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PART III: FINANCIAL HIGHLIGHTS AND RISK MANAGEMENT
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE I. OF SECTION THREE
TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI AND
ITS FINANCIAL SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND
FOR THE YEAR ENDED 31 DECEMBER 2015
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
USA (New York)
The Parent Bank’s branch that is operating in New York is taxable according to state law legislation and country law legislation. Double Tax Treaty
Agreements is stated for being taxed in Turkey.
Banking and Insurance Transaction Tax
Banking and insurance transaction tax is arranged by the Law No. 6802 on Expenditure Taxes Law. Excluding the banks’ and insurance companies’
transactions according to Law No. 3226 on Leasing Law Legislation which is dated 10.6.1985, the collecting money in cash or by approximation is
subject to banking and insurance transaction tax. Those amounts are up to 5% banking and insurance transaction tax according to Law No. 6802 on
Expenditure Taxes Law’s 33. Notice and Article No. 98/11591.
Deferred taxes
According to the TAS 12 - Income Taxes; deferred tax assets and liabilities are recognized, on all taxable temporary differences arising between the
carrying values of assets and liabilities in the financial statements and their corresponding balances considered in the calculation of the tax base, and
initial recognition of assets and liabilities which affect neither accounting nor taxable profit.
According to 8 December 2004 BRSA DZM 2/13/1-a-3 notice;
- There is no deferred tax assets on general provision
- Deferred tax income is not considered on distribution on profit.
Deferred taxes’ book value is revised in every balance sheet date. Deferred tax book value can be reduced if there is improbable to create revenue.
The deferred tax assets and liabilities are reported as net in the financial statements only if the Bank has legal right to present the net value of current
year tax assets and current year tax liabilities and the deferred tax assets and deferred tax liabilities are income taxes of the same taxable entity.
In case valuation differences resulting from the subsequent measurement of the items are recognized in the statement of income, then the related
current and or deferred tax effects are also recognized in the statement of income. On the other hand, if valuation differences are recognized in
shareholders’ equity, then the related current or deferred tax effects are also recognized directly in the shareholders’ equity.
Transfer Pricing
In Turkey, the transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with heading of “disguised profit distribution
via transfer pricing”. The General Communiqué on disguised profit distribution via Transfer Pricing, dated 18 November 2007 sets details about
implementation.
Pursuant to the relevant Communiqué, if a taxpayer enters into transactions regarding sale or purchase of goods and services with related parties,
where the prices are not set in accordance with arm's length principle, then related profits are considered to be distributed in a disguised manner
through transfer pricing. Such disguised profit distributions through transfer pricing are not accepted as tax deductible for corporate income tax
purposes.
XIX. INFORMATION ON CASH AND CASH EQUIVALENT
For the purposes of the cash flow statement, cash includes cash effectives, cash in transit, purchased cheques and demand deposits including balances
with the Central Bank of Turkey (CBRT); and cash equivalents include interbank money market placements and time deposits at banks with original
maturity periods of less than three months.
