CAPITALISATION OF THE LOAN FROM SHAREHOLDER IN TERMS OF CAPITAL INCREASES PROVIDING THE DEDUCTION FROM THE CORPORATE TAX BASE

In the event that companies make cash capital increase, a practice that allows the deduction of an amount of interest to be calculated over the increased capital from the corporate tax base is included in the Corporate Tax Code. This deduction practice was put into force in order to encourage the companies to increase their cash capital. On the other hand, the provisions of the General Communique on Corporate Tax and some circular and ruling statements on the matter have led to misinterpretation and misevaluation of the concept of “cash capital increase” in terms of various transactions. In particular, the loan given to the company by the shareholders being used for capital increase is qualified as capital contribution in kind and such capital increases are excluded from the deduction practice without any legal basis. In our study, it is intended to suggest that the deduction practice in corporate tax base should be applied in case where the loan given by shareholder is included in company capital. In this context; related article of CTC will be examined in detail, whether the addition of the shareholder’s loan to company capital should be considered in the scope of capital in kind or capital in cash increase will be elaborated and also various evaluations in the context of the regulations and explanations by general communique, circular and rulings will be made, respectively