Türkiye takes lead in global corporate tax reform to ensure fairness

Minister of Treasury and Finance Mehmet Simsek commented on the ongoing preparations for the implementation of a minimum corporate tax scheme.

Simsek highlighted the global efforts underway to impose a minimum corporate tax on multinational corporations.

“It is inevitable to regulate the imposition of a minimum corporate tax on multinational corporations operating in Türkiye. Otherwise, taxes not collected in our country will be collected by another country,” he said.

‘Over 30 countries have legalized implementation’

Simsek pointed out that in 2021, approximately 140 countries agreed on a global minimum corporate tax under the auspices of the Organisation for Economic Co-operation and Development (OECD).

“According to the agreement, multinational corporations with annual consolidated revenue exceeding 750 million euros will be subject to a minimum 15% corporate tax on their branches, subsidiaries, and establishments in low-tax jurisdictions. In this regard, more than 30 countries, primarily European Union (EU) members, have legalized the implementation of the minimum corporate tax scheme to be applied to 2024 earnings,” he said.

Simsek mentioned that legislative efforts are also ongoing in other countries, providing details on the application.

“Countries that have legalized the minimum corporate tax scheme can collect the tax difference if the corporate tax burden paid by multinational corporations in the country of operation is less than 15%. The right to collect the tax difference primarily lies with the country where the company operates. If the country does not have a minimum corporate tax scheme, the country where the company’s headquarters is located can collect this tax.,” the minister said.

“If there is no minimum corporate tax scheme in place, the tax can be collected by a third country where companies belonging to the same group operate. The model aims to ensure that multinational corporations’ earnings bear a tax burden of 15% in any case,” he added.

‘To maintain taxation rights, it needs to be implemented’

Simsek emphasized the necessity of implementing a minimum corporate tax in Türkiye to avoid transferring taxation rights to another country.

“Many multinational corporations are operating in our country. It is inevitable to regulate the imposition of a minimum corporate tax on multinational corporations operating in Türkiye. Otherwise, taxes not collected in our country will be collected by another country.”

Highlighting the need for implementing a minimum corporate tax in Türkiye to retain taxation rights, Simsek informed that efforts are underway and preparations are in the final stages.

‘2.5% exceeds the €750M euro threshold’

Simsek stated that approximately 80,000 internationally funded companies operate in Türkiye, 2,134 of which have their headquarters abroad.

“Only a small fraction, about 2.5%, of multinational corporations investing in our country exceed the 750 million euro threshold. Alternative models are being explored on how to preserve the tax incentives they receive and how to utilize them in different areas. We, as the Ministry, continue to work closely with the Ministry of Industry and Technology to develop alternatives to encourage investment in our country,” he said.

Minister Simsek shared on his social media account following the announcement: “Additional steps to enhance fairness and efficiency in taxation are on the way.”