The merger of commercial companies through merger by acquisition or merger by new establishment is regulated in articles 136 to 158 of the Turkish Commercial Code.

A regulation has been made in articles 18 – 20 of the Corporate Tax Law regarding company mergers, stating that the type of merger will be subject to tax under liquidation provisions. It is specified that mergers occurring on the condition that the legal and business centers of the dissolved institution and the merging institution are located in Türkiye, and that the balance sheet values of the dissolved institution on the transfer date are taken over as a whole by the merging institution and recorded exactly in its balance sheet, are considered as transfers.

It is stipulated that if the conditions specified in the same law are complied with, only the profits earned by the dissolved institution until the transfer date will be taxed, while the profits arising from the merger will not be calculated or taxed. Furthermore, it is ruled that the merging institution shall commit to paying the accrued and future tax debts and fulfilling other duties of the dissolved institution with a letter of commitment to be submitted as an annex to the corporate tax return of the dissolved institution due to the merger.

Even if the law is very clear, some foreseen or unforeseen tax-related problems still occur in company mergers:

  • Offsetting the period losses of the acquired institutions,
  • Transfer of positive differences from capital adjustments to the new balance sheet in case the balance sheet values of the dissolving company are taken over as a whole by the acquiring company and recorded exactly in its balance sheet,
  • Application of minimum living allowance for wages earned by the dissolving company personnel in the acquiring company,
  • Whether the cumulative tax bases of the dissolving company personnel will be transferred to the payroll of the acquiring company,
  • Whether the deferred value-added tax belonging to the dissolving firms in mergers can be used as a deduction in the acquiring firm.

Under the management of Mete Auditing, we can easily overcome all the listed or newly arising merger problems.