MILLIRE ENG2024

2.18 Income taxes Corporate tax Amendments were made to the Corporate Tax Law No. 5520 with a Law submitted to the Grand National Assembly of Turkey on 5 July 2023 and published in the Official Gazette dated 15 July 2023. According to this; the corporate tax rate has been increased from 25% to 30% for banks, Companies within the scope of Law No. 6361, electronic payment and money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies, starting from the declarations that will be submitted as of 1 October 2023. The corporate tax rate is applied to the net corporate income to be found as a result of adding the expenses that are not accepted as deductible in accordance with the tax laws to the commercial income of the corporations and deducting the exceptions and deductions in the tax laws. No further tax is paid if the profit is not distributed. There is no withholding tax on profit shares (dividends) paid to institutions that generate income through a workplace or permanent representative in Turkey and to institutions residing in Turkey. 10% withholding tax is applied on dividend payments made to institutions other than these. In the application of withholding tax rates for profit distributions to non-resident companies and real persons, the practices included in the relevant Double Taxation Agreements are also taken into consideration. Addition of profit to capital is not considered as profit distribution and withholding tax is not applied. Provisional taxes are paid by calculating at the corporate tax rate to which the earnings of that year are subject. Provisional taxes paid during the year can be deducted from the corporate tax calculated on the annual corporate tax return of that year. There is no practice in Turkey to reach an agreement with the tax authority regarding the taxes to be paid. Corporate tax returns are submitted to the relevant tax office until the evening of the last day of the fourth month following the month in which the accounting period is closed. However, the tax inspection authorities can examine the accounting records within five years, and if an incorrect transaction is detected, the tax amounts to be paid may change. As per the Article 17 of the Omnibus Law published in the Official Gazette dated December 28, 2023, Banks, companies within the scope of the Law on Financial Leasing, Factoring, Financing and Savings Finance Companies, payment and electronic money institutions, authorized foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies will apply inflation accounting in accordance with the Tax Procedure Law as of December 31, 2023, and the profit/loss difference arising from the inflation adjustment made in the 2024 and 2025 accounting periods, including the temporary tax periods, will not be taken into account in the determination of the tax base. In September 2023, the Public Oversight, Accounting and Auditing Standards Authority (KGK) published amendments to TMS 12, introducing a mandatory exception for the recognition and disclosure of deferred tax assets and liabilities related to Pillar Two income taxes. These amendments clarify that TMS 12 will apply to income derived from tax laws that have either come into effect or are close to coming into effect for the purpose of implementing the Pillar Two Model Rules published by the Organisation for Economic Co-operation and Development (OECD). Additionally, these changes introduce certain disclosure requirements for businesses affected by such tax laws. The exception indicating that information regarding deferred taxes within this scope will not be recognized or disclosed will come into effect upon the publication of the amendment. The Pillar Two regulations, which were agreed upon by OECD member countries, came into effect in Turkey through the Law No. 7524 on Amendments to Tax Laws and Certain Laws published in the Official Gazette dated August 2, 2024. Although no secondary regulations have been published regarding this matter, preliminary assessments made based on the guidelines issued by the OECD suggest that the aforementioned regulations are not expected to have any impact on financials. Nevertheless, legislative changes in Turkey and other countries where operations are conducted are being monitored. The laws published in the Official Gazette dated August 2, 2024, have enacted a Domestic Minimum Corporate Tax, which will be applied starting from the 2025 accounting period. With the Law No. 7524, the minimum corporate tax mechanism has been introduced, stipulating that the calculated corporate tax cannot be less than 10% of the taxable corporate income before deductions and exemptions. This regulation will come into effect on the date of its publication to apply to corporate profits for the taxation period of 2025. Additionally, General Communiqué No. 23 on Corporate Tax related to this matter has been published. Transfer pricing In Turkey, the transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the heading of “disguised profit distribution via transfer pricing”. The General Communiqué on disguised profit distribution via Transfer Pricing, dated November 18, 2007 sets details about implementation. 205 2024 Annual Report Millî Reasürans Türk Anonim Şirketi (Currency: Turkish Lira (TL)) Notes to the Consolidated Financial Statements As of December 31, 2024 (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish) GENERAL INFORMATION FINANCIAL RIGHTS PROVIDEDTOTHE MEMBERS OF THE GOVERNING BODY AND SENIOR EXECUTIVES RISKS AND ASSESSMENT OF THE GOVERNING BODY ACTIVITIES AND MAJOR DEVELOPMENTS RELATED TO ACTIVITIES RESEARCH & DEVELOPMENT ACTIVITIES FINANCIAL STATUS FINANCIAL INFORMATION