Everything You Should Know About Minimum Alternate Tax in Turkey-Minimum Alternate Tax (MAT)
Everything You Should Know About Minimum Alternate Tax in Turkey
Table of contents
- Everything You Should Know About Minimum Alternate Tax in Turkey
- 1-What Is the Domestic Minimum Alternate Tax Regulation?
- 2-On Which Amount Will the Domestic Minimum Alternate Tax Be Calculated?
- 3-How Will the Domestic Minimum Alternate Tax Be Calculated for New Taxpayers?
- 4-Will the Domestic Minimum Alternate Tax Be Applied in Provisional Tax Periods?
- 5-From Which Accounting Period Will the Domestic Minimum Alternate Tax Start to Be Applied?
- 6-Will Past Years' Losses Be Included in the Calculation?
- 7-Which Exemptions Will Not Be Deducted in the Calculation?
- 8-Which Deductions Will Not Be Deducted in the Calculation?
- An Example
- 9-How Is the Minimum Alternate Tax Calculated for Taxpayers Not Benefiting from Exemptions and Deductions?
- 11-For Taxpayers with No Tax Base
Everything You Should Know About Minimum Alternate Tax in Turkey
The Minimum Alternate Tax (MAT) application, which has recently been a hot topic, has come into effect with the Communiqué (Serial No: 23) Amending the Corporate Tax General Communiqué (Serial No: 1), published in the Official Gazette dated September 28, 2024, and numbered 32676. Previously, in our article titled "How Will the Minimum Alternate Tax Be Calculated?" penned on July 31, 2024, we examined this regulation in detail.
However, due to incoming questions, we've observed some uncertainties, especially among taxpayers who do not benefit from deductions and exemptions and who do not have a tax base at the end of the period. Therefore, we wanted to explain the issue again with examples.
1-What Is the Domestic Minimum Alternate Tax Regulation?
The domestic Minimum Alternate Tax is a regulation stating that the corporate tax calculated by considering the provisions of Articles 32 and 32/A cannot be less than 10% of the corporate income before deductions and exemptions.
2-On Which Amount Will the Domestic Minimum Alternate Tax Be Calculated?
The corporate income on which the 10% corporate tax will be calculated is determined by adding non-deductible expenses to the commercial balance sheet profit or loss and then subtracting the exemptions and deductions stipulated in the article.
3-How Will the Domestic Minimum Alternate Tax Be Calculated for New Taxpayers?
For taxpayers starting business for the first time, this provision will not be applied for three accounting periods starting from the accounting period in which the activity begins. This ensures that new taxpayers beginning their investments following the establishment phase are not affected by this regulation.
4-Will the Domestic Minimum Alternate Tax Be Applied in Provisional Tax Periods?
Yes, the Minimum Alternate Tax will also be applied during provisional tax periods.
5-From Which Accounting Period Will the Domestic Minimum Alternate Tax Start to Be Applied?
This regulation has come into effect to be applied to the incomes obtained in the taxation periods of 2025 and the following years. For institutions subject to special accounting periods, it applies to incomes obtained in the special accounting period starting in the 2025 calendar year and subsequent taxation periods.
6-Will Past Years' Losses Be Included in the Calculation?
In calculating the Minimum Alternate Tax, past years' losses will not be deducted from the tax base; the calculation will be made without considering them.
7-Which Exemptions Will Not Be Deducted in the Calculation?
Foreign income
Sale income of foreign subsidiary shares
Income exemption of investment funds and partnerships
Exemption of real estate subsidiary shares and fund sale income
Sale income of real estate and subsidiary shares of those indebted to banks, financial leasing or financing companies, or the Savings Deposit Insurance Fund (TMSF)
Foreign branch income
Income from foreign construction, repair, assembly, and technical services
Education and training income
Income related to management companies in the taxation of foreign fund incomes
Sale income of industrial property rights
Income obtained from exchange-protected deposit accounts
Income from the disposal of product certificates issued within the scope of licensed agricultural warehouses
Income obtained from R&D and innovation activities
8-Which Deductions Will Not Be Deducted in the Calculation?
Sponsorship expenses
Donations and aids
Donations related to the construction of education and health facilities and dormitories
Donations for cultural and tourism purposes
Donations made to aid campaigns initiated by the President
Cash donations made to Kızılay (Turkish Red Crescent) and Yeşilay
Income from software, engineering, education, and health services provided abroad
Interest deduction due to cash capital increase
Incomes of institutions operating in the Istanbul Finance Center (IFC)
Investment allowance
Techno-entrepreneurship capital support
Technopark capital support
An Example
Company (E) A.S. has a commercial balance sheet profit of 15,000,000 TL for the 2025 accounting period, a profit exemption of 5,000,000 TL obtained from exchange-protected deposit accounts, and past years' losses of 5,000,000 TL. The company holds an investment incentive certificate obtained before August 2, 2024, allowing it to apply a reduced corporate tax rate on a base of 2,000,000 TL for the 2025 accounting period. The reduced tax rate is 5%.
Calculation:
| Corporate Tax | Minimum Alternate Tax | ||
| Commercial Balance Sheet Profit | 15,000,000 | Commercial Balance Sheet Profit | 15,000,000 |
| Exemptions | |||
| - Profit exemption from exchange-protected accounts | (5,000,000) | - Exemptions | 0 |
| Past Years' Losses | (5,000,000) | - Past Years' Losses | 0 |
| Tax Base for Reduced Rate | Tax Calculated on Reduced Rate Base | ||
| - (2,000,000 TL * 5%) | 100,000 | ||
| Tax Not Collected According to Incentive Certificate | - (2,000,000 TL * 20%) | 400,000 | |
| Tax Calculated on General Rate Base | |||
| - (3,000,000 TL * 25%) | 750,000 | ||
| Total Calculated Corporate Tax | 850,000 | Minimum Alternate Tax | 1,100,000 |
Explanation:
The Minimum Alternate Tax is calculated as 10% of the corporate income before deductions and exemptions:
(15,000,000 TL * 10%) = 1,500,000 TLAfter deducting the 400,000 TL tax not collected due to the incentive certificate under Article 32/A, the Minimum Alternate Tax is:
1,500,000 TL - 400,000 TL = 1,100,000 TL
Since the Minimum Alternate Tax amount (1,100,000 TL) is higher than the calculated corporate tax (850,000 TL), the tax payable will be 1,100,000 TL.
9-How Is the Minimum Alternate Tax Calculated for Taxpayers Not Benefiting from Exemptions and Deductions?
When There Is a Commercial Balance Sheet Profit:
Company (Demir) A.S. has a commercial balance sheet profit of 2,000,000 TL and non-deductible expenses of 300,000 TL for the 2025 accounting period.
Calculation:
| Corporate Tax | Minimum Alternate Tax | ||
| Commercial Balance Sheet Profit | 2,000,000 | Commercial Balance Sheet Profit | 2,000,000 |
| Non-Deductible Expenses | 300,000 | Non-Deductible Expenses | 300,000 |
| Exemptions and Deductions | 0 | Exemptions and Deductions | 0 |
| Corporate Tax Base | 2,300,000 | Corporate Tax Base | 2,300,000 |
| Calculated Corporate Tax | Minimum Alternate Tax | ||
| - (2,300,000 TL * 25%) | 575,000 | - (2,300,000 TL * 10%) | 230,000 |
Explanation:
Since the calculated corporate tax (575,000 TL) is higher than the Minimum Alternate Tax (230,000 TL), the tax payable will be 575,000 TL.
When There Is a Commercial Balance Sheet Loss:
Company (X) A.S. has a commercial balance sheet loss of 500,000 TL and non-deductible expenses of 1,500,000 TL for the 2025 accounting period.
Calculation:
| Corporate Tax | Minimum Alternate Tax | ||
| Commercial Balance Sheet Loss | (500,000) | Commercial Balance Sheet Loss | (500,000) |
| Non-Deductible Expenses | 1,500,000 | Non-Deductible Expenses | 1,500,000 |
| Exemptions and Deductions | 0 | Exemptions and Deductions | 0 |
| Corporate Tax Base | 1,000,000 | Corporate Tax Base | 1,000,000 |
| Calculated Corporate Tax | Minimum Alternate Tax | ||
| - (1,000,000 TL * 25%) | 250,000 | - (1,000,000 TL * 10%) | 100,000 |
Explanation:
Since Company (X) A.S. does not have exemptions, deductions, or past years' losses, and the calculated corporate tax (250,000 TL) is higher than the Minimum Alternate Tax (100,000 TL), the tax payable will be 250,000 TL.
11-For Taxpayers with No Tax Base
The term "corporate income before deductions and exemptions" refers to the amount found by adding non-deductible expenses to the commercial balance sheet profit or loss at the end of the accounting period. Minimum Alternate Tax calculation will be made in cases where the sum of the commercial balance sheet profit and non-deductible expenses or the sum of the commercial balance sheet loss and non-deductible expenses is greater than zero.
Contact Us
At Ozm-Consultancy, our dedicated team of tax experts is ready to assist you in navigating the complexities of the new Minimum Alternate Tax regulation. With our in-depth industry knowledge and personalized approach, we can help ensure your company remains compliant while optimizing your tax strategy.
Get in touch with us today to discuss how these changes may affect your business and how we can support you in adapting to this new tax landscape.
Email: info@ozmconsultancy.com
Phone: +90 (216) 352 29 61
Website: www.ozmconsultancy.com
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