Turkey’s Revenue Administration has reportedly introduced draft legislation featuring measures for the implementation of the Pillar 2 global minimum tax.
The global minimum tax will align with the GloBE rules approved by the BEPS Inclusive Framework and will apply to fiscal years starting on or after 1 January 2024, with initial returns due in 2025.The draft legislation is anticipated to be submitted during the next parliamentary session starting on 1 July 2024.
The main feature of Pillar Two is the establishment of a global minimum tax rate of 15% to ensure that multinational enterprises (MNEs) pay a minimum level of tax.
Key elements include the Income Inclusion Rule (IIR), which includes low-taxed foreign subsidiary income in the parent entity’s taxable income, and the Undertaxed Payments Rule (UTPR), which denies deductions for related-party payments taxed below the minimum rate.
The Subject to Tax Rule (STTR) allows source countries to impose a top-up tax on certain low-taxed payments.
The Effective Tax Rate (ETR) is calculated on a jurisdictional basis, and a top-up tax is applied if the ETR falls below the minimum rate.
These measures aim to reduce profit shifting and ensure a fairer distribution of tax rights.
