For 2023, the rate to be used for the interest deduction on cash capital increases is 52.73%.
For the interest deduction on cash capital increases, the “Commercial Loans (Extended in TRY) (Excluding Corporate Overdraft Accounts and Corporate Credit Cards)” rate is taken from the “Weighted Average Interest Rates Applied to Loans Extended by Banks” most recently announced by the Central Bank of the Republic of Türkiye for the year in which the deduction is used.
The Commercial Loans (Extended in TRY) (Excluding Corporate Overdraft Accounts and Corporate Credit Cards) rate most recently announced for 2023 on the Central Bank’s website is 52.73%.
Accordingly, the rate of 52.73% will be used for the interest deduction calculated on cash capital increases for 2023.
The cash capital deduction:
Subparagraph (ı) of the first paragraph of Article 10 of the Corporate Income Tax Law, entitled “Other deductions”, provides that capital companies — excluding entities operating in the finance, banking and insurance sectors and state economic enterprises — may deduct from corporate income 50% of the amount calculated up to the end of the relevant accounting period on cash capital increases in their paid-in or issued capital registered with the trade registry during that accounting period, or on the portion of paid-in capital met in cash in newly established capital companies, by reference to the “weighted average annual interest rate applied to TRY commercial loans extended by banks” most recently announced by the Central Bank of the Republic of Türkiye for the year in which the deduction is used (this rate is applied at 75% for the portion of cash capital increases met with funds brought in from abroad).
In addition, the subheadings of the section entitled “10.6. Deduction on capital increases” of Corporate Income Tax General Communiqué No. 1 state that:
- for capital increases made from 5 July 2022 onwards, the deduction will be applied separately for five accounting periods, including the accounting period in which the capital increase resolution or, at the initial incorporation stage, the articles of association is registered,
- companies that increased their capital or were first established before 5 July 2022 may continue to benefit from the deduction separately for five accounting periods, including the 2022 accounting period.
The Central Bank data can be accessed through the link below.
Central Bank interest rates