727;

• For the earnings of corporations engaged in exports, derived exclusively from export activities,
• For the earnings of corporations holding an industrial registration certificate and actually engaged in production activities, derived exclusively from production activities,

A regulation was introduced to apply the corporate tax rate with a 1-point reduction to earnings obtained as of January 1, 2022, and for taxpayers subject to a special accounting period, from the beginning of the special accounting period starting in the 2022 calendar year.

With the Corporate Tax General Communiqué No. 20 published by the Revenue Administration (GİB), explanations regarding the procedures and principles of the application have been provided.

• The benefit of the 1-point reduction in the corporate tax rate for earnings from exports and production will be utilized in the 2022 Provisional Corporate Tax Returns for the 1st Period, which must be submitted by May 17, 2022 (extended to May 20, 2022).
• If taxpayers have earnings from other activities in addition to their export activities, the tax base subject to the 1-point reduction arising from exports will be determined by proportioning the earnings from exports to the commercial balance sheet profit. The amount of earnings subject to the 1-point reduction cannot exceed either the earnings from exports or the net corporate income for the relevant period.
• Corporations holding an industrial registration certificate and actually engaged in production activities may apply the corporate tax rate with a 1-point reduction to their earnings derived exclusively from these production activities.
• Earnings from production and exports cannot exceed the net corporate income.
• The reduced tax rate under Article 32/A of the Law will be applied after the 1-point reduction.
• If the corporate tax rate is applied with a 1-point reduction to earnings from production activities, a separate 1-point reduction will not be applied to the portion of these earnings attributable to exports, as this would cause a double reduction.