Turkey’s government has submitted a draft bill to the parliament in which it proposed to implement the global (Pillar Two) and domestic minimum taxes alongside amendments to various tax laws on 16 July, 2024.

The bill proposes the implementation of a qualifying domestic minimum tax and a global minimum tax under the Global Anti-Base Erosion (GloBE) rules. These measures will be incorporated into the Turkish Corporation Tax Code under a new section titled “Qualifying Domestic and Global Minimum Top-Up Corporation Tax and Temporary Provisions”.

The legislation includes the implementation of the Pillar Two income inclusion rule (IIR) and the undertaxed payment/profit rule (UTPR) to ensure a minimum corporate tax of 15% for large multinational (MNE) groups with annual consolidated revenue of at least EUR 750 million (in Turkish Lira) in at least two of the preceding four fiscal years.

The rules apply to all domestic and international groups with a parent company or subsidiary in an EU member state. The bill also proposes implementing a qualified domestic minimum top-up tax (QDMTT) for members of in-scope groups and certain safe harbours.

The IIR and QDMTT apply for financial periods beginning on or after 1 January, 2024, and the UTPR generally applies for financial periods beginning on or after 1 January, 2025.

As per the income inclusion principle, the taxpayer responsible for the global minimum top-up corporate tax is the ultimate parent enterprise, intermediate parent enterprise, or partially owned parent enterprise based in Turkey. These entities must be affiliated with MNE groups that meet the specified thresholds and are residents of other countries.