Tax Relief For Stock Certificates

Tax Relief For Stock Certificates

Tax Incentives About Stock Certificates

Tax relief for stock certificates will be explained from the scope of Income Tax Act, Corporate Tax Act and Value Added Tax Act.

Stock certificates are crucial for confirming ownership in a joint-stock company. They also enable shareholders to enjoy tax benefits when transferring shares. These tax benefits include exemptions from income tax for individual shareholders and notably from stamp duty for corporate shareholders. By issuing stock certificates under the right conditions, shareholders can avoid higher tax burdens.

Income Tax Relief for SCs

According to article 80 of the Income Tax Law No.193, profits from the sale of company shares generally fall under capital gains and are taxable. Nevertheless, profits from stock certificates held for over two years are not taxed under income tax rules.

This means that while individual shareholders of a joint-stock company would normally pay income tax on profits from share sales, any profit from selling stock certificates held for two years or more remains untaxed, irrespective of the amount.

Corporate Tax Relief for SCs

Under article 5 of the Corporate Tax Law No.5520, 75% of the gains from the sale of stocks owned by corporations for at least two years are free from corporate tax. The existence of share certificates does not alter this exemption.

Therefore, if a corporation sells its shares within two years of acquisition, those profits are liable for corporate tax. However, if the stock certificates or the shares themselves are sold after being held for two years, 75% of the profit is exempt from corporate tax. Thus, issuing share certificates does not provide additional corporate tax benefits.

Value Added Tax Relief for SCs

As per the Value Added Tax Law No.3065, article 17, clause 4/g, the transfer of stock certificates is not subject to VAT. Furthermore, clause 4/r states that sales of participation shares held in corporate assets for at least two years are also VAT-exempt.

These VAT exemptions apply regardless of when the stock certificates are transferred after issuance. If no share certificates are issued, the shares must be held in the corporate assets for a minimum of two years to qualify for this tax exemption.

 If you need more information or assistance about the tax relief for stock certificates, please dont hesitate to contact us.

error: Content is protected !!
Sohbet Başlat
Yardıma mı ihtiyacınız var?
Yardımcı olabilir miyim?