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Major Changes to Taxation of Financial and Capital Markets Transactions

Legal Alerts
Banking & Finance
Capital Markets
Tax
Financial Institutions

The Law No. 7338 on Amendments to Tax Procedural Law and to Certain Laws (“Law No. 7338”), published in the Official Gazette No. 31640 and dated October 26, 2021 made significant amendments to the tax law. You can find our Legal Alerts explaining these amendments below:

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The amendments introduced by the Law No. 7338 include major changes to the taxation of capital markets transactions and financial transactions.

What Do the Amendments Say? 

The amendments below are especially important for capital market instrument issuers and asset management companies:

  • Prior to the amendments, it was not clear whether the papers issued for guarantees subject to the issuance of domestic or international bonds were subject to stamp duty or not. Following the amendments, receipts and papers issued for guarantees subject to the issuance of capital market instruments within the scope of Article 31/B of the Capital Markets Law, including the ones signed by the collateral manager, are now exempt from stamp duty.
  • The stamp duty, fee and the Resource Utilization Support Fund exemption applicable to asset management companies during the calendar year they were established and for the following five years in accordance with the Banking Law No. 5411 is made permanent, starting from January 1, 2022. Accordingly, asset management companies may now benefit from a significant tax incentive.
  • The banking and insurance transactions tax exemption granted to asset management companies for the calendar year they were established in and the following five years will be repealed as of January 1, 2022.

Conclusion

The amendments that the Law No. 7338 brought will be cure for two major problems. Firstly, the question of whether the security documents relating to debt instruments and other capital markets instruments are exempt from stamp duty is now clarified, and the receipts and papers securing the issuance of capital market instruments are now exempt from stamp duty. Moreover, the asset management companies will no longer need to establish a new company and merge with it every five years with their tax (stamp duty, fee and the Resource Utilization Support Fund) exemptions becoming permanent.