Provisional Tax Declaration is a statement prepared by taxpayers engaged in commercial activities in Turkey to determine and make payment obligations based on the earnings they expect to generate during the year. In other words, it is a type of tax that allows taxpayers to pay periodically according to their estimated earnings. Here are general details about the Provisional Tax Declaration and how it is calculated:
Provisional Tax Declaration:
Declaration Periods:
- Provisional Tax is typically declared three times a year, usually in March, July, and November. During these periods, taxpayers estimate their earnings and make payments based on these estimations.
Estimated Earnings:
- Taxpayers estimate the earnings they expect to generate by the end of the year during the Provisional Tax Declaration periods. This estimation is a fundamental factor in determining the payment.
Calculation of Tax Base:
- Once the estimated earnings are determined, taxpayers calculate the Provisional Tax base by subtracting allowable expenses to arrive at the net earnings, similar to the income tax base.
Tax Rate and Calculation:
- The calculated tax base is then subjected to the Provisional Tax rate to determine the payment amount. Provisional tax rates are determined by the Ministry of Finance and are announced annually.
Declaration and Payment:
- Taxpayers prepare the Provisional Tax Declaration and make payments based on the calculated amount. The declaration includes information about the estimated earnings, expenses, and tax calculations.
How it is Calculated:
Provisional Tax Calculation General Formula:
In this formula, estimated earnings represent the taxpayer's expected year-end earnings for the given period. The Provisional Tax rate is the rate determined by the Ministry of Finance.
The process of preparing a Provisional Tax Declaration enables taxpayers to monitor their economic activities throughout the year, estimate their earnings, and make payments during specified periods. Since calculations and payment dates may change based on current tax regulations, it is important for taxpayers to obtain the most up-to-date information from the Ministry of Finance or relevant tax authorities.