Taxation Of Agio Under The Additional Taxes Introduced By Law Numbered 7440

Taxation Of Agio Under The Additional Taxes Introduced By Law Numbered 7440

Is Agio A Gain?

Agio is the gain obtained by issuing shares above the nominal value of the shares issued by joint stock companies during the establishment or capital increase phase. Especially entrepreneurial companies aim to make new investments by increasing their equity capital and to obtain a resource for expenditure planning with the stock issuance method, which is frequently used to collect investment and capital increase.

Agio is explained in the Corporate Tax General Communiqué Serial No. 1, under the heading "Exemption of Agio Gain" as follows: "With the subparagraph (ç) of the first paragraph of Article 5 of the Corporate Tax Law, the gains arising from the disposal of the shares issued by joint stock companies both during their establishment and when they increase their capital are exempt from corporate tax".

In the second and third paragraphs of Article 519 of the Turkish Commercial Code titled "general legal reserves" In the second and third paragraphs of Article 519 of the Turkish Commercial Code; "the portion of the premium provided for the issuance of new shares that has not been used for issuance expenses, redemption provisions and charitable payments shall be added to the general legal reserve fund, and if the general legal reserve fund does not exceed half of the capital or issued capital, it shall be used only to cover losses, The Bank has qualified the agio as a reserve fund by stipulating that it can be used to continue the business in times when business is not going well, or to take measures to prevent unemployment and alleviate its consequences", and an explanation has been provided on the nature of the agio by excluding it from the classification of discretionary reserves or retained earnings.

According to the Uniform Chart of Accounts, the agio is recognized directly under "520-Share Premiums" in the "Shareholders' Equity" section of the balance sheet and is not associated with income statement accounts.

In addition, the fact that the agio is listed as an exception in Article 5 of Law No. 5520, which regulates the tax exemptions on corporate income, prevents it from being recognized as income within the scope of Article 38 of the Income Tax Law.

As explained above, both in the application of the Commercial Code and in accounting transactions, the agio is a part of the company capital and is not considered as company income.

Evaluation Of The Issue Within The Scope Of Law No. 7440

The "Additional Tax" introduced by paragraph 27 of Article 10 titled "Other Provisions" of the "Law on Restructuring of Certain Receivables and Amendments to Certain Laws" numbered 7440 is calculated on the exemption and discount amounts deducted from the corporate income shown in the corporate tax return for the year 2022 and the bases subject to discounted corporate tax.

Law No. 5520 and the exemption and discount amounts taken into account in the determination of corporate income in accordance with the regulations in other laws and the bases subject to discounted corporate tax within the scope of Article 32/A of Law No. 5520 constitute the subject of additional tax. Accordingly, the agio income, which is exempt from corporate tax in Article 5/1-ç of Law No. 5520, will also be considered as the subject of the additional tax introduced by Law No. 7440 and will constitute the base of the additional tax.

As explained above, the agio is not an income subject to corporate tax, but a part of the equity capital of the company. Especially start-up companies spend their agio directly on the resources necessary to grow their business, and since this accounting period closes at the end of 2022, taxing agio with the additional tax will destroy the commercial confidence environment for both entrepreneurs and domestic and foreign investors.

It should be taken into consideration that the will of the administration and the legislator is to encourage entrepreneurship and investments, the additional tax introduced aims to tax the earnings of the corporations by making a taxation within the scope of Article 5 of the Turkish Commercial Code, and agio are not a corporate income in real terms, agio should be considered as equity capital, not as an income, taking into account the purpose of the legislator, and should not be covered by the additional tax introduced by Law No. 7440.

In this context, it is possible to apply for judicial remedy within the legal period for additional tax declarations submitted with reservation.

Please see our other article on this subject: Legal Evaluation of the Additional Tax Introduced by Law No. 7440

Bibliography:

Emisyon Priminin Ek Deprem Vergisi Kapsaminda Değerlendirilmesi ve Çözüm Önerisi – Ferit TAŞ

Serial No. 1 Corporate Tax General Communiqué