Latest Amendments to the Stamp Tax Law
Introduction
Pursuant to Stamp Tax Law numbered 488[1], documents prepared through writing and signing, or the marking thereof substituent to signing, to be used to evidence or define any subject, and the documents prepared electronically as electronic data are referred to as “paper” under the Law, and the parties to these papers are obliged to pay stamp tax on such papers. Stamp tax is collected either on a proportional or fixed base. Proportional stamp tax are predicated on the genre and nature of the paper that is subject to the stamp tax, while fixed stamp tax are predicated on the qualification of the papers that are subject to the stamp tax.
Law numbered 6728 on the Amendment of Several Laws Concerning Improvement of Investment Environment[2] made substantial amendments to Stamp Tax Law numbered 488 (“Law”). In accordance with the purpose of Law numbered 6728, improving the investment environment, the stamp tax obligations of investors under the Law are readjusted in to a considerable extend. Amendments made to the Law entered into force on the date of their publication in the Official Gazette on 09.08.2016.
Provisions Concerning Stamp Tax Law
Proportional Stamp Tax on Multiple Copies: Pursuant to the amendment of Article 5 of the Law, in the event of issuance of multiple copies of the same paper that is subject to proportional stamp tax, only one copy shall be subject to the stamp tax. Prior to the amendment, in practice, and due to the parties’ intention not to pay multiple stamp taxes, only one of the parties may retain a signed original, and the other parties must be given ordinary photocopies, or the parties would be exposed to multiple stamp tax obligations for the same paper[3]. Such defect originated in practice is recovered with the amendment. Please note that such amendment is only predicted for proportional stamp tax and the fixed stamp tax is not subject to the amendment; fixed stamp tax shall accrue on as much as the number of copies of the paper.
Multiple Guaranty or Ordinary Suretyship Undertakings on the Same Paper: Pursuant to the amendment made on Article 6 of the Law, the regulation predicting a separate collection of stamp tax for each guaranty, and ordinary suretyship undertakings under the same agreement, gives its place to the regulation predicting the sole collection of stamp tax on the multiple guarantees or ordinary suretyship under the same agreement. Pursuant to the second paragraph of the same Article, in the event of multiple arrangements or transactions under an agreement, only the tax of on the arrangement or transaction that is subject to a higher tax amount between these shall be accrued. In this regard, in the event of the existence of multiple guarantees or ordinary suretyship undertakings under an agreement, only the undertaking with the highest amount among these shall be subject to stamp tax in addition to the stamp tax due on the actual agreement.
Punitive Undertakings under Agreements: Pursuant to the amended regulation in Article 6 of the Law, on punitive undertakings such as the forfeiture and penalty clause, no stamp tax shall accrue unless such undertakings are being made that are subject to a separate agreement. In this regard, through the amendment, on the agreements that include punitive clauses of high numbers, the stamp tax obligation of the parties, on the amounts that exceed the advantage granted by the related agreement, is abolished.
Amendments on the Price of Agreements Subject to the Upper Limit of Stamp Tax: Pursuant to the amended regulation in the event of amendment on the price of an agreement that has been made subject to the upper limit of stamp tax[4], no additional stamp tax shall accrue. Please note that such amendment shall not be applicable in the event of an amendment of the other terms of the agreement.
Exemption on Foreign Exchange Acquisitive Transactions: Within the amendment made to Additional Article 2, the regulation concerning the scope and procedure of the exemption of exportation and other foreign exchange acquisitive transactions is included in the Law. In consequence of the critics regarding these exemptions being regulated under the communiqué[5], the regulation has been included in the Law.
Public Private Partnership Projects: The extension of services and activities of fully fledged tax payer firms that undertake facility construction and maintenance works in public private partnership projects is granted through the amendment on Additional Article 2.
Amendments on the Annexes of the Law: Additionally, Table Number I and Table Number II of the Law that regulate the papers that are subject to stamp tax, have been amended, considerably. Some of the important amendments for investors are as follows:
- The scope of the exemption granted to real estate investment companies on real estate purchases and promise to sell agreements is extended to include real estate investment funds.
- The scope of exemption that are granted to securities and repayments of loans provided by banks, foreign credit institutions, and other foreign foundations is extended to include assignment of such loans, and the assignment of claims arising from such loans.
- The scope of the exemption granted to insurance agreements is extended to include re-insurance, co-insurance, individual and group retirement agreements, as well as other insurance undertakings.
- Exemption on share purchase agreements of joint stock and limited liability companies is granted.
- Exemption on papers regarding assignments of loans provided by financing companies is granted.
- Correction declarations submitted within the legal terms are not subject to stamp tax. Notwithstanding the correction declarations provided, following the extension of the legal term, are subject to stamp tax.
- The agreements executed with the administration within public tenders are subject to stamp tax.
- Wholesale and retail electricity sales agreements are subject to stamp tax.
Conclusion
Stamp tax obligations are being subjected to negotiation processes of agreements as one of the most significant obligation of the parties. Within the amendments, the stamp tax obligations of investors are decreased significantly to improve the investment environment. Please note that these amendments entered into force on 09.08.2016 through publication in the Official Gazette numbered 29796.
[1] For the Turkish version of Stamp Tax Law numbered 488 please see:
http://www.mevzuat.gov.tr/Metin1.Aspx?MevzuatKod=1.5.488&MevzuatIliski=0&sourceXmlSearch=damga%20vergisi&Tur=1&Tertip=5&No=488 (Access Date: 18 August 2016).
[2] For the Turkish version of Law on Amendment of Several Laws Concerning Improvement of Investment Environment numbered 6728, please see: http://www.resmigazete.gov.tr/main.aspx?home=http://www.resmigazete.gov.tr/eskiler/2016/08/20160809.htm&main=http://www.resmigazete.gov.tr/eskiler/2016/08/20160809.htm (Access Date: 18 August 2016).
[3] Please see exemplary Court of Appeal Decision of 15th Civil Chamber decision numbered 2015/420 and dated 27.1.2015.
[4] The upper limit of stamp tax for 2016 is TRY 1,797,117.30.
[5] For the Turkish version of Communique on Implementation of Stamp Tax Exemption on Foreign Exchange Acquisitive Activities (Serial No. 1) please see: http://www.mevzuat.gov.tr/Metin.Aspx?MevzuatKod=9.5.8457&MevzuatIliski=0&sourceXmlSearch=d%C3%B6viz%20kazand%C4%B1r%C4%B1c%C4%B1(Access Date: 18 August 2016).
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