SOFTWARE DEVELOPERS CAN PAY HALF OF CORPORATE TAX!

Not long ago, the tourism sector, which constituted a significant portion of the country's national income, was referred to as the "smokeless factory". Tourism revenue attracted investors due to its direct contribution to the country's foreign exchange earnings and employment opportunities, as it did not involve overseas operations (which means there were no overseas operation costs). In this case, the fiscal administration makes significant investments in tourism or provides support to investors (such as land allocation, a %10 accommodation VAT, employment incentives). All of these measures encourage the growth of the country's tourism sector.

The software sector, one of the smokeless factories of today's world, has become quite attractive for many reasons. The attractiveness of this sector can be explained by factors such as its global presence, contribution to foreign exchange earnings, and its positive effect on employment. Additionally, the fiscal administration has observed this situation by excluding a portion of this income from taxation in the other deductions section of the Corporate Tax Law in order to support software activities.

Article regarding Corporate Tax Reduction:

The relevant legal notification is explained below:

The profit that will be obtained by deducting the expenses and costs incurred due to these activities from the revenue obtained from the activities accepted within the scope of the discount, will be subject to discount by showing it in the "Exemptions and Discounts to be Deducted in Case of Determination of Profit" section of the Corporate Tax Declaration. The amount that cannot be subject to discount due to other discounts and exemptions, as well as losses from previous years, cannot be carried forward to subsequent periods. In the event of a loss in the result of the activity, no discount will be applicable.

  In 2022, the Corporate Tax rate was 23%. This rate decreased to 20% in 2023.

How can programmers benefit from corporate tax reduction?

1. It should be operated in one of the sectors of Architecture, Engineering, Design, Software, Medical Reporting, Accounting Record Keeping, Call Center, Data Storage.
2. It is necessary to provide services to individuals who do not live in Turkey and to companies whose workplace, legal and business center are located abroad.
3. The invoice or similar document must be issued and issued on behalf of the customer abroad.
4. It is necessary to provide software and design services among the main activities specified in the articles of association of your company.
5. The software and design services provided by you from Turkey should be utilized abroad.

As seen, in order to benefit from this exception, the service provided must be exported to customers abroad and this service must be utilized abroad. Exporting to foreign countries increases the ability of businesses to compete in the international market. In this way, businesses can reach new customers and seize growth opportunities. Additionally, by providing services abroad, businesses can gain international experience and optimize their business processes to become more efficient. This enables businesses to grow in a more sustainable manner. Therefore, exporting to foreign countries and providing services abroad can be an important strategy for businesses.

My strong recommendation is that businesses taking advantage of this exception should always keep their provable documents related to their software activities ready in case they are asked for later. For example, they can share success stories and customer references obtained from past projects to prove that the software is for export to the financial administration. They can also keep documentation that documents the software development process, test reports, and user feedback. Such proof can be preserved both in physical and virtual disk environments.

Furthermore, they should confirm whether they qualify for software export by briefly mentioning the work done and obtaining a ruling from the financial administration.

The software industry offers the potential to develop new products and services using emerging technologies. This enhances the competitiveness of businesses and supports their growth. Additionally, investments in the software sector encourage R&D activities and promote innovation. As a result, value is added to the country's economy and employment opportunities increase. The software industry also enables collaboration and integration with other sectors, creating synergy and supporting economic growth.

  This tax advantage has been introduced to promote the rapid development of the software sector and contribute to the country's economy. Software companies that are exempt from high corporate tax rates can make more investments, develop new projects, and increase their potential for job creation. Additionally, individuals and companies operating in the software sector are required to meet certain criteria. This advantage makes the software industry more competitive.

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