NEWSLETTER-2019-metin

316 NEWSLETTER 2019 Conclusion As stated in this article, Turkish tax legislation does not include any specific provision regulating the resources of capital decrease transactions. However, in its rulings, Turkish Tax Administration accepts that capital decrease transactions should be accepted to be made firstly from taxable funds and items. Accordingly, corporate and/or withhold- ing tax liabilities should be fulfilled as a result of capital decreases. On the other hand, it is observed that first instance tax courts held decisions in favor of taxpayers on the grounds that the Revenue Administration’s approach regarding the taxation of capital decrease transactions has no legal basis within the scope of the tax legislation. In line with our above-mentioned explanations, taxpayers may consider to initiate tax litigation procedures against tax assessments, including tax loss penalties, and/or following the declaration with res- ervation, in relation to capital decrease transactions.