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17. TAXES ON INCOME
a) Current Statutory Taxes
The Holding and the subsidiaries which are incorporated in Turkey are subject to taxation in accordance with the tax procedures and the legislation effective in Turkey.
In Turkey, the corporation tax rate for the fiscal year ended 31 December 2014 is 20% (2013: 20%). Corporate tax returns are required to be filed until the twenty fifth of the fourth month
following the balance sheet date and paid in one installment until the end of the fourth month. The tax legislation provides for a temporary tax of 20% to be calculated and paid based on
earnings generated for each quarter. The amounts thus calculated and paid are offset against the final corporate tax liability for the year.
Corporate tax losses can be carried forward for a maximum period of five years following the year in which the losses were incurred. The tax authorities can inspect tax returns and the
related accounting records for a retrospective maximum period of five years.
Undistributed dividends incorporated in share capital are not subject to income withholding taxes. Withholding tax at the rate of 19.8% is still applied to investment allowances relating
to investment incentive certificates obtained prior to 24 April 2003. Subsequent to this date, the investments without investment incentive certificates do not qualify for tax allowance.
Income Withholding Tax
In addition to corporate taxes, companies should also calculate income withholding taxes and funds surcharge on any dividends distributed, except for companies receiving dividends who
are Turkish residents and Turkish branches of foreign companies. Income withholding tax applied in between 24 April 2003 – 22 July 2006 is 10% and commencing from 23 July 2006, this
rate has been changed to 15% upon the Council of Ministers’ Resolution No: 2006/10731. Undistributed dividends incorporated in share capital are not subject to income withholding tax.
Current statutory income tax payable for the years ended 31 December 2014 and 2013 are summarized as follows:
31 December 2014
31 December 2013
Provision for current taxes as per statements of income
- Turkey tax charge
32,347,558
27,476,585
- Kazakhstan tax charge
4,336,136
1,340,423
- Malta tax charge
8,064,632
10,308,385
- Effect of tax recoverable (Malta) (*)
(5,861,603)
(7,302,647)
- Italy tax charge
74,006
-
Total statutory income tax charge for the year
38,960,729
31,822,746
Prepaid taxes
(29,930,902)
(26,375,172)
Currency translation reserve
(5,466,950)
(1,089,309)
Tax receivable (Malta)(*)
5,861,603
7,302,647
Income tax payable
9,424,480
11,660,912
(*) MIT Holding has a tax receivable amounting to USD 5,861,603 classified under current assets. (2013: USD 7,302,647)
BORUSAN HOLDING A.Ş. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2014
(Currency - US Dollars (“USD”) unless otherwise indicated)