Tax Procedure Law Communiqué No. 555
Taxation of previous year profits
ARTICLE 55- (1) In the event that the previous year profit resulting from the inflation adjustment of 2023, which is followed in the previous year profits account as a result of the correction of the balance sheet for the accounting period of 2023 according to the third section of the Communiqué, is transferred to another account or withdrawn from the enterprise in any way, the transferred or withdrawn amount will be subject to income or corporate tax in this period without being associated with the profit of the periods in which these transactions were made. In addition, the values withdrawn from the enterprise will be subject to dividend withholding tax according to the legal status of the acquirers and will be taxed in accordance with the provisions regarding the taxation of dividends.
(2) Within the scope of the third section of this Communiqué, it is possible for corporate taxpayers to add the previous year profit resulting from the correction of the balance sheet for the accounting period of 2023 to the capital, and this transaction will not be considered as profit distribution.
(3) In the event that the previous year and/or current period commercial profit before the correction, which is followed in the 2023 previous years’ profits account, which is formed as a result of the correction of the balance sheet for the 2023 accounting period according to the third section of the Communiqué, is subject to profit distribution after 1/1/2024, the distributed amount will not be subject to income and corporate tax, but will be subject to dividend withholding tax according to the legal status of the beneficiaries and will be taxed in accordance with the provisions regarding the taxation of dividends.
Source: Istanbul Chamber of Certified Public Accountants
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