Türkiye İş Bankası A.Ş.
Notes to the Unconsolidated Financial Statements
for the Year Ended 31 December 2015
104 İşbank
Annual Report 2015
The above mentioned Law also states that;
• Through a commission constituted by the attendance of one representative separately from the Social Security Institution, Ministry of Finance, Turkish Treasury, State Planning
Organization, Banking Regulation and Supervision Agency, Savings Deposit Insurance Fund, one from each pension fund, and one representative from the organization employing
pension fund contributors, related to the transferred persons, the cash value of the liabilities of the pension fund as of the transfer date will be calculated by considering their
income and expenses in terms of the lines of insurance within the context of the related Law, and technical interest rate of 9.8%will be used in the actuarial calculation of the
value in cash,
• And that after the transfer of the pension fund contributors, the ones who receive salaries or income from these funds and their rightful beneficiaries to the Social Security
Institution, these persons’ uncovered social rights and payments, despite being included in the trust indenture that they are subject to, will be continued to be covered by the
pension funds and the employers of pension fund contributors.
In line with the new law, the Bank obtained a technical actuarial valuation report for the year ended 31 December 2015. And provided full provision for the total amount of technical
and actual deficit in the actuarial report in the financial statements. The actuarial assumptions used in the related actuarial report are given in Section Five Note II-h-5-2.
Up to now, there has not been any deficit in Türkiye İş Bankası A.Ş. Mensupları Munzam Sosyal Güvenlik ve Yardımlaşma Sandığı Vakfı (İşbank Members’ Supplementary Pension Fund),
which has been founded by the Bank as per the provisions of the Turkish Commercial Code and Turkish Civil Code and which provides subsequent retirement benefits; and the Bank
has made no payment for this purpose. It is believed that the assets of this institution are capable of covering its total obligations, and that it shall not constitute an additional liability
for the Bank.
XVIII. Taxation
1. Corporate Tax:
In accordance with the Article 32 of the Corporate Tax Law No: 5520, the corporate tax rate is calculated at the rate of 20%. As per the related law, temporary tax is calculated and
paid quarterly in line with the principles of the Income Tax Law and at the corporate tax rate. The temporary tax payments are deducted from the current period’s corporate tax. The
temporary provisional tax of the year 2015 will be paid in February 2016 and will be offset with the current period’s corporate tax.
Tax expense is the sum of the current tax expense and deferred tax charge. Current period tax liability is calculated over taxable profit. Taxable profit is different from the profit in
the income statement since taxable income or deductible expenses for the following years and non-taxable and non-deductible items are excluded. Current taxes are shown in the
financial tables by offsetting with prepaid taxes.
Within the framework of the Corporate Tax Law numbered 5520, 75% of the gains on the sale of the participation shares, which were held in the assets for a minimum of 2 whole
years and 75% of the gains on the sale of immovable are exempt from tax provided that they are added to the capital as set forth by the Law or that they are kept in a special fund
under liabilities for a period of 5 years.
2. Deferred Tax:
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that
taxable profits will be available against which deductible temporary differences can be utilized. General provisions that are allocated for possible future risks are included in the tax
base and they are not subject to deferred tax calculation. No tax assets or liabilities are recognized for the temporary timing difference that affects neither the taxable profit nor the
accounting profit and that arises from the initial recognition in the balance sheet, of assets and liabilities, other than the goodwill and mergers.
The carrying values of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax is measured at enacted tax rates prevailing in the period when the assets are realized or liabilities are settled, and the tax is recorded as income or expense in the income
statement. Nonetheless, if the deferred tax is related to assets directly associated with the equity in the same or different period, it is directly recognized in the equity accounts.
Deferred tax assets and liabilities are shown in financial tables by way of offsetting.
3. Tax Practices in the Countries that Foreign Branches Operate:
Turkish Republic of Northern Cyprus (TRNC)
According to the tax regulations in the Turkish Republic of Northern Cyprus, corporate gains are separately subject to 10% corporate tax and 15% income tax. The tax bases for
companies are determined by adding the expenses that cannot be deducted according to TRNC regulations, to commercial gains and by subtracting exemptions and deductions from
commercial gains. Income tax is paid in June, and corporate tax payment is made in two installments, in May and in October. On the other hand, withholding tax is paid in TRNC over
interest income and similar gains of the companies. The relevant withholding tax payments are deducted from the corporate tax-payable.
England
Corporate earnings are subject to 20% corporate tax in England. The relevant rate is applied to the tax base that is determined by adding the expenses that cannot be deducted due
to the regulations, to commercial gains and by subtracting exemptions and deductions from commercial gains. On the other hand, if the tax base of the relevant year, is higher than the
amount found the corporate tax payments are made as temporary tax payments in four installments in July and October of the relevant year and in January and April of the following
year. Relevant temporary tax payments are deducted from the corporate tax that is finalized until the end of January of the second year following the relevant year. On the other hand,
if the tax base is under the afore-mentioned threshold, corporate tax is paid by the end of September following the year that the profit is made.
Bahrain
Banks in Bahrain are not subject to tax according to the regulations of the country.
The Republic of Iraq (Iraq)
The corporate tax is 15% in Iraq. In central government- dependent cities tax is paid in the following year to the related tax administration by the end of June, at the latest and in the
cities under the administration of Northern Iraq tax is paid in the following year to the related tax administration by the end of April, at latest and the financial statements must be
presented and accrued taxes must be paid. On the other hand, Tax Administrations Regional Government in Northern Iraq can recognize the fixed tax except signified rates.
