Significant Tax Advantage Introduced For Debt Pushdown

New developments

Law No. 7440 on Restructuring of Certain Receivables and Amendments to Certain Laws ("Law No. 7440"), published in the Official Gazette dated 12 March 2023, allows financing costs incurred for the share purchase to be deducted from the corporate income tax base at the acquired company if the loan is transferred to that company through a merger.

What is transferring loans for the share purchase to the acquired company (debt pushdown)?

Acquisitions can take place through the purchase of the target company's shares by a special purpose vehicle (SPV) instead of acquiring the target company's shares directly. It is common for such acquisitions to be financed through loans. Transferring the loans obtained for the share purchase to the acquired company, also called debt pushdown, refers to recognizing the financing costs related to the share purchase as an expense in the acquired company after the merger with the SPV.