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Türkiye Vakıflar Bankası Türk Anonim Ortaklığı
and Its Financial Subsidiaries Consolidated Financial Report as at and
For the Year Ended 31 December 2013
(Currency: Thousands of Turkish Lira (“TL”))
Convenience Translation of the Consolidated Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Section 3 Note I
The prepaid taxes are calculated and paid at the rates valid for the earnings of the related years. The payments are deducted from the annual corporate
tax calculated for the whole year earnings.
In accordance with the tax legislation, tax losses can be carried forward to offset against future taxable income for up to five years. Tax losses cannot be
carried back to offset profits from previous periods.
In Turkey, there is no procedure for a final and definite agreement on tax assessments. Companies file their tax returns with their tax offices by the end
of 25th of the fourth month following the close of the accounting period to which they relate. Tax returns are open for five years from the beginning of
the year that follows the date of filing during which time the tax authorities have the right to audit tax returns, and the related accounting records on
which they are based, and may issue re-assessments based on their findings.
The corporate tax rate for the Group’s subsidiary in Austria has been determined as 25.0%. Prepaid corporate taxes for every three months are
computed and paid using the related period’s tax rate. Taxes which have been paid for previous periods can be deducted from corporate taxes
computed on annual taxable income. According to the Double Taxation Treaty Agreement between Turkey and Austria, Turkish corporations in Austria
possess the right to benefit from tax returns of 10.0% on interest earned from the investments and loans granted in Turkey.
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, except
for the differences not deductible for tax purposes and initial recognition of assets and liabilities which affect neither accounting nor taxable profit.
Deferred tax assets and deferred tax liabilities for each subsidiary subject to consolidation are presented after offsetting these assets and liabilities in the
financial statements of the related subsidiaries, since the subsidiaries have legal right to offset tax assets and tax liabilities. In the consolidated financial
statements, deferred tax assets and deferred tax liabilities are not offsetted since the subsidiaries subject to consolidation do not have the right to
receive a net receivable or pay a net payable legally.
In case where gains/losses resulting from the subsequent measurement of the assets are recognized in the consolidated statement of income, then the
related current corporate and/or deferred tax effects are also recognized in the consolidated statement of income. On the other hand, if such gains/
losses are recognized as an item under equity, then the related current and/or deferred tax effects are also recognized directly in the equity.
Transfer pricing
In Turkey, the transfer pricing provisions have been stated under the Article 13 of Corporate Tax Law with the 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.
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.
Investment incentive
As per the provisional Article no. 69, effective from 1 January 2006, added to the Income Tax Law no. 193 by Law no. 5479 dated 8 April 2006 and
published in Official Gazette no. 26133, tax payers could deduct investment incentives which were calculated according to the legislative provisions
(including tax rate related provisions) in force on 31 December 2005, only from the taxable income for the years 2006, 2007, and 2008. The rights
of tax payers who could not deduct investment incentives fully or partially due to insufficient taxable income during those years, were lost as at 31
December 2008.
In accordance with the decision taken by the Turkish Constitutional Court on 15 October 2009, the 2006, 2007 and 2008 clause of the provisional Article
no. 69 of the Income Tax Law mentioned above, is repealed and the time limitation for the use of the investment incentive is removed. The repeal
related to the investment incentive was enacted and issued in the 8 January 2010 Official Gazette number 27456. Accordingly, the Group’s subsidiary
operating in finance leasing business will be able to deduct its remaining investment incentives from taxable income in the future without any time
limitation.
As per “Law regarding amendments to the Income Tax Law and Some Other Certain Laws and Decree Laws” accepted on 23 July 2010 at the Grand
National Assembly of Turkey, the expression of “can be deducted from the earnings again in the context of this legislation (including the legislation
regarding the tax rate) valid at this date” has been amended as “can be deducted from the earnings again in the context of this legislation (including
the legislation regarding the tax rate as explained in the second clause of the temporary article no 61 of the Law) valid at this date” and the following
expression of “ Investment incentive amount used in determination of the tax base shall not exceed 25% of the associated taxable income. Tax is
computed on the remaining income per the enacted tax rate” has been added. This Law has been published in the Official Gazette on 1 August 2010.
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