Founding and Pre-operating Expenses

 Founding and Pre-operating Expenses
In Turkish tax legislation, provisions relating to founding and operating expenses, have been regulated in two separate laws. The first one is the Tax Procedures Code, which is a general framework law, and the second one is the Corporation Tax Code, which is a more organic law.
In Article 282 of the Tax Procedures Code, founding and operating expenses were defined as follows:
“Incorporation and startup expenses are expenses that are incurred for the establishment of the incorporation, or for the opening of a new branch, or for the continued expansion of business, and in return for which no tangible asset  is acquired shall also be included in this group.”
According to this provision of the Law, of the incorporation and startup expenses, of whose capitalization is left to the preference of the corporations,  incorporation expenses are related to those expenses incurred during the founding  or the extension of the operations of a corporation, the organization expenses are those that are related to the pre-operating expenses that are incurred for the beginning of the operations pf a corporation that has completed its founding stage,  and in return for which no tangible asset  is acquired.
In Article 8/1-b of the Corporation Tax Code, it is stated that the founding and pre-operating expenses may be deducted in the calculation of corporate earnings. In the  previous Corporation Tax Code (Law No.5422), this regulation was provided in Article 14/2.

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