TAX NEWS
NO: 2023/4
Subject: Withholding Tax Rate Reduced to 0% for Corporations Acquisition of their Own Shares
With the Presidential Decree numbered 6791 published in the Official Gazette dated February 14, 2023 and numbered 32104 (bis), the withholding tax rate applied to the amounts considered as distributed dividends in the event that resident corporations that have acquired their own shares or partnership interests has been reduced from 15% to 0%.
As may be remembered, with the Law No. 7256 published in the Official Gazette dated November 17, 2020, Article 94 of the Income Tax Law No. 194 ("Income Tax Law") was amended, and it was stipulated that taxation through withholding tax would be applied in three different situations in case of resident corporations that have acquired their own shares.
- In the event that these shares are extinguished through a capital reduction, the difference between the acquisition value and the nominal value of the shares shall be treated as dividend distributed as of the date on which the resolution regarding the capital reduction is registered on the Trade Registry and 15% WHT will be applied thereon,
- In the event that these shares are disposed of at a price lower than the acquisition value, the difference between the acquisition value and the disposal value shall be considered as dividend distributed as of the date on which the disposal takes place and 15% WHT will be applied thereon,
- In the event that these shares are neither extinguished through a capital reduction nor disposed of within 2 years following the acquisition date, the difference between the acquisition value and the nominal value of the shares shall be treated as dividend distributed as of the last day of the 2-year time frame and 15% WHT will be applied thereon.
Presidential Decree No. 6791 reduced from 15% to 0% the withholding tax rate applicable to amounts considered as distributed dividends in the case of resident corporations that have acquired their own shares or partnership interests (in the circumstances described above).
Yours sincerely,
Deloitte Turkey
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