Are the interests paid to foreign companies and the amounts paid to the group company subject to a tax deduction in return for credit guarantee?
Interest payments made to foreign companies and commission expenses paid in return for guarantor service are considered as interest on receivables within the framework of financing service and 10%of tax is deducted in accordance with the decision of the Council of Ministers numbered 2009/14593 according to the paragraph (1), subparagraph (ç) of Article 30 of the Corporate Tax Law No.5520.
Moreover, financing services among group companies can be subject to criticism in terms of disguised income or can be the subject of hidden capital.
In accordance with the decision of Council of Ministers No. 2009/14593, 0% of tax deduction is applied to the interest paid against loans used from banks and financial institutions abroad.
Source: GİB
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