Announcements

Position Against Tax Law, Which Operations Realised in Free Zone
Gaziantep Free Zone
Advantages
Infrastructure
Activity Topics and Terms
Types of licence
Licence Application Procedure
Regulations
 

•  Document System and Recording System

As it is well known, according to article 23 of Free Zones Application Regulation, it is compulsary to arrange legal books in Turkish language, to deliver necessary information on time and open every kind of books, certificates and other necessary documents to the con tr ol of assignees and authorities of Zone Management and General Management. In the arranged book and certificates, tr ansactions regarding out of zone activities never takes place. Invoice and tr ade books will be used before the accounting term, after the approval of Zone Management.

With the 5084 Law, regarding the compulsory book keeping of the Users and their prepared documents, without depending on Law of Tax rules numbered 213, Minis tr y of Finance is authorized to make arrangements. As a result of Free Zone Law, since tax law application is possible in the zone, these tr ansactions are subject to Tax Procedure Law rules. However, until the arrangement date by Minis tr y of Finance regarding the matter, we believe that the present rules and above mentioned principles should be applied. Therefore, we believe that the Minis tr y of Finance should urgently make an arrangement regarding the matter.

On the other hand, it's well known that apart from the taxpayers, which are operating as branch status, other taxpayers are not applied to tax office with the reason that the tax regulation rules are not applied in these zones. After Law nr. 5084, with the reason that regulation rules of tax, expenditure and duty can be applied in free zones, all the tax payers should apply to tax officers for their liabilities.

•  Income and Corporate Tax

It's well known that according to the rule "regarding unapplicable tax, expenditure and duty to taxpayers" of article 6 of Free Zone Law nr. 3218, profits gained from free zone operations were exempted from income and corporate tax. With the Law nr. 5084, this application is ended and effective from 06.02.2004, corporate or legal persons, who start their operations in free zones will be income or corporate tax payers.

However, as of 06.02.2004, that alteration was made, profits of the people, who gained from their operations in the zone is exempted from income or corporate tax, until their present operation licence expires. In another words, profits of the tax payers, who start their activities in free zones after 06.02.2004 and the tax payers, who have operation licence in their hand as of 06.02.2004 and profits after the expiry of operation licence are subject to income or corporate tax.

On the other hand, current producers in the free zones or profits of income or corporate tax payers, who sold their produced goods in the zone and will start their productions, obtaining a licence after 06.02.2004 will be exempted from income or corporate tax until the end of the annual tax term, which Turkey becomes a full member of European Union.

•  Salary Payments

The tax payers that obtained licence as of 06.02.2004 in order to start operation in free zones, the salaries of recruited personnel is exempted from income tax until 31.12.2008. However, as of this article comes in force, if the expire date is before 31.12.2008, the expire date will be taken into consideration for exemption application.

•  Dividends

Although temporary article 3 rule is applied for the persons who starts or will start their activities in Zone and they are tax benefited, Public Prosecutor has added a rule to the same article and decided that these exemptions are not effected from sub-paragraph (b) of paragraph (6) of article 94 of Income Tax Law.

To be more specific; if profit that are gained from the free zone will be dis tr ibuted to full individual tax payers, to the tax payers, who are not income and corporate tax payers, to the people who are exempted from income and corporate tax, low liability individuals, low liability institutions and income and corporate tax exempted low liabilites, 10% rate stoppage will be applied, regarding sub-paragraph (b) of paragraph (6) of article 94 of Income Tax Law.

•  Payments to be made on scope of article GVK 94 and KVK 24

According to paragraph (c) of temporary article 3 that is added to Free Zones Law, operation licence holder liabilities' tr ansactions,which they realised from their operations in these zones, are exempted from every kind of tax, duty and expenditures until 31.12.2008.

Explanations are mentioned above. We believe that exception rule, that is mentioned on paragraph (c) of temporary article 3, is not included the payments, which will be made on the extension of article 24 of Corporate Tax Law and article 94 of Income Tax Law and declaration should be made over these payments.

However " tr ansactions regarding their activities" expression means; tr ansactions made by the liabilities who are only doing activities in these zones. For example, a company that is operating in this zone, may need to make declaration over the payments that comprising of article 24 of Corporate Tax Law or article 94 of Income Tax Law to the persons who are operating out of zone. Because the mentioned income is related with the company's tr ansactions that is operating out of zone, not the company that is operating in the zone. Besides, in case of a payment of a company,which is operating in the zone, to another company, which is also operating in the zone, we believe that since the other company is also has operations in the zone, no declaration should be made until 31.12.2008.

•  The situation of Branch Status Liabilities

As its well known, according to the rule "profits and revenues of full and less liability individual or legals that are gained in the free zone operations are exempted from income and corporate tax, in case of they are tr ansferred to other part of Turkey and confirmed according to foreign exchange regulation "as mentioned in the article 6 of Free Zones Law, the liabilities of branch status accounts, related branch operations, are not neccessary to consolidate with head office and in accordance with foreign exchange regulations, there was an application that they were exempted from income and corporate tax, when they are brought to Turkey.

However, "if confirmed according to foreign exchange rules that the profits and revenues of full and less liability individuals and legals in Turkey, who gained them regarding their operations in zone, are brought to other place of Turkey are exempted from income and corporate tax too", that is mentioned in article 6 of Law, when this rule is taken from the text of article, then present branches in free zone doesn't make any difference from the other established branches in other part of Turkey and it's resulted that the branch accounts in these zones should be consolidated with head office accounts, as it is in the other branches.

On the other hand, although it's consolidated with head office, incomes gained from free zones are not taken into consideration whether they are brought in accordance with foreign exchange regulations or not, on the income and corporate tax exemption terms, they are not subject to income and corporate tax.

•  Value Added Tax

In accordance with the regulation regarding Value Added Tax, since the exported goods from Turkey to Free Zone are exceptional, VAT will not be calculated in the invioce on the delivery of these goods and VAT of this export will be discounted or a return may be requested by the exporter.

Because of Free Zone deliveries are exempted from VAT, on the goods and service deliveries, no VAT is calculated. VAT will not be calculated on economical value that is subject to depreciation.

On the other hand, regarding the arrangements with Law nr. 5035, services given in free zones are also exceptional. Therefore, VAT is not calculated on the services given in free zones.

•  Expenditure Tax

Before Law Nr. 5084, in accordance with the rule, that is mentioned in the article 6 of Free Zone Law , that "regulation rules of tax, duty and expenditure tax payers are not applicated", BSMV was not applicated regarding tr ansactions in these zones. (BSMV-Banking, Insurance, Transaction Tax) .Since the rule is abolished with the number 5084 Law, for the tax payers who will start their activities as of 06.02.2004 in free zones, BSMV should be calculated over their tr ansactions that are peretaining to Expenditure Tax Law.

On the other hand, the tax payers that have operation licences as of 06.02.2004 will not be subject to BSMV until 31.12.2008.

•  Incentive Regulation

After Law nr. 5084, according to article 6 of Free Zone, these zones are considered as out of customs line and regulation rules are not applied for customs and foreign exchange tax payers, tax duty and expenditure regulation rules are applicable.

Therefore, with new arrangements, incentive regulations should be applied in these zones too. For instance, an investment reduction application that takes place in Income Tax Law should be applied depending on income and corporate tax payers in these zones.

•  Social Security Legislation

  Regarding Free Zones Law and Application Regulation, Türkiye Cumhuriyeti Social Security Regulation rules will be applied for individual and legal persons and their con tr acted employees, including foreign citizens. Insurance premiums may be paid in foreign currency or Turkish Lira to Social Security Institutions. Payments to claimants will be made by Turkish Lira by these institutions. Therefore, there is no new arrangement made regarding social security regulation application in free zones.

GENERAL EVALUATION

Tax responsibilities of corporate or legal people after alterations and arrangements made with 5084 Law are summarized and listed below.

 

a) Evaluation from the tax payers point of view (apart from production activity), which will start their activities as of 06.02.2004 as Company.

•  Subject to full tax payer status,

•  Profits will be subject to income and corporate tax,

•  In case of dividends according to subparagraph (b) of paragraph (6) of article 94 of Income Tax Law, subject to stoppage,

•  Payments of employees are subject to income tax,

•  Payments comprised of article 24 of Corporate Tax Law and article 94 of Income Tax Law are subject to stoppage.

•  Regulation rules regarding customs and foreign exchange tax payers will not be applied,

•  Goods and Service deliveries are exempted from VAT.

•  Since the tax, duty and expenditure regulation rules may be applied, tr ansactions are subject to tax, duty and expenditures.

•  Incentive regulation rules will be applied,

•  Social Security Regulation rules are applied,

b) Evaluation from the tax payers point of view (only production activity), which will start their operations as of 06.02.2004 as Company.

•  Subject to full tax payer status

•  Profits will be exempted from income and corporate tax until the end of the year, which full membership of EU is realised)

•  In case of dividents, payments will be subject to stoppage, according to subparagraph (b) of paragraph (6) of article 24 of Income Tax Law,

•  Wages and salaries of employees will be subject to income tax,

•  Payments, which comprised of article 24 of Corporate Tax Law and Article 94 of Income Tax Law, will be subject to stoppage,

•  Regulation rules regarding customs and foreign exchange tax payers will not be applied,

•  Goods and service deliveries are exempted from VAT,

•  Since the tax, duty and expenditure rules of legislation is applied, all the tr ansactions will be subject to tax, duty and expenditure.

•  Incentive Regulation rules are applied,

•  Social Security Regulation rules are applied,

c)  Evaluation from the Branch tax payers point of view, who will start their operations as of 06.02.2004

•  Branch accounts will be consolidated with head office,

•  Branch profits will be subject to corporate tax, as it is in the head office profits of other branch places of Turkey (profit tr ansfer to Turkey is not neccessary)

•  Salaries of employees are subject to income tax,

•  Payments, which comprised of article 24 of Corporate Tax Law and Article 94 of Income Tax Law, will be subject to stoppage,

•  Regulation rules regarding customs and foreign exchange liabilities will not applied,

•  Goods and service deliveries are exempted from VAT,

•  Since the tax, duty and expenditure rules of legislation is applied, all the tr ansactions will be subject to tax, duty and expenditure.

•  Incentive Regulation rules are applied,

•  Social Security Regulation rules are applied,

d)   Liabilities point of view evaluation (apart from production activity), which will start their operations as of 06.02.2004 as Company and has operation licence.

•  Subject to full tax payer status

•  Profits, will be exempted from income and corporate tax, provided that the term limits of Operation licence,

•  In case of dividends, it's subject to stoppage in line with the subparagraph (b) of paragraph (6) of article 94 of Income Tax Law,

•  Salary payments to the employees will be exempted from income tax until 31.12.2008 in any case, provided that the limits of term of operation licence.

•  Regulation rules regarding customs and foregn exchange tax liabilites will not be applied,

•  Goods and service deliveries will be exempted from VAT,

•  Transactions, regarding activites realised in these zone will be exempted from tax, duty and expenditures until 31.12.2008,

•  Subject to incentive regulation rules parallel to income and corporate tax payers,

•  Social Security Regulation rules will be applicated.

e)  Evaluation from the point of tax payers or Company, which their operation Licence has not expired (producers) as of 06.02.2004,

•  Subject to full tax payer status,

•  Profits will be exempted from income and corporate tax until the end of the year, which full membership of EU is realised)

•  In case of dividends, subject to stoppage in line with the subparagraph (b) of paragraph (6) of article 94 of Income Tax Law,

•  Salary payments to the employees will be exempted from income tax until 31.12.2008 in any case, provided that the limits of term of the operation licence,

•  Regulation rules regarding customs and foreign exchange tax liabilites will not applied,

•  Goods and service deliveries will be exempted from VAT,

•  Transactions, regarding activites realised in these zone will be exempted from tax, duty and expenditures until 31.12.2008,

•  Subject to incentive regulation rules, parallel to income and corporate tax payers,

•  Social Security Regulation rules will be applicated.

f)  Evaluation from the point of Branch tax payers, which their operation Licence has not expired (producers) as of 06.02.2004

•  Branch accounts will be consolidated with head office,

•  Profits gained from branch, provided that the limts of operation licence, will be exempted from income and corporate tax (profit tr ansfer to Turkey is not necessary),

•  Salary payments to the employees will be exempted from income tax until 31.12.2008 in any case, provided that the limits of term of the operation licence,

•  Payments, which comprised of article 24 of Corporate Tax Law and Article 94 of Income Tax Law, will be subject to stoppage,

•  Regulation rules regarding customs and foreign exchange tax liabilites will not be applied,

•  Transactions, regarding activites realised in these zone will be exempted from tax, duty and expenditures until 31.12.2008,

•  Social Security Regulation rules will be applicated.

 

 

Copyright © 2007 GASBAŞ Gaziantep Serbest Bölgesi Kurucu ve İşleticisi A.Ş.