Finance Minister Mehmet Şimşek has said that publicly traded companies can reduce their taxable incomes by the amount of cash capital increases made considering their equity offerings.
Pointing out that the Finance Ministry lowered the tax burden on companies that raise capital by equity offerings with a regulation in May, Şimşek said that another regulation is on its way. Şimşek said that a draft bill that further encourages equity offerings was submitted to the Council of Ministers for approval, indicating that its implementation would be a vital step for financial stability.
Explaining that the pronouncement consisted of regulatory adjustments that would help the real economy shift to equity offerings for raising capital, Şimsek said that the Council of Ministers decreed tax discounts corresponding to 50 percent of the equity offerings made by the companies.
The rate of tax discount will be 75 percent for publicly traded companies with a free float of 50 percent or below and 100 percent for companies with above a 50 percent free float. That means companies that have shares traded on the Borsa Istanbul stock exchange (BIST) will be able to get tax-based reductions up to the total worth of equity offerings made depending on their free float market capitalization.
On top of this, an additional 25 percent discount is possible if the raised capital is invested in an industry with an investment incentive certificate.
Şimşek said that the decree would apply to equity offerings made as of July 1 or to start-ups that offered equity in exchange of cash and claimed that Turkish companies will become less dependent on foreign capital to finance their operations. He added that they would thoroughly encourage growth and financing through equity offerings.