Interest Deduction Calculated Over Cash Capital Increase for the Year 2025 Is Determined as 45.34%

In the application of the interest deduction on cash capital increases, the interest rate for "Commercial Loans (Granted in TRY) (Excluding Overdraft Accounts of Legal Entities and Corporate Credit Cards)" under the "Weighted Average Interest Rates Applied to Loans Extended by Banks", most recently announced by the Central Bank of the Republic of Turkey (CBRT) for the year in which the deduction is utilized, is taken into consideration.

According to the CBRT website, the most recently announced interest rate for Commercial Loans (Granted in TRY) (Excluding Overdraft Accounts of Legal Entities and Corporate Credit Cards) for the year 2025 is 45.34%.

Accordingly, the 45.34% rate shall be applied in calculating the interest deduction on cash capital increases for the 2025 fiscal year.

Key Reminders Regarding the Application

Under subparagraph (ı) of the first paragraph of Article 10, titled "Other Deductions", of the Corporate Tax Law, capital companies—excluding institutions operating in the finance, banking, and insurance sectors and State Economic Enterprises (SEEs)—may deduct 50% of the amount calculated until the end of the relevant accounting period from their corporate income. This deduction is calculated on:

• Cash capital increases in the paid-in or issued capital registered with the Trade Registry during the relevant accounting period, or

• The portion of the paid-in capital contributed in cash in newly established capital companies.

In calculating the deduction, the "weighted annual average interest rate applied to commercial loans extended in TRY by banks", most recently announced by the CBRT for the year in which the deduction is utilized, is taken into account. (For the portion of cash capital increases financed with funds brought from abroad, this rate is applied as 75%.)

Furthermore, under the subheadings of "10.6. Deduction in Capital Increase" in the Corporate Tax General Communiqué Serial No. 1:

• For capital increases made on or after July 5, 2022, the deduction shall be applied separately for five accounting periods, including the accounting period in which the capital increase resolution—or, in the case of newly established companies, the articles of association—is registered.
• Companies that carried out capital increases before July 5, 2022, or companies established before that date may continue to benefit from the deduction separately for five accounting periods, including the 2022 accounting period.

In addition, since the deduction amount is calculated based on the commercial loan interest rate most recently announced by the CBRT for the relevant year, the deduction may only be claimed in the 2025 Corporate Tax Return and/or only in the fourth provisional tax period among the provisional tax periods.

On the other hand, any deduction amounts that cannot be utilized in the relevant accounting period due to insufficient taxable income may be carried forward to subsequent accounting periods and taken into account in determining the tax base, without being subject to any indexation.

Yours sincerely.