The State of Bail Bonds in Terms of Tax Laws

Companies use credit from domestic and foreign financial institutions in order to meet their financing needs. In the loans they use, they represent the related companies as guarantors. In this article, whether the related bail relationship can be considered as a financing service, whether the implicit profit distribution is realized within the scope of the transfer pricing in terms of the Corporate Tax Law; Furthermore, in terms of the Value Added Tax Law, it will be discussed whether this financing service is subject to VAT.

1. Introduction

1. Introduction

One of the most important problems in the loans used by banks in order to meet the financing needs of the companies is to provide guarantees. Collateral may be cash, securities, real estate or personal surety.

Banks want as much collateral as possible from companies that use credit to minimize the risk of repayment of their loans.

In this case, companies, especially group companies, guarantee each other on the loans they use. The guarantor company is jointly responsible for all loans used.

2. Is Loan / Guaranty Financing Service?

2. Is Loan / Guaranty Financing Service?

2.1. Transferring the Loan to the Company Associated with the Same Conditions

2.1. Transferring the Loan to the Company Associated with the Same Conditions

In summary, the Revenues of the Presidency of the Revenue Administration about the use of all or part of the loans used by the Bank with the same conditions;

“Transfer of the loan obtained from the bank to the group company under the same conditions, is a financing service provided to the related person, and does not change the expenses of the group company to any kind of costs and interest, not to pay any expenses or not to be included among the activities of the company. . in case of a natural person or entity unrelated wherein said financial service will be requested for a charge to the parties from the money given service, when administered to individuals associated with the service in the service provision is of course to be requested at a price. “

explanations were made.

2.2. Cash Collateral Display Status

2.2. Cash Collateral Display Status

1 Serial Number Corporate Tax General Communiqué 12.2.1. section; “Loans provided for cash collateral shall be taken into account as liabilities to the enterprise in the calculation of debt / equity ratio.”

It is clear that a company’s use of the loan provided by the bank with the same conditions will be the financing service of a company’s cash collateral for the loan to be used by the related company.

In this case, if the service is given to the related person, the demand for a price corresponding to the service given to the peers is explained in the General Communiqué on Disguised Earnings Distribution through Transfer Pricing with Serial No 1 through the 13th article of the Corporate Tax Law and the provision for the financing service. should be determined according to.

2.3. Personal Surety / Guaranty Status

2.3. Personal Surety / Guaranty Status

1 Serial Number Corporate Tax General Communiqué 12.2.1. section;

Gay All kinds of checks, bonds, bills, gold, government bonds, treasury bills, shares issued by the Mass Housing Administration or all kinds of bonds, except bonds, bonds issued by the Mass Housing Administration or traded on the ISE, will be considered as non-cash collateral. . “

issues.

Securities, real estate and personal surety, other than those mentioned above, should be considered as non-cash collateral.

In this case, what would be the situation of a company being the only guarantor / guarantor of the loan against the tax laws?

In summary, the subject given by the Revenue Administration Large Taxpayers Office on the subject of in whether the guarantee / collateral fee to be paid in return for non-cash collateral to be obtained from the holding company abroad is subject to withholding ük is summarized in the summary;

“…. since the provision of non-cash collaterals by your group company to provide loans from your company abroad, the Council of Ministers 2009/14593 according to the first paragraph of the Article 30 of the Corporate Tax Law no. 10% corporate tax deduction determined by the decision ‘.’

was evaluated.

Article 18 of the Regulation on the Procedures and Principles Regarding the Financing of External Financing under the Law No. 4749 under the heading “Guarantee Fee”;

“…….. for a one-time guarantee from the entity whose repayment is guaranteed by taking into account the criteria such as the financial position of the organization, the guaranteed financing and the repayment performance of the borrowed loans and the terms of the guaranteed financing provided if the company has previously provided guaranteed financing and a loan. up to 1% of the warranty amount charged. “

the provision is given.

In this way, the Treasury takes a guarantee fee of up to 1% on a one-time basis in return for this guarantor service / financing service as a guarantor in favor of the institution that uses the loan.

Credit Guarantee Fund established in July 1991 (KGF) provides support to small and medium-sized enterprises on these bailings and makes it possible for them to use bank loans to finance their investments and enterprises.

The shareholders of the Fund, TOBB (Union of Chambers and Commodity Exchanges of Turkey) (33%) KOSGEB (Small and Medium Industry Development and Support Administration) (33%) and other partners. The Credit Guarantee Fund (KGF), which gives a maximum of 80% of the loan, will receive a special inspection fee for the companies that request bail. In case the claim is found to be appropriate and the loan is used with the guarantee of the Fund, the commission is charged in cash at the rate of 1% to 2% per annum, on bail balance, in cash, non-cash or other characteristics of the bail.

All these explanations of the surety company for the funding to be understood / guarantor to be is within the scope of financial services and in the case of the person associated with this service must be requested by a suitable counterparts in return for the service fee.

3. Evaluation of the Company Tax

3. Evaluation of the Company Tax

In the first paragraph of Article 13 of the Corporate Tax Law no. buying, selling, manufacturing and construction operations, renting and leasing operations, to borrow money receiving and giving, bonuses, of transactions that require fees and similar payments are reported each state and will be evaluated as purchasing goods or services or the sale of the condition.

According to the third paragraph of the same article, the principle of conformity with the rights shall mean that the price or price applied to the purchase or sale of the goods or services with the related persons is in conformity with the price or the price to be generated in the absence of such a relationship.

As explained in the previous section of our article, it is covered by the financing service to be a guarantor / guarantor for a company to provide financing, and in case a service is given to the related person, an appropriate price should be requested for the service provided. According to the loan, Garanti Securities, Inc., cash and non-cash or other features of the bail may be taken as a fee in terms of the equivalent of 1% to 2% per annum.

Sample:

(X) A.Ş. During the 2013 calendar year, the Bank used a loan of TL 10,000,000.00. In addition to the real estate mortgage as collateral, the related company (Y) Ltd. Has shown the Company bail. In this case (Y) Ltd. (X) A.Ş., as a guarantor. This bail is non-cash bail, personal guarantee / guarantor is (Y) Ltd. In accordance with the equivalent of 1% (10,000,000,00 * 1% = 100,000,00 TL) to calculate the commission fee and the amount should be transferred to the book records. In the same way (X) A.Ş. in the amount of 100.000,00 TL should be transferred to the accounts as financial expense. If the said financing service is provided by a related company abroad, a 10% corporate tax deduction is required, based on the article 30/1-ç of the Corporate Tax Law no. Double taxation agreements should also be considered.

4. Evaluation of Value Added Tax

4. Evaluation of Value Added Tax

4.1. Status of Financing of the Financing Service

4.1. Status of Financing of the Financing Service

In KDV Law 1 / Article 1, Turkey in commercial, industrial, agricultural activities and delivery in the framework of self-employed activities and services to be subject to VAT, in Article 4, the delivery of services and delivery to be outside the imports of goods and cases that the remaining transactions, 6 / b substances in the process of Turkey on the construction of service as stated to be utilized in Turkey made or services Turkey, the Law 17/4-e substance in the banking and insurance transactions that are exempt from value added tax on transactions falling within the tax coverage provision it is connected.

The following issues are included in a special feature of the Revenue Administration Directorate of Istanbul Tax Office.

“”. The lending transactions made by companies established for commercial and industrial activities are not subject to BSMV since they cannot be considered as the main business subject and they need to be subject to VAT.

Holding in place the group company’s other group companies interest and carried out by applying commission and not subject to BITT lending process from source is subject to KDV interest which constitutes the provision of these transactions and commissions should be calculated KDV over the total.

Meanwhile, the Group company from banks and other financial institutions, to other group companies are provided with a loan of any amount without addition of the principal and transferred exactly in transferring the same, together with interest and costs of operations will not be calculated KDV for these costs.

However, if any amount is received in addition to the amount of the loan transferred, this value will be subject to the value added tax in general rate, as this would constitute the value of the service offered by the company. “

As explained in the previous sections of our article, it is covered by the financing service to be a guarantor / guarantor for a company to provide financing and if a service is given to the related person, a suitable price should be requested for the service provided.

In this case, the related firm must have an invoice arrangement and an 18% value-added tax calculation on the basis of the revenue obtained from the guarantee of personal guarantee / guarantorship. (Y) Ltd. The Company shall issue an invoice for 100,000.00 TL of financial service income and transfer the value added tax amounting to TL 18,000.00 (100,000,00 * 18% =). (X) A.Ş. will be subject to a reduction of 18.000,00 TL VAT in accordance with the general provisions.

4.2. The provision of financing service from abroad

4.2. The provision of financing service from abroad

What will be the case with regard to the value added tax if the said financing service is taken from abroad?

Value Added Tax General Practice Communiqué I / C-2.1.2.1. Residence, Commercial, Legal Center and Business Center in Turkey Absence in the section entitled Transactions Made by;

“….. residence, workplace, legal center and business center services that make the in Turkey, not in Turkey with which they do abroad, but will be subject to VAT of utilizing services in Turkey, taxpayers in such services carried out mainly service Although our performance, place of residence in Turkey, workplace, because the legal center and business center there, all VAT, payable shall be declared in his capacity as responsible by the addressee within the country benefiting from the service, to be exempt from tax services and services if the benefit abroad from services made abroad taxpayer or will be declared KDV reverse charge, VAT of the service to be declared in his capacity as responsible is not essential to being KDV taxpayer’s interlocutor benefiting in Turkey KDV obligations without also making KDV deduction due to such services with No. 2 KDV declaration declared to and have to pay ru ‘. “

It indicated.

The issue of the Revenue Administration Directorate of Tekirdag Tax Office is summarized as follows;

“…….. transactions related to loans from foreign group companies, KDV Law 1 / According to Article 1 are evaluated as financial services and interest amounts will be calculated from such transactions is available subject to VAT, Article 9 of the Law VAT is calculated on the basis of the interest amount in accordance with the article no.

matters are specified.

In this case, if the related company is a personal guarantor / guarantor for the loans used from a financial institution, the value added tax calculated on the price to be determined according to the peers should be declared and paid by the domestic company which is benefiting from the financing service.

5.Sonuç

5.Sonuç

One of the most important problems in the loans used by banks in order to meet the financing needs of the companies is to provide guarantees. Collateral may be cash, securities, real estate or personal surety.

The financing service provided by a company to provide another company with the same terms as the loan to be used by another company and the fact that a company is a personal guarantor / guarantor for a loan to be used by another company is covered by the financing service. In addition to the service provided in accordance with a suitable price should be requested.

According to the loan, the amount of commission calculated on the basis of the cash, non-cash or other nature of the bail is calculated as 1% to 2% per annum. 18% value added tax should be calculated over the commission amount received. In case the service is obtained from abroad, it is necessary to declare and pay the corporate tax deduction at the rate of 10% and the value added tax calculated as 18% in accordance with the peer’s responsibility.

Today, when companies meet the financing needs through banks, the group companies undertake the guarantee of each other continuously; It should not be forgotten that companies may face penalties if they do not carry out the necessary tax transactions without considering these transactions within the scope of financing service.