17 December 2025Yavuz AKBULAK

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Local and Global Minimum Supplementary Corporate Tax in Turkish Law

In recent years, the increasing digitalization of economies has led to the emergence of many new business models and areas of activity. By leveraging the opportunities afforded by technological advancements, corporations have increased their mobility and begun to operate more easily in different countries.

As a result of these developments, certain problems have emerged in the general taxation rules applicable to international income taxation. This has led both countries and international organizations to revise their tax systems and implement the necessary regulations to ensure fairer and more minimal taxation of income where economic activities occur and value is created.

In this context, the Organization for Economic Cooperation and Development (OECD) initiated a series of studies to address the issues arising from the taxation of profits of multinational enterprises exceeding a certain size. An action plan called the “Base Erosion and Profit Shifting Project” was developed in September 2013. This action plan identified 15 subheadings to ensure consistency in the domestic legislation of countries regarding the taxation of profits derived from the international activities of multinational enterprises and to strengthen the fundamental requirements of existing international standards.

One of the subheadings in question is titled “Addressing tax challenges arising from the digitalization of the economy.” On October 8, 2021, more than 130 countries representing over 95% of the global gross domestic product agreed on a two-pillar solution to ensure that multinational enterprises pay fair and minimum taxes in the places where they operate and earn profits by amending international taxation rules.

The local and global minimum supplementary corporate tax, the details of which are included in the “Model Rules for the Global Anti-Base Erosion Rules”^[1], “Commentaries to the Model Rules”^[2], and “Administrative Guidelines”^[3] published by the OECD and approved by the “Inclusive Framework on Base Erosion and Profit Shifting”^[4] (BEPS Inclusive Framework), was developed to address the taxation issues of multinational enterprises, as mentioned above. These rules aim to halt the downward trend in corporate tax rates by requiring multinational enterprises of a certain size to pay a minimum level of tax on their profits in the countries in which they operate, thereby reducing the incentive for profit shifting.

Following the studies carried out in this direction by the OECD, some G20 and OECD member countries, especially the European Union countries, have started to make changes in their domestic legislation to prevent large multinational business groups from taking advantage of globalization and shifting their profits and paying much lower taxes than small or medium-sized enterprises that do not have access to the same opportunities.

In this context, the Law Proposal for Amending Tax Laws and Certain Other Laws, which was submitted to the Grand National Assembly of Türkiye (TBMM) on July 16, 2024, was accepted by the TBMM General Assembly on July 28, 2024. It became law under the title Law No. 7524, known as the “Law on Amending Tax Laws and Certain Other Laws and Decree Law No. 375”. The Local and Global Minimum Supplementary Corporate Tax is regulated in Articles 37 to 50 of Law No. 7524 and incorporated into Corporate Tax Law No. 5520 (CTL).

This article will focus on the principles regarding the Local and Global Minimum Supplementary Corporate Tax introduced by Law No. 7524.

Local and Global Minimum Supplementary Corporate Tax^[5]

The profits of affiliated enterprises of multinational business groups whose annual consolidated revenue in the consolidated financial statements of their ultimate parent company exceeds the Turkish lira equivalent of 750 million euros in at least two of the four accounting periods preceding the period in which the income is reported are subject to local and global minimum supplementary corporate tax.

Exemptions and Exceptions

• Public institutions, organizations, and international organizations are exempt.
• Non-profit organizations are exempt.
• Retirement investment funds are exempt.
• Investment funds that qualify as ultimate parent entities are exempt from this requirement.
• Ultimate parent businesses considered real estate investment instruments, particularly real estate investment funds are exempt.

Although not included in the scope above, the following businesses and their workplaces are also exempt from local and global minimum supplementary corporate tax:

1. Businesses established to hold assets or invest in funds exclusively for the benefit of exempt businesses within the scope mentioned above, or to assist in the activities of exempt businesses. At least 95% of the business’s value must be owned by these exempt businesses, excluding organizations providing retirement services.
2. Businesses owned by exempt entities within the outlined scope excluding organizations that provide retirement services, qualify if at least 51% of their revenue comes from activities specified in the sections of the Corporate Tax Law (CTL).

Profits derived from international maritime transport activities of subsidiaries of multinational business groups are exempt from local and global minimum supplementary corporate tax.

Profits derived from the following activities carried out by affiliated companies in a country in connection with international maritime transport activities are also exempt from local and global minimum supplementary corporate tax, provided that the total of these profits does not exceed 50% of the total profits derived by these affiliated companies from international maritime transport:

1. Earnings from ship charters made on a bare-bones basis for maritime companies that are not affiliated with the same multinational business group and do not exceed three years;
2. Earnings from the sale of tickets issued by other maritime transport companies for domestic routes within the scope of international maritime transport;
3. Earnings from the rental of containers, including their storage for periods of less than three months, or payments received for their late return;
4. Earnings from services provided to other maritime transport companies by engineers, maintenance personnel, cargo operators, food and beverage service personnel, and customer service personnel;
5. Earnings from investments made as an integral part of the international ship management business.

Calculating Adjusted Covered Taxes to Determine the Tax Burden

The tax burden of a multinational enterprise group with net country-based profits is calculated separately for each country on a country-by-country basis for each accounting period. When determining the country-by-country tax burden of a multinational enterprise group, the adjusted covered taxes calculated for affiliated enterprises located in that country are taken into consideration.

An affiliate’s adjusted covered taxes for an accounting period are calculated by adding the accrued current period tax expense related to covered taxes, adjusted in accordance with specific guidelines, to the total deferred tax adjustment amount. This total is then adjusted for any increase or decrease in covered taxes related to gains or losses within the scope of the Corporate Tax Law (CTL) as reflected in the statement of changes in equity or the statement of other comprehensive income in its financial statements.

1. The covered tax shall include:
   1. Any covered tax accrued as an expense in pre-tax profit in the financial accounts,
   2. A deferred tax asset related to an identified country-based loss,
   3. Any amount paid in the current accounting period that relates to an uncertain tax position and was treated as a reduction in covered taxes for a previous accounting period,
   4. Any deduction or refund amount related to qualified refundable tax credits and marketable (transferable) tax credits recorded as a reduction in current period tax expense.
2. From the covered tax:
   1. The current period tax expense is related to income that is not included in the calculation of country-based gain or loss.
   2. A credit or refund related to a tax credit that is not recorded as a reduction in current-period tax expense and is not a qualified refundable tax credit or a marketable (transferable) tax credit.
   3. Covered tax refunded or credited to an affiliated entity (excluding qualified refundable tax credits and marketable [transferable] tax credits) that is not treated as an adjustment to the current period tax expense in the financial accounts.
   4. Current period tax expense related to an uncertain tax position.
   5. Any current period tax expense not expected to be paid within three years of the last day of the accounting period shall be deducted.

Determining the tax burden involves calculating the business-based profit or loss

The subsidiary’s business-based profit or loss for the relevant accounting period is determined by making the following adjustments to its financial accounting net profit or loss:

1. The following items are added to the financial accounting net gain or loss:
   1. Net tax expense greater than zero determined under the Corporate Tax Law (CTL),
   2. Equity losses not allowed as deductions in determining operating-based income,
   3. Revaluation method gains,
   4. Losses arising from the disposal of assets and liabilities within the scope of the Corporate Tax Law,
   5. Asymmetric exchange rate gains or losses,
   6. Payments made under legally prohibited acts and penalty payments exceeding the Turkish lira equivalent of €50,000,
   7. Amounts incurred due to prior period accounting errors or principle changes,
   8. The difference lies in the pension expenses recognized as expenses when determining profit for the period in accordance with internationally accepted financial accounting standards, and the actual pension expenses paid in the current accounting period.
2. The following items are deducted from the net profit or loss in financial accounting:
   
   1. Net tax expense less than zero as determined under the CTL,
   2. Exempt dividends,
   3. Equity gains not recognized in determining operating-based income,;
   4. Losses due to the revaluation method,
   5. Gains arising from the disposal of assets and liabilities within the scope of the CTL,
   6. Asymmetric exchange rate gains or losses,
   7. Amounts arising from prior period accounting errors or principle changes,T
   8. he difference between pension expenses actually paid in the current accounting period and pension expenses recognized as expenses in determining period profit according to internationally accepted financial accounting standards.

In financing transactions conducted by affiliated enterprises within the same group, if the tax burden in the country where the borrowing affiliate is located is below the minimum corporate tax rate, or if the tax burden in the country where the lending affiliate is located is above the minimum corporate tax rate, or if the tax burden calculated without considering interest income and expenses arising from intra-group financing is above the minimum corporate tax rate, the interest expense incurred by the borrowing affiliate and considered as an expense in determining operating-based income will be limited to the amount considered as income by the lending affiliate.

Debtor affiliates have the option to exclude the waived amount as income when calculating operating-based income or loss if any of the following conditions are met:

1. The debt is forgiven based on a court decision, the debtor and creditor are not related parties, and the debtor is expected to file for bankruptcy within twelve months.
2. The value of the debtors assets, determined according to market value before the debt is forgiven, is less than its liabilities.

Transactions between affiliated enterprises located in different countries that are not recorded in the same amount in the financial accounts of both affiliated enterprises or that do not comply with the arm’s length principle are restated at arm’s length. If transactions involving the sale or other disposal of assets between two affiliated enterprises located in the same country result in a reduction in the local or global minimum supplementary corporate tax due to non-compliance with the arm’s length principle, such transactions are restated at arm’s length and taken into account in the calculation of country-based gains or losses. The arm’s length principle^[6] refers to recording transactions between affiliated enterprises based on the results that would have been achieved in similar transactions between independent enterprises under comparable circumstances.

The total of the business-based gains or losses of affiliated enterprises in a country represents the country-based gain or loss.

Global Minimum Supplementary Corporate Tax Base, Rate, and Calculation

The minimum corporate tax rate is 15%. The difference between the minimum corporate tax rate and the rate determined under the Corporate Tax Law (CTL) is the global minimum supplementary corporate tax rate. If the country-based tax burden exceeds the minimum corporate tax rate, the global minimum supplementary corporate tax is not calculated.

The global minimum supplementary corporate tax is calculated based on the global minimum supplementary corporate tax base. This base is determined by deducting 5% of the total annual gross wages of employees of affiliated businesses located in that country and 5% of the net book value of their property, plant, and equipment from the total net country-based earnings.

The global minimum supplementary corporate tax rate for a country is determined by applying the global minimum supplementary corporate tax rate to the global minimum supplementary corporate tax base.

The global minimum supplementary corporate tax rate for a subsidiary is determined by multiplying the rate calculated by dividing the business-based profit of a subsidiary by the country-based profit, by the global minimum supplementary corporate tax calculated for the relevant country.

If a multinational business group’s average annual revenue per country is less than the Turkish lira equivalent of €10 million and its average annual earnings per country are less than the Turkish lira equivalent of €1 million, the global minimum supplementary corporate tax for affiliated businesses in that country may be considered zero for the relevant accounting period. In this context, average revenue or average earnings refer to the average of the total revenue or earnings for the accounting period for which financial accounts for a country are reported and the two preceding accounting periods.

Taxpayer of the Global Minimum Supplementary Corporate Tax

The global minimum supplementary corporate tax is determined based on the income inclusion principle and the undertaxed payments principle^[7].

Under the income inclusion principle^[8], the taxpayer of the global minimum supplementary corporate tax is the ultimate parent company, intermediate parent company, or partially owned parent company located in Türkiye of businesses affiliated with multinational business groups within the scope of the Corporate Tax Law and located in other countries. Among those listed here, the taxpayer is determined as follows:

1. In the case of subsidiaries with an ultimate parent company located in Türkiye and an intermediate parent company located in Türkiye or other countries, the taxpayer is the ultimate parent company in Türkiye. If the partially owned parent company is in Türkiye but the ultimate parent company or intermediate parent company is in Türkiye or other countries, the partially owned parent company is also subject to tax under the income inclusion principle.
2. If the partially owned parent company is in Türkiye but there is another partially owned parent company in a different country that fully owns the business and the global minimum supplementary corporate tax is not applied in that country under the qualifying income inclusion principle, the taxpayer is the partially owned parent company in Türkiye under the income inclusion principle.
3. If the intermediate parent company is established in Türkiye and the global minimum supplementary corporate tax is not applied under the qualifying income inclusion principle in the countries where the ultimate parent company or partially owned parent company is located, the taxpayer under the income inclusion principle is the intermediate parent company in Türkiye.

Taxpayers listed above are responsible for paying the tax, limited to their involvement in the affiliated enterprise in which they have an ownership interest. The inclusion ratio is obtained by dividing the amount calculated by subtracting the portion attributable to third parties other than the parent enterprise from the affiliated enterprise’s operating-based income for an accounting period by the operating-based income of the affiliated enterprise.

Entities subject to the global minimum supplementary corporate tax under the undertaxed payments principle are affiliated enterprises based in Türkiye. These enterprises have a parent company, intermediate parent company, or partially owned parent company that is not located in Türkiye and are part of multinational business groups that are either not subject to or only partially subject to the global minimum supplementary corporate tax under the qualifying income inclusion principle as per relevant laws. Taxpayers falling under this category are required to pay a portion of this tax, which is calculated based on the undertaxed payments principle and the percentage of undertaxed payments.

The tax amount determined under the undertaxed payments principle is the sum of the global minimum supplementary corporate tax calculated for all enterprises within the multinational business group. If the tax has already been calculated for these enterprises under the income inclusion principle, then the undertaxed payments principle tax is the difference between the global minimum supplementary corporate tax and the income inclusion tax.

The percentage used to calculate the undertaxed payments principle is established by adding 50% of the total number of employees in Türkiye to the total number of employees in all countries where the qualified undertaxed payments principle is applicable, and then dividing that by the total number of employees in all countries. Furthermore, 50% of the total tangible fixed asset value in Türkiye is divided by the total tangible fixed asset value in all countries where the qualified undertaxed payments principle is applicable.

Local Minimum Supplementary Corporate Tax

Taxpayers subject to the local minimum supplementary corporate tax are affiliated businesses and business partnerships that are part of multinational business groups within the scope of the Personal Data Protection Law and are based in Türkiye.

According to the Corporate Tax Law (CTL), the local minimum supplementary corporate tax is calculated by applying the minimum supplementary corporate tax rate to the global minimum supplementary corporate tax base. This tax is levied upon the declaration of taxpayers, with any additional current period local minimum supplementary corporate tax being added to it. Under the CTL, if taxpayers residing in Türkiye and affiliated with the same multinational business groups declare and pay the entire local minimum supplementary corporate tax on their own behalf, the responsibilities of other taxpayers regarding the declaration and payment of this tax are eliminated.

Conclusion

In conclusion, Law No. 7524 has introduced regulations aimed at imposing a minimum level of corporate tax on multinational enterprises with annual consolidated global revenue exceeding the Turkish lira equivalent of €750 million. These regulations take into account practices in different countries and the Model Rules and Guidelines published by the OECD.

The purpose of these regulations is to prevent the shifting of profits from values created in our country towards tax havens due to increasing globalization, minimize practices that erode tax bases, ensure compliance with international rules that require large multinational enterprises to pay minimum taxes on their profits in the countries where they operate, and implement a transparent and comprehensive taxation system that provides predictable results for multinational enterprises.

The regulation has established a supplementary tax system that aims to bring the total tax calculated on the profits of large multinational enterprises to the minimum corporate tax rate (15%). This taxation is not intended as a direct tax on the profits of these enterprises. Instead, the tax will be applied when these profits, calculated on a country-by-country basis, are effectively taxed below the minimum corporate tax rate in the relevant accounting period. In this regard, the regulation acts as an international minimum tax, utilizing standardized tax bases and tax calculation techniques for large multinational enterprise groups and equalizing the effective tax burden on their profits in each country to the minimum corporate tax rate.

(The opinions expressed in this article are solely those of the author and do not represent the views of the institution with which he is affiliated. They should not be used to imply any connection between the author and the institution. Any errors, flaws, deficiencies, or shortcomings in the article are the responsibility of the author.)

 Financial Support: The author, Yavuz Akbulak, has not received any financial support for the research, authorship, or publication of this study.

Author’s Contributions: This article was solely prepared by the author.

Declaration of Conflict of Interest/Common Interest: The author declares that there is no conflict of interest in relation to the content of the article presented.

Use of AI: The author declares that no artificial intelligence tools were used in the creation of this article.