Various adjustments have been made in many areas, from exemptions to reductions in corporate tax. Accordingly, the corporate tax to be paid cannot be less than 10% of the declared income. New employees will be exempt from tax for 3 years. Progressive corporate tax will be applied to income from major investments. Changes have been made in the Corporate Tax General Communique prepared by the Ministry of Treasury and Finance, ranging from exemptions to reductions in local minimum corporate tax. The “Communiqué on Amendment to the Corporate Tax General Communique,” prepared by the Revenue Administration affiliated with the Ministry, was published in the Official Gazette and entered into force. Accordingly, the corporate tax payable by taxpayers cannot be less than 10% of the amount before deductions and exemptions made from the declared income. The minimum corporate tax will be applied to the income obtained during the 2025 and subsequent taxation periods for taxpayers whose accounting period is the calendar year, and to the income obtained in the special accounting period starting in the calendar year and the subsequent taxation periods for taxpayers subject to the special accounting period. In temporary tax periods, minimum corporate tax calculations will be made. REGULATION FOR NEW EMPLOYEES New employees will not be subject to minimum tax for 3 years. The rights of taxpayers who currently hold investment incentive certificates will be protected. With the changes, some exemptions and reductions have been excluded. Dividend profits, emission premiums, technopark profits, and free zone profit exemptions along with R&D and design incentives will be out of scope. The real sector will face a 25% corporate tax, while banks and financial institutions will face a 30% tax on incomes earned from significant investments in Turkey. Exporting companies will face a 20% tax, publicly traded companies a 23% tax, and manufacturers a 24% tax. In public-private partnership projects and build-operate-transfer model projects like in banks and financial institutions, a 30% corporate tax will be levied on profits obtained. The entire profit of investment funds and partnerships is exempted from corporate tax. From January 1, 2025, a profit distribution requirement will be imposed to benefit from this exemption for profits earned, and 50% of real estate incomes will have to be distributed. Therefore, when 50% of the exempted income is distributed to the partners, income and corporate taxes will be levied on the recipients of profit shares. PROFITS FROM PRODUCTION IN FREE ZONES Companies engaged in manufacturing in free zones will be exempt from corporate tax, regardless of whether the products are sold domestically or abroad from the date in question. As of that date, the exemption will be limited to export revenues only to exclude the profits earned from sales within the country. The corporate tax exemption granted for profits obtained from the securities of venture capital investment funds and venture capital investment partnerships, excluding other investment funds, was removed as of July 15, 2023. Until the redemption or disposal of the participation certificates obtained before this date, the benefit from the exemption will continue. The corporate tax exemption granted for gains from real estate sales was also removed on the same date. However, the exemption will continue to be enjoyed under the specified conditions for real estates acquired before this date, but the exemption rate will be 25% instead of 50%. Since the real estate income exemption has been lifted, the tax-free transfer of real estates within the context of partial division is also abolished as of January 1, 2024. 80% GAIN REDUCTION FOR SOME SERVICES While the corporate tax rate on export earnings was previously reduced by 1 point, with the change, companies exclusively engaged in exports will benefit from a 5-point reduction in this tax rate on the profits they derive from exports. Manufacturers or suppliers as well as foreign trade capital companies or sectoral foreign trade companies benefit from a 5-point tax reduction on earnings from export activities carried out through such entities. From January 1, 2023, the entire profits derived from services such as architecture, engineering, design, software, medical reporting, accounting, call centers, product testing, certification provided to foreign clients and training and health services for foreigners must be transferred to Turkey by the date of the tax return. The rate at which deductions can be made from these profits in the declaration is raised from 50% to 80%. TAX EXEMPTION FOR PARTICIPATION FINANCE GUARANTEE INC. Companies in the form of foreign corporations with no business center in Turkey holding at least 50% of the paid-up capital and transferring the profits in the form of profit share obtained from the company being participated in before the date of submission of the corporate tax return to Turkey will be exempt from corporate tax on 50% of such profits. Furthermore, the Participation Finance Guarantee Joint Stock Company, established to provide guarantees for any kind of financing in compliance with Islamic finance principles and practices, will be exempt from corporate tax. In cases where a company taking part in another company or the company being participated in that company acquires the shareholders’ equity and share acquisition-related financing expenses incurred thereafter, made for the acquiring company, will be allowed as a deduction for the acquiring company. As part of the change, 10% of the amount determined based on the investment expenditure made on an investment basis in a…

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