XML 54 R29.htm IDEA: XBRL DOCUMENT v3.24.1.u1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Taxes [Abstract]  
INCOME TAXES

23 - INCOME TAXES

 

Cayman Islands

 

Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to stockholders.

 

The United States of America

 

Pursuant to Section 7874 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), even though the Company is an exempted company incorporated with limited liability under the laws of the Cayman Islands, the Company will be treated as a U.S. domestic corporation for all purposes of the Code. The Company will therefore be taxed as a U.S. domestic corporation for U.S. federal income tax purposes. As a result, the Company will be subject to U.S. federal income tax on its worldwide income. The federal income tax rate for corporations is 21%. Additionally, a U.S. subsidiary is subject to US. federal income taxes and state and local income taxes.

 

Turkiye

 

The Turkish subsidary is subject to Turkiye corporate income tax. In connection with legislation passed in July 2023, the corporate income tax increased to 25% beginning January 1, 2023.

 

Income withholding tax

 

10% withholding tax rate applies to profit distributions from the Turkish subsidiary to the Marti Technologies I Inc.

 

Income tax expense

 

For the years ended December 31, 2023, 2022 and 2021 income tax expense all of which is foreign current tax expense was as follows:

 

   January 1 -
Dec 31,		   January 1 -
Dec 31,		   January 1 -
Dec 31,		 
   2023   2022   2021 
             
Current:            
Federal   
--
    
--
    
--
 
State   
--
    
--
    
--
 
Foreign   
--
    
--
    (887,648)
Total   
--
    
--
    (887,648)
                
Deferred:               
Federal   
--
    
--
    
--
 
State   
--
    
--
    
--
 
Foreign   
--
    
--
    
--
 
Total   
--
    
--
    
--
 
                
Total income tax expense   
--
    
--
    
--
 

 

For the years ended December 31, 2023,2022 and 2021 loss before income tax expense consists of the following:

 

   January 1 -
Dec 31,		   January 1 -
Dec 31,		   January 1 -
Dec 31,		 
   2023   2022   2021 
             
U.S. operations   (3,348,514)   (4,199,652)   (1,934,339)
Foreign operations   (30,466,205)   (10,046,226)   (11,650,507)
                
Total   (33,814,719)   (14,245,878)   (13,584,846)

 

The components of Group’s net deferred tax assets and liabilities are as follows:

 

   Dec 31,
2023		   Dec 31,
2022		 
Deferred tax assets:        
Net operating loss carryforwards   6,735,213    3,678,381 
Other current assets   214,120    776,016 
Stock-based compensation   833,584    565,018 
Operating lease liabilities   172,133    548,732 
Financial liabilities   110    173,587 
Accounts receivable, net   164,722    121,417 
Accrued expenses and other current liabilities   589,247    89,475 
Other non-current liabilities   81,465    71,445 
           
Total deferred tax assets   8,790,594    6,024,071 
           
Deferred tax liabilities:          
Property, equipment and deposits, net   (2,577,631)   (1,428,847)
Operating lease right of use assets   (255,935)   (687,993)
other current assets   (36,910)   
--
 
Other   (321,030)   (26,798)
           
Total deferred tax liabilities:   (3,191,506)   (2,143,638)
           
Less valuation allowance   (5,599,088)   (3,880,433)
           
Net deferred tax assets   
--
    
--
 

 

Assessing the realizability of deferred tax assets requires the determination of whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. In assessing the need for a valuation allowance, the Group management considered all sources of taxable income available to realize deferred tax assets, including the future reversal of existing taxable temporary differences, carryback availability, forecasts of future taxable income, and tax-planning strategies. Based on the weight of available evidence, which includes the Group’s historical cumulative net losses, the Group management recorded a valuation allowance on deferred tax assets not supported by reversing taxable temporary differences.

 

The valuation allowance for deferred tax assets as of December 31, 2023, 2022 and 2021 was US$5,599,088, US$3,880,433 and US$2,735,881 respectively, The following table reflects changes in tax valuation allowances for the years ended December 31, 2023,2022 and 2021.

 

   2023   2022   2021 
             
January 1,   3,880,433    2,735,881    1,413,050 
                
Net change in the valuation allowance   1,718,655    1,144,552    1,322,831 
- Additions recognized in the income statement   1,718,655    1,224,430    2,645,495 
- Translation adjustments   
--
    (79,878)   (1,322,664)
                
December 31,   5,599,088    3,880,433    2,735,881 

 

As of December 31, 2023 and 2022, the Group has net operating loss carryforwards for income tax purposes of US$27,903,732 and US$18,634,695, respectively. U.S. federal net operating loss carry forward amounts are US$4,335,776 and US$3,093,138, respectively, and can be carried forward indefinitely. Foreign net operating loss carryforward amounts are US$23,331,214 and US$15,541,557, respectively, which expire from 2024 through 2029.

 

The Company files income tax returns in the United States (federal, and various state jurisdictions), as well as Turkiye. The US federal and state income tax returns are generally subject to tax examinations for the tax years ended December 31, 2020 through December 31, 2023. The Turkiye income tax returns are subject to tax examinations for the tax years ended December 31, 2018 through December 31, 2023. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state or Turkiye tax authorities until utilized in a future period.

 

Tax rate reconciliation

 

The following table reconciles the differences between the U.S. federal statutory income tax rate to the Groups’ effective tax rate for the years ended December 31, 2023, 2022 and 2021:

 

   %   2023   %   2022   %   2021 
                         
Loss before income tax expense:        (33,814,719)        (14,245,878)        (13,584,846)
Income tax benefit at statutory rate   21    7,101,091    21    2,991,634    21    2,852,818 
Tax exempt income   
--
    
--
    
--
    
--
    1    71,360 
Nondeductible expenses   (11)   (3,799,970)   (5)   (777,764)   (10)   (1,347,007)
Currency remeasurement adjustments   (7)   (2,455,462)   (4)   (555,212)   
--
    
--
 
Change in valuation allowance   (5)   (1,718,655)   (9)   (1,224,430)   (20)   (2,645,495)
Effect of different tax rates   3    872,997    (3)   (434,228)   (2)   (286,748)
Change in tax rates   
--
    
--
    
--
    
--
    3    467,424 
Effective tax rate / income tax expense:   
--
    
--
    
--
    
--
    (7)   (887,648)