Limitation on Financial Cost Deduction Put Into Effect For Taxpayers

According to the Presedential Decree with Number 3490 released by Offical Gazette, effective from 01.01.2021 limitation on financial cost deduction has been introduced for income and corporate taxpayers except for credit agencies, financial leasing and factoring companies.

As per the decree

- The individual and corporate business whose liability exceeded its equity, the amount exceeded the its equity, 10% of total of ex-ch rates difference, interest, comission, dividend, delay interest and similar titles related amount of the liability exceeded the equity are not allowed to be deducted from taxpayer’s revenue.

- Financing Expenses/Cost regarding the liabilities which are included in investment cost are not subject to the limitation.

For instance;

- Equity : 2.000.000 TL,

- -short and long term liabilities : 3.000.000 TL,

- amount exceeded the equity : 1.000.000 TL,

- Financing Cost : 500.000 TL,

- Financial Cost of The Amount Exceeded The Equity : 500.000x1.000.000/3.000.000 = 166.667 TL

- The Rate : % 10

- Non-Deductible Cost : 166.667x % 10 = 16.667 TL

As per the decree

- Financing Expenses/Cost regarding the liabilities which are included in investment cost are not subject to the limitation.

For instance;