BASIC PRINCIPLES of STAMP DUTY
1. Stamp Tax Law and Stamp Duty :
1.1. In Turkish Law, stamp tax is regulated under the Stamp Tax Law numbered 488[1] and dated July 1, 1964 (the “Stamp Tax Law”).
1.2. Stamp tax is a kind of consumption tax levied on papers, which are prepared with intent to execute the transactions regarding transfer of goods, services and wealth appeared in the chain extending from production to consumption legally.
1.3. According to first article of the Stamp Tax Law, documents listed in the table 1 appended to the Law are subject to stamp tax on the basis of value specified herein. In this regard, some documents that are not shown under the Table 1, such as consent letter, purchase order form, power of attorney are not subject to stamp tax.
1.4. Pursuant to the Stamp Tax Law, stamp tax is imposed upon instruments rather than transactions. In this regard, many kinds of documents are classified by their legal status in order to be taxed at different tax rates. As opposed to other taxes, stamp tax applies to many tax payers, since relevant documents subject to taxation have a widespread practice.
1.5. In accordance with the Stamp Tax Law, stamp duty applies to a wide range of documents, including agreements, undertakings, assignments, lease contracts, bail and surety bonds, letters of lien, bonds of arbitration, deeds of settlement, letters of cancellation and payrolls. Stamp duty is levied as a percentage of the value of the document at rates ranging from 0,189% to 0,948% or is collected as a fixed price (a pre-determined price) for some documents as defined in the Stamp Tax Law.
2. Calculation Principles
2.1. Stamp tax is calculated on the highest monetary amount stated or calculable from the taxable the legal document or on the maximum amount stated on the legal document.
2.2. The Stamp Tax is calculated over the highest monetary amount set forth in the (such as agreements, letter of undertakings, lease agreements, certificate of annulments, negotiated settlements, warranties etc. as stated in the Stamp Duty Law, No:488 and its annexes).
2.3. Documents subject to stamp tax are defined as; “written” and “signed” (or marked in lieu of signature) papers issued for the purposes of proving or documenting any legal matter.
2.4. Stamp tax shall arise at the time when agreements are signed19, even if these documents are being terminated or cancelled. In such case, the said termination/cancellation shall occur within the shortest possible time or before the expiry of the term of the agreement.
2.5. The Stamp Tax is payable on whatever sum may be calculable at the date of the document as the maximum consideration that may arise.
2.6. The Law for the Purpose of Improvement of the Investment Environment, numbered 6728 [2] entered into force with the Official Gazette dated August 09th, 2016. Following this, the Stamp Duty General Communique Serial No:60 was published in the Official Gazette dated September 29th, 2016 in order to explain further details of the amendments regarding Stamp Duty that were defined with the Law numbered 6728.
2.7. Before taking effect the Law numbered 6728, each copies of an agreement, undertaking, assignment, lease contract, bail and surety bond, letter of lien, bond of arbitration, deed of settlement, letter of cancellation and payroll were subject to stamp duty separately over the same amount.
2.8. Within the Law numbered 6728 it is regulated that the Stamp Duty of the papers (defined in the Stamp Tax Law), which are subject to proportional tax and issued as more than 1 (one) copy, shall be calculated over only one copy provided that the taxable event that gives rise to Stamp Duty occurs on August 09th, 2016 or on a later date. This amendment targets to mitigate the Stamp Duty obligation especially for the agreements.
2.10. As per the 14th Article of the Stamp Tax Law, in the event that parties change the value of the agreement, only the increased amount will be subject to stamp tax.
3. The Tax Payer :
3.1. According to third Article of the Stamp Tax Law, all parties of an agreement are liable for the payment of stamp tax, as a “tax payer”. In case an agreement embodies more than one signature, stamp tax should be paid on an equal basis by each signatory in practice or under the agreed shares specified in the document.
3.2. However, signatories shall be jointly and severally liable for the unpaid taxes and tax penalties related to papers signed by more than one party.
4. The Stamp Duty Cap for 2019 :
The stamp duty cap for 2019 has been announced as TRY 2.642.810. In accordance with the Stamp Duty Law No:488, any legal documents signed in Turkey, or signed abroad where the beneficial interest of the parties lies in Turkey, will be subject to stamp duty, unless there is an applicable tax exemption.
[1] http://www.resmigazete.gov.tr/eskiler/2016/08/20160809-22.htm (as of June 27th, 2019)
[2] http://www.mevzuat.gov.tr/MevzuatMetin/1.5.488.pdf (as of June 27th, 2019)