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VAKIFBANK
2014 ANNUAL REPORT
231
TÜRKİYE VAKIFLAR BANKASI TÜRK ANONİM ORTAKLIĞI AND ITS FINANCIAL SUBSIDIARIES
CONSOLIDATED FINANCIAL REPORT AS AT AND
FOR THE YEAR 31 DECEMBER 2014
(Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)
CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED CONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE I. OF SECTION THREE
The prepaid taxes are calculated and paid at the rates valid for the earnings of the related years. The payments can be 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%. 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% 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 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.