Author: Beyza Günsel
Introduction
Through the promulgation of Law No. 7394 on the Amendments of Treasury-Owned Immovable Property Valuation and the Value Added Tax Law and on the Amendments of Certain Other Laws and Decrees (“Law No. 7394”), published in the Official Gazette dated 15 April 2022 and No. 31810, significant amendments have been made to certain tax laws. One of the essential amendments was that capital replenishment fund amounts transferred by the shareholders of companies to replenish diminished capital as per Article 376 of Turkish Commercial Code No. 6102 (“Article 376 of TCC”), will be excluded in the determination of corporate income. Prior to this amendment, the situation that the shareholders transfer the amount that would cover the balance sheet deficit to the company (namely, capital replenishment fund) was considered a risky TCC Article 376 measure in terms of taxation. In this article, it will be briefly explained in which cases the capital replenishment fund is a measure that can be applied. In addition, the tax risk before the implementation of Law No. 7394 will be briefly explained.
Capital Replenishment Funds
TCC Article 376 is one of the laws aiming to protect company shareholders, company creditors, and other capital market actors as well as general economic interests of companies. The terms of capital loss and insolvency are regulated in Article 376; and, considering the current economic conjuncture; some additional regulations regarding implementation have been introduced with the Communiqué on the Principles and Procedures for the Application of Article 376 of the Turkish Commercial Code No. 6102 (“Communiqué”).
