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Latest Tax Regulations in Turkey

Turkey is struggling with massive tax revenue shortfalls. The government has taken measures to stabilise the situation. So taxes on consumer goods are being increased and measures are being taken to present Turkey as an attractive market for the post-pandemic period.

Turkey has faced serious economic problems over the last few years. These include depreciation of the Turkish lira against the US dollar and a high rate of inflation. The situation is forcing the government to make serious decisions affecting the Turkish economy. On the one hand there are effforts to increase tax revenues. But on the other hand, the focus is on new opportunities that will arise after the pandemic. The country’s location and its low labour costs can make it an attractive market after the pandemic.

Turkey is gearing up for the time after the pandemic as an attractive location for investments.

Uğur Kaan Bora, Assistant Auditor, ECOVIS DIPLOMAT DENETIM VE YMM A.S, Izmir, Turkey

The Most Important Tax Changes

• Increase in Special Consumption Tax (SCT) on cars. The minimum SCT basis has increased from TRY 70,000 to TRY 85,000. The tax ratios based on engine size have increased from 60% to 80%, 100% to 130%, 110% to 150% and 130% to 220%. This means, for example, a ratio of 220% for cars whose engine size exceeds 2000 cm³, with no base limit.
• The Banking and Insurance Transactions Tax on foreign exchange and gold purchases, which was increased to 1% last May, has been reduced to 0.2%.
• The VAT rate for education and training services, which is currently 8%, has been reduced to 1%.

The goverment also plans to restructure some tax debts, including debts to the Ministry of Finance, customs tax debts, debts to social insurance institutions and debts to the municipality. The proposal being discussed in parliment is expected to become law shortly say the Ecovis experts.

For further information please contact:

Uğur Kaan Bora, Assistant Auditor, ECOVIS DIPLOMAT DENETIM VE YMM A.S, Izmir, Turkey
Email: kbora@diplomatymm.com.tr

Preparing for Brexit: Our Guide Shows What Companies Should Do

From 1 January 2021, new rules will apply for companies in the UK as a result of Brexit. To familiarise companies with these new rules, Ecovis UK has developed the business guide “Preparing for Brexit”. The guide covers specific information about changes that will impact all businesses – from importing/exporting goods and direct taxation, through to the impact on your workforce.

With Brexit now inevitable, companies have to know the new rules. Our guide provides companies with information about the most important regulations.

Gerry Collins, Managing Partner, ECOVIS Wingrave Yeats, London, UK

On 31 January 2020 the UK left the EU. There is a transition period until the end of 2020, while the UK and EU negotiate additional arrangements. Even if these are still unclear, one thing is certain: the changes will extend to all areas of cooperation.

The subjects covered in the “Preparing for Brexit” guide include:

• Trading in the UK post Brexit
• Customs and VAT
• Direct taxes
• Social security
• Legal matters concerning setting up a UK legal entity

For further information please contact:

Gerry Collins, Managing Partner, ECOVIS Wingrave Yeats, London, UK
Email: gerry.collins@ecovis.co.uk

Holding Company Regime Regulations in Colombia (CHC Regime)

In Colombia, laws 1943 of 2018 and 2010 of 2019 modified the Tax Statute and introduced the Colombian Holding Companies (CHC) Regime to domestic regulations. This provides tax advantages which could also be interesting for foreign investors.

CHCs are not a separate type of company, but rather a series of tax benefits for which domestic companies can apply, provided they meet certain requirements. These include:

• Incorporation as a company in Colombia, or a foreign company which has its effective administrative headquarters in Colombia.
• A specific, main activity of the “holding of securities, the investment or holding of shares or participations in Colombian and/or foreign companies or entities, and/or the administration of said investments”.
• Holding a stake in other companies of at least 10% of the capital of two or more Colombian and/or foreign companies or entities for a minimum period of 12 months.
• Having the human and material resources for the full realisation of the corporate purpose. This is considered done if a company has 3 employees, its own management in Colombia and is able to demonstrate that decision making is carried out in Colombia.
• Be authorised by the National Tax and Customs Directorate (DIAN) to function as a CHC, in accordance with Decree 598 of 2020.

Would you like to take advantage of tax advantages in Colombia and set up a holding company? We can support you in this.

Giovanni Tellez, Legal Advisor, ECOVIS Colombia SAS, Bogotá, Colombia

The CHC regime, in a similar way to that established for Spanish holding companies (Spanish Holding Regime, ETVE), foresees a series of benefits for non-residents who decide to apply the regime to resident companies. These include the following:

• Dividends or participations distributed by entities not resident in Colombia to a CHC will be exempt from income tax and will be declared as “exempt capital income”.
• Dividends distributed by a CHC to a natural or legal person not resident in Colombia will be understood as foreign source income.
• Income derived from the sale or transfer of a CHC’s participation in non-Colombian entities will be exempt from income tax and must be declared as “exempt occasional gains.”
• The capital gains derived from the sale of the shares of the CHC, to the amount corresponding to foreign source income, will be considered exempt income for non-residents.

For further information please contact:

Giovanni Tellez, Legal Advisor, ECOVIS Colombia SAS, Bogotá, Colombia
Email: infocolombia@ecovis.co