Turkey Issues a Communique for Detailed Pillar 2 Implementation

On December 26, 2025, Turkey published the Communique for the detailed application of the IIR, UTPR and QDMTT in its Official Gazette. Whilst Turkey has enacted its Minimum Tax Law, a lot of the detailed application of the GloBE rules was left to a further Regulation. 

This Communique therefore provides for the detailed rules for the implementation of the GloBE rules in Turkey.

The Law includes an income inclusion rule (IIR), an under-taxed profits rule (UTPR) and a domestic minimum tax (intended to be a Qualified Domestic Minimum Top-Up Tax (‘QDMTT’)).

Although the Law provides that it will apply to profits arising in 2024 and subsequent fiscal years, Article 50 provides that the UTPR aspects are to apply from January 1, 2025.

Key Aspects of the December 2025 Communique include:

Aspects of the First Set of OECD Administrative Guidance included in the Law are:

-Debt release Election (Article 2.4)

-Equity Gain or loss inclusion election (Article 2.9)

The only aspects of the Second Set of OECD Administrative Guidance included in the Law are Marketable Transferable Tax Credits (aside from the Transitional UTPR Safe Harbour). As such the additional rules for the substance-based income exclusion and currency conversion rules are not included. No aspects of the Third or Fourth Set of OECD Administrative Guidance are included in the Law.

The December 2025 Communique includes numerous other aspects including:

First Set of OECD Administrative Guidance

-Rebasing monetary thresholds in the GloBE Rules (Article 1.1)

-Sovereign wealth funds and the definition of Ultimate Parent Entity (Article 1.4)

-Clarifying the definition of ‘Excluded Entity’ (Article 1.5)

-Meaning of ancillary for Non-Profit Organisations (Article 1.6)

-Forex hedge election (Article 2.2)

-Excluded Dividends – Asymmetric treatment of dividends and distributions (Article 2.3)

-Accrued Pension Expenses (Article 2.5)

-Excess negative tax carry-forward guidance (Article 2.7)

-Substitute loss-carry forwards (Article 2.8)

-Qualified Ownership Interest/Flow through entity (Article 2.9)

-Allocation of taxes arising under Blended CFC Tax Regimes (Article 2.10)

-The extension of the taxable distribution method election to insurance investment entities (Article 3.1)

-Extension of definition of restricted tier 1 capital (Article 3.3)

-Portfolio shareholding election (Article 3.5)

-Application of Tax transparency election to Mutual insurance companies (Article 3.6)

-Transitional Rules (Article 4)

Second Set of OECD Administrative Guidance

SBIE Rules (Article 3):

-Foreign rules

-Stock-based compensation election

-Leases

-Impairment losses including in tangible asset value

Third Set of OECD Administrative Guidance

-Identifying Consolidated Revenue (Article 3.1)

-Mismatch between Fiscal Years of the UPE and another Constituent Entity (Article 3.2)

-Mismatch between Fiscal Year and Tax Year of Constituent Entity (Article 3.2)

Fourth Set of OECD Administrative Guidance

-General rules for allocating cross-border, current taxes under a cross-crediting corporate tax system: 4 Steps (Article 3.1.3)

-Specific rules for foreign PEs/CFCs, Hybrids/rev hybrids with domestic source income (Article 3.1.3)

-Cross-crediting between Permanent Establishments and distributions from foreign subsidiaries (Article 3.1.3)

-Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity (Article 5.2.2)

-Non-group owners: Partially owned Flow-through Entities (Article 5.3.2)

-Non-group owners: Indirect minority ownership (Article 5.3.5)

-Taxes allocated to a flow-through entity (Article 5.4.2)

-Hybrid entities – Taxes pushed down include indirect owners (Article 5.5.2)

-Extension of taxes pushed down to include Reverse Hybrids (Article 5.6.2)

January 2025 OECD Administrative Guidance

The amended Section 12.3.2.1 of the Communique includes the deferred tax recognition amendments to Articles 9.1 of the GloBE Rules in the January 2025 OECD Administrative Guidance (including the grace period for DTA reversals). The consequential amendments to the Transitional CbCR Harbour are also included.

Safe Harbour and Penalty Relief Guidance

Article 50(e) of the Law includes the Transitional CbCR Safe Harbour. However, it only provides for this at a high level and outlines the three tests. The detailed rules for applying this (eg including specific adjustments to revenue/profits as provided in the OECD Safe Harbour Guidance) are not included, however, they are included in the December 2025 Communique. This does not, however, yet include the amendments in the Third Set of OECD Administrative Guidance (eg for Hybrid Mismatches). 

Article 50(f) of the Law applies the Transitional UTPR Safe Harbour.

The December 2025 Communique also includes the QDMTT Safe Harbour and the NMCE Simplified Calculations Safe Harbour. The QDMTT Safe Harbour references the consistency standard and the administration standard from the OECD Administrative Guidance.

ELECTIONS

Elections in the OECD Model Rules

Elections included in the OECD Model Rules provided in the Law are:

-Excluded Entity Election (Article 39(4) of the Law)

-Election to Spread Capital Gains (Article 42(6) of the Law)

-GloBE Loss Election (Article 40(6) of the Law)

-Prior Year Adjustment Election (Article 42(6) of the Law)

-De minimis Election (Article 42(8) of the Law)

-Taxable distribution Election (Article 48(10) of the Law)

-Tax transparency Election (Article 48(9) of the Law)

-Distribution Tax Regime Election (Article 48(5) of the Law)

-Safe Harbour Elections (Article 50 of the Law).

The following are included in the December 2025 Draft Communique:

-Stock-Based Compensation Election (5.2.3 Communique)

-Election to use the Realization Method (5.2.7 Communique)

-Consolidation Election (5.2.9 Communique)

-Unclaimed Accrual Election (6.3.1.1.2 Communique)

-Substance-Based Income Exclusion Election (7.3 Communique)

Elections in the Administrative Guidance

Elections included in the OECD Administrative Guidance that are included in the Law include the:

-Debt release Election (Article 41(b)(4) of the Law)

-Equity Gain or loss inclusion election (41(b)(2) of the Law)

The following are included in the December 2025  Communique:

-Foreign Exchange Hedge Election (5.2.1.3.3 Communique)

-Portfolio Shareholding Election (5.2.1.2.1 Communique)

-Excess Negative Tax Carry-Forward Election (6.1.4.1  Communique).

See the Turkey GloBE Country Guide (below) for further information, including the domestic QDMTT design (including optional and mandatory variations), as well as our domestic Pillar 2 trackers.