Subsequently, on 5 July 2023, “Draft Law on Additional Motor Vehicles Tax and Amendments to Certain Laws and Decree Law No. 375 for the Compensation of Economic Losses Caused by the Earthquakes Occurred on 6/2/2023” (“Draft Law“), which includes certain regulations and amendments aiming to meet the financing needs caused by the earthquake, was submitted to the Planning and Budget Committee of the Turkish Grand National Assembly.
The Draft Law encompasses a range of regulations and amendments that have implications for various aspects of taxation, specifically concerning corporate income tax and VAT exemptions in real estate sales. Notably, Article 19 of the Corporate Income Tax Law outlines the conditions under which real estate, shares, and production and service businesses may be eligible for a partial demerger, subject to specific criteria. Partial demergers carried out within this scope are granted exemptions from corporate income tax, VAT, stamp tax, and title deed fees.
However, it’s important to note that the Draft Law explicitly excludes real estate from the scope of a partial demerger. Consequently, the transfer of real estate alone would not be eligible for the tax exemptions provided under the partial demerger provisions. This provision is anticipated to come into effect on 1 January 2024, bringing about potential changes to the tax landscape in relation to real estate transactions.
The intended purpose of these regulations and amendments is to address the financial needs arising from the earthquakes that occurred on 6 February 2023 in Kahramanmaraş and Hatay, which have necessitated increased public revenue through tax adjustments. As a result, it is crucial for taxpayers to stay well-informed about these new provisions, as they may impact tax liabilities and require careful financial planning to mitigate potential adverse consequences.
As always, it is recommended that taxpayers closely monitor the developments and seek guidance from professional tax advisors or legal experts to ensure compliance with the evolving regulations and make informed decisions regarding their real estate transactions.
In conclusion, the tax implications in the Turkish real estate industry play a significant role in investment decisions. From property tax and corporate profits tax to income tax and VAT, understanding the intricacies of the tax system is crucial for investors to effectively manage their financial obligations and optimise their returns. By staying informed, seeking professional guidance, and adapting to changes, investors can navigate the Turkish real estate market with confidence and make informed investment choices.
Remember, the information provided in this guide is for informational purposes only and should not be considered as legal or financial advice. It is always recommended to consult with qualified professionals to tailor the information to your specific circumstances.
