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Income tax expense (Tables)

12 Months Ended

Dec. 31, 2021

Text block [abstract]

Summary of Income Tax Expense


		2021		2020		2019

Current income tax expense		(681,513)		(724,688)		(570,509)
Deferred income tax credit/(expense)		1,171,697		337,495		(215,121)
Total income tax expense		490,184		(387,193)		(785,630)

Summary of Income Tax Relating to Each Component of Other Comprehensive Income


Income tax relating to each component of other comprehensive income				Tax (expense)/
2021		Before tax		credit		Net of tax
Foreign currency translation differences		2,410,295		(861,143)		1,549,152
Change in cash flow hedge reserve		197,211		(55,912)		141,299
Change in cost of hedging reserve		(1,185,074)		237,015		(948,059)
Fair value reserve		(65,494)		13,099		(52,395)
Hedges of net investments in foreign operations		(1,558,374)		311,675		(1,246,699)
Remeasurements of employee termination benefits		(163,588)		32,276		(131,312)
		(365,024)		(322,990)		(688,014)

2020
Foreign currency translation differences		29,352		7,729		37,081
Change in cash flow hedge reserve		9,914		(5,957)		3,957
Change in cost of hedging reserve		(487,644)		92,089		(395,555)
Fair value reserve		(1,970)		483		(1,487)
Hedges of net investments in foreign operations		(368,959)		72,684		(296,275)
Remeasurements of employee termination benefits		(37,230)		6,085		(31,145)
		(856,537)		173,113		(683,424)

2019
Foreign currency translation differences		536,796		(99,234)		437,562
Change in cash flow hedge reserve		(217,877)		47,933		(169,944)
Change in cost of hedging reserve		75,605		(16,634)		58,971
Fair value reserve		4,451		(979)		3,472
Hedges of net investments in foreign operations		(55,389)		12,186		(43,203)
Remeasurements of employee termination benefits		(36,385)		8,005		(28,380)
		307,201		(48,723)		258,478

Summary of Reconciliation of Effective Income Tax Expense


		2021		2020		2019
Profit from continuing operations before income tax expense		4,541,094		4,626,813		3,289,884
(Loss) from discontinued operations before income tax expense		—		—		772,436
Profit before income tax expense		4,541,094		4,626,813		4,062,320

Tax at the Turkey’s tax rate		(1,135,274)		(1,017,899)		(893,710)
Difference in overseas tax rates		16,711		(3,825)		(12,580)
Effect of exemptions		231,817		130,718		123,878
Revaluation effect of tangible and intangible assets (*)		1,641,145		—		—
Previously unrecognized tax losses used to reduce deferred tax expense (**)		—		665,842		—
Utilization of previously unrecognized tax losses		—		6,746		—
Effect of amounts which are not deductible and permanent differences		(467,266)		(123,738)		(134,538)
Tax exemptions from sale of subsidiary and associate (***)		—		—		169,936
Change in unrecognized deferred tax assets (****)		(17,970)		(47,094)		(41,681)
Adjustments for current tax of prior years		(5,115)		(4,667)		3,880
Effect of increase in corporate tax rate in Turkey		237,709		8,119		—
Tax effect of investment in associate and joint venture		(13,514)		(2,794)		(2,592)
Other		1,941		1,399		1,777
Total income tax expense		490,184		(387,193)		(785,630)

(*) With Article 11 of the Law No. 7326 published in the Official Gazette on 9 June 2021, the opportunity to revalue the properties and depreciable economic assets on the effective date of the law was introduced. The provision of the article can be used until 31 December 2021. These assets will be valued with the Producer Price Index (“PPI”) rate and tax, calculated 2% of valuation difference, paid in 3 installments (at two-month intervals) at the rate of 2%. For revalued assets, the valuation difference can be depreciated and written off as an expense. Within the scope of the law amendment, deferred tax asset has been recognised in the statement of financial position based on the revaluation records for fixed assets in the legal book, and the deferred tax income related to this asset has been recorded in the consolidated statement of profit or loss.

(**) Mainly comprises the deferred tax credit of TL 665,842 which relates to the carried-forward tax losses of lifecell. lifecell has recorded positive taxable profits for the year ended 31 December 2020, mainly as a result of increased subscriber numbers and cost management. The Group has concluded that the deferred tax assets will be recoverable using the estimated future taxable profits based on the business plan of lifecell. The tax losses can be carried forward indefinitely and have no expiry date.

(***) For the years ended 31 December 2019, includes the Group’s transfer of its total shareholding in Fintur and Azerinteltek, respectively.

(****) Mainly comprises of unused tax losses for which no deferred tax asset has been recognized.