TÜRKİYE İŞ BANKASI A.Ş.
Notes to the Unconsolidated Financial Statements for the Year Ended
31 December 2012
ANNUAL REPORT 2012
1. Corporate Tax:
In accordance with the Article 32 of the Corporate Tax Law No: 5520, the corporate tax rate is calculated at the rate of 20%. As per the
related law, temporary tax is calculated and paid quarterly in line with the principles of the Income Tax Law and at the corporate tax rate.
The temporary tax payments are deducted from the current period’s corporate tax. The temporary provisional tax for the year ended 2012
will be paid in February 2013 and will be offset with the current period’s corporate tax.
Tax expense is the sum of the current tax expense and deferred tax charge. Current period tax liability is calculated over taxable profit.
Taxable profit is different from the profit in the income statement since taxable income or deductible expenses for the following years and
non-taxable and non-deductible items are excluded. Current taxes are shown in the financial tables by offsetting with prepaid taxes.
Within the framework of the Corporate Tax Law numbered 5520, 75% of the gains on the sale of the participation shares, which were held
in the assets for a minimum of 2 whole years and 75% of the gains on the sale of immovables are exempt from tax provided that they are
added to the capital as set forth by the Law or that they are kept in a special fund under liabilities for a period of 5 years.
2. Deferred Tax:
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary
differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which
deductible temporary differences can be utilized. General provisions that are allocated for possible future risks are included in the tax base
and they are not subject to deferred tax calculation. No tax assets or liabilities are recognized for the temporary timing difference that
affects neither the taxable profit nor the accounting profit and that arises from the initial recognition in the balance sheet, of assets and
liabilities, other than the goodwill and mergers.
The carrying values of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is measured at enacted tax rates prevailing in the period when the assets are realized or liabilities are settled, and the tax is
recorded as income or expense in the income statement. Nonetheless, if the deferred tax is related to assets directly associated with the
equity in the same or different period, it is directly recognized in the equity accounts.
Deferred tax assets and liabilities are shown in financial tables by way of offsetting.
3. Tax Practices in the Countries that Foreign Branches Operate:
Turkish Republic of Northern Cyprus (TRNC)
According to the tax regulations in the Turkish Republic of Northern Cyprus, corporate gains are separately subject to 10% corporate tax
and 15% income tax. The tax bases for companies are determined by adding the expenses that cannot be deducted according to TRNC
regulations, to commercial gains and by subtracting exemptions and deductions from commercial gains. Income tax is paid in June, and
corporate tax payment is made in two installments, in May and in October. On the other hand, withholding tax is paid in TRNC over interest
income and similar gains of the companies. The relevant withholding tax payments are deducted from the corporate tax-payable. In the
case the amount of the withholding tax collections is are higher than the corporate tax payable, the difference is deducted from income tax
Corporate earnings are subject to 24% corporate tax in England. The relevant rate is applied to the tax base that is determined by adding
the expenses that cannot be deducted due to the regulations, to commercial gains and by subtracting exemptions and deductions from
commercial gains. On the other hand, if the tax base of the relevant year, is higher than the amount found by dividing 1,500,000 GBP (exact
value), as specified in regulations, by the number of participations, in which the Bank has 75% or more share, plus one, the corporate tax
payments are made as temporary tax payments in four installments in July and October of the relevant year and in January and April of the
following year. Relevant temporary tax payments are deducted from the corporate tax that is finalized until the end of January of the second
year following the relevant year. On the other hand, if the tax base is under the afore-mentioned threshold, corporate tax is paid by the end
of January of the second year following the year that the profit is made.
Banks in Bahrain are not subject to tax according to the regulations of the country.
The Republic of Iraq (Iraq)
Corporate earnings are subject to 15% income tax in Iraq. Income tax is accrued at the end of the year and paid in the following year to the
related tax administration by the end of June, at the latest.