2019/51 -December, 18th 2019 – Tax Payment Process Update in Turkey

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Tax Bulletin

Bulletin nr: 2019-51

To                   : The clients and company web site

From              : Independent Advisors / Tax, Turkey

Date.               : December, 18th 2019

Subject           :  Tax Payment Process Update in Turkey

According to the Article 41 of the Law No. 6183 on the Procedure for the Collection of Public Receivables, some amendments have been made to the tax collection protocols signed with banks on the basis of the authority granted to the Ministry of Finance, effective from 01.01.2020.

According to the announcement on the website of the Revenue Administration; tax, fees, fines and other receivables, which are being followed up and collected by the tax offices, will continue to be collected through the banks listed below except the tax offices.

  • C. Ziraat Bankası A.Ş.
  • Türkiye Halk Bankası A.Ş.
  • Türkiye Vakıflar Bankası T.A.O.
  • Ziraat Katılım Bankası A.Ş.
  • Vakıf Katılım Bankası A.Ş.
  • Türkiye Emlak Katılım Bankası A.Ş.
  • Posta ve Telgraf Teşkilatı A.Ş.  (PTT)

OTHER BANKS

No payment will be made by the banks other than those mentioned above by cash, account, check, debit card, wire transfer and EFT.

However, the following debts, which are deemed appropriate for collection by credit card; continue to be collected by using credit cards through the banks listed below.

  • Income tax (income tax on real estate / securities capital income, wages, other earnings and income),
  • Motor vehicle tax, traffic fines,
  • Fines, toll and administrative fines,
  • Other fines, financial and tax structuring law paymetns (such as 6736, 7020, 7143),
  • Installments payable under the Law No. 6183,
  • Land registry fee, phone usage permission fee,
  • Student loans and contribution credit debts,
  • Passport fees and precious paper fees, driver’s license fee and precious paper fees,
  • C. ID card fee, departure fee,
  • Immigration Administration residence fee, residence permit book sale fee, single entry visa fee,
  • Adequate pay income and inheritance and gift tax debts,
    • C. Ziraat Bankası A.Ş.
    • Türkiye Halk Bankası A.Ş.
    • Türkiye Vakıflar Bankası T.A.O.
    • Türk Ekonomi Bankası A.Ş.
    • Akbank T.A.Ş.
    • Şekerbank T.A.Ş.
    • Türkiye Garanti Bankası A.Ş.
    • Türkiye İş Bankası A.Ş.
    • Yapı ve Kredi Bankası A.Ş.
    • ING Bank A.Ş.
    • QNB Finansbank A.Ş.
    • HSBC Bank A.Ş.
    • Alternatifbank A.Ş.
    • Denizbank A.Ş.
    • Aktif Yatırım Bankası A.Ş.
    • Odea Bank A.Ş.
    • Albaraka Türk Katılım Bankası A.Ş.
    • Kuveyt Türk Katılım Bankası A.Ş.
    • Türkiye Finans Katılım Bankası A.Ş.

We will continue to announce other developments on the subject.

Final Word:

Let’s finish our tax newsletter with a critic. Last year, taking into account the developing blockchain and financial technology (fintech) infrastructure in our country, we boasted a little and asked, “So, can we pay taxes with Bitcoin in Turkia?”.

At this point, unfortunately, we understand that some of the banks that we have been paying our taxes for years cannot provide this service.  Turkey has taken very important steps to make Istanbul financial center and has made all kinds of attempts to attract foreign capital. We will be experiencing the pains of the abolition of the authorization given to all of the banks.

For this reason, we recommend that companies with a lot of banking and financial transactions should take the necessary measures in advance and take precautions to avoid any disruption in tax payments.

If you have any questions, please contact our tax and accounting experts.

Regards,

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2019/48 – December, 9th 2019 – New Tax Legislations in Turkey (Digital Tax)

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Tax Bulletin

Bulletin nr: 2019-48

To       : The clients and company web site

From   : Independent Advisors / Tax, Turkey

Date     : December, 9th 2019

Subject:  New Tax Legislations in Turkey (Digital Tax)

A new legislation related mostly very crucial tax issues including digital taxation has been widely discussed in the news recently in Turkey.

As of October 24th, a huge tax package having 45 articles is submitted to the Parliament (TBMM). After long discussions and minor amendments it is enacted by the Parliament and published on December 7th in Official Gazette as Act nr.7194.

We will give you summarized information below:

  • Exact name of the proposed legislation is “The Digital Service Tax Code and Amendments on some Tax Laws Proposal”
  • It has new taxes such as “digital tax”, “tourism tax” and “high-valued real estate tax” which has not been collected before.
  • There are new amendments for income taxation, income tax rate increases for people, expense and leasing limitation for vehicles and changes in taxation for sportsmen.

In summary,

  • Turkey will be one of the countries, taxing the digital economy. The new one is called “digital service tax”.
    • Tax rate will be 7,5% regardless with the services providers’ residence or identity.
    • It is one of the popular topics in international taxation area recently in the World.
    • Turkish proposal is in line with the OECD countries, but the rate is high.
    • The companies having revenues less than 20 million TRY in Turkey, and 750 million Euro worldwide are exempted from this tax.
  • 40% income tax rate is introduced in Turkey for real persons.
    • There used to be 4 tax brackets in Turkey including 15%, 29%, 27% and 35%.
    • It is proposed to be 40% for high income levels.
    • The bracket number will be 5 and 40%tax rate will be for the incomes higher than 500.000TRY (roughly EUR78.000).
    • This new schedule will be used for 2019 as well but not for the wages and salaries. There is a favour for wage and salaries for 2019.
    • This application have been criticized so far as it will cover the whole year without any prior notice. The new tax tariff will be used for the earners of wage/salaries for FY2020.
  • Wages and salaries are taxed by witholding method in general in Turkey. Those income is not supposed to be declared to the tax authority unless some conditions are realized currently.
    • With the new amendments, the salaries and wages income will be submitted with an annual tax return to the tax office if exceeding the 4th bracket of the tariff. It will start in 2020.
  • Tourism tax is proposed in Turkey first time in history.
    • It is a common tax abroad.
    • The tax rate will be 2%.
    • It will be provisionally calculated as 1% for 2020.
  • A new tax called “tax on high-valued real estates” is introduced in Turkey. Residential houses whose value is above than 5 million TRY, is subject to this new tax and the rate will be %1, 0,3% and 0,6% depending on the value.
    • Commercial buildings are not subject to this tax.
    • New houses which are not sold yet by the companies are not subject to this tax.
  • Exhange transaction tax rate will be 0,2%. The current rate is now 0,1%.
  • Income from the intellectual property is tax exempt in general and only taxed by witholding method in Turkey.
    • Tax exemption for the intellectual property rights is changed with this new regulation. (starting from 2020, the incomes from the intellectual properties will not be exempted if it exceeds 4th brackets of the tariff.
    • Below the 4th bracket, the incomes of IP, will be taxed just witholding taxes.
    • If it exceeds that figure all of this income will be declared to the Tax Office.)
  • Witholding tax rates will be increased for exchange nominated incomes with a Presidantial decree.
  • Referees’ income tax exemption is revised with the new law.
  • Daily transportation costs’ for employees will be tax exempted for 10TRY, exceeding amount will be subject to income tax.
  • Taxation system on sportsmens’ income will be changed. The special regime for them will be used until 2023. The tax rate will be 20% rather than 15%. The sportsmens will submit annual income tax returns if they earn more than the 4th bracket yearly basis. The Parliament gives permission to the current contracts for sportsmen to be taxed with previous tax legislation.
  • Special refund mechanism for taxes witheld from sportsmens’ income is revised.
  • One of the very important changes in the proposal is about the vehicles’ expenses, taxes and depreciation.
  • The new rules will be applied for real persons and corporate taxpayers as well.
    • The rental cars’ monthly rental payments will be deductible up until 5.500TRY. Above will not be deductible expense in corporate or income tax returns.
    • If the cars are preferred to be bought rather than renting a car, the total VAT (Value Added Tax) and SCT (Special Consumption Tax) deductible will not exceed 115.000TRY for each car.
    • 70% of the expenses of the cars will be deductible as well. Regardless with the amount of car expenses 30% of those expenses cannot be deductible.
    • The cars will be depreciated for their values below 250.000TRY if the VAT and special consumption tax is included or if they are used ones.
    • If the value is below 135.000 excluding the VAT and special consumption tax, the total value can be depreciated. The figures above cannot be used as depreciation expenses.

This new Tax Code is enacted, and published. We will keep you posted accordingly.

Regards,

/by

2019/27 – October, 24th 2019 – New Proposed Tax Legislations submitted to Turkish Grand National Assembly

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Tax Bulletin
Bulletin nr: 2019-27
To : The clients and company web site
From : Şaban Küçük, Partner/ IA, Turkey
Date : October, 24
th 2019
Subject: New Proposed Tax Legislations submitted to Turkish Grand National Assembly

A new legislation related mostly very crucial tax issues including digital taxation has been widely discussed in the news recently. As of October 24th, a huge tax package having 45 articles is submitted to the Grand National Assembly of Turkey (TBMM). It is not enacted yet; we will keep you posted accordingly.

Exact name of the proposed legislation is “The Digital Service Tax Code and Amendments on some Tax Laws Proposal” It has new taxes such as “digital tax”, “tourism tax” and “high-valued real estate tax” which has not been collected before. There are new amendments for income taxation, income tax rate increases for people, expense and leasing limitation for vehicles and changes in taxation for sportsmen.

In summary,

  • There is going to be a new tax in Turkey called “digital service tax”. Tax rate will be 7,5% regardless with the services providers’ residence or identity. It is one of the popular topics in international taxation area recently in the World. Turkish proposal is in line with the OECD countries, but the rate is high. The companies having revenues less than 20 million TRY in Turkey, and EURO750 million worldwide are exempted from this tax.
  • 40% income tax rate will be introduced in Turkey. There are 4 tax brackets in Turkey now including 15%, 29%, 27% and 35%. It is proposed to be 40% for high income levels. The bracket number will be 5 and 40%tax rate will be for the incomes higher than 500.000TRY (roughly EUR78.000). This new schedule will be used for 2019 as well but not for the wages and salaries. This application have been criticized so far as it will cover the whole year. The new tax tariff will be used for wage/salaries earners for FY2020.
  • Wage and salaries are not supposed to be declared to the tax authority by the people in Turkey unless some conditions are realized currently. With the new amendments, the salaries and wages income will be submitted with an annual tax return to the tax office if exceeding the 4th bracket of the tariff. It will start in 2020.

The corporate tax rate were going to be decreased in the first place according to the news
but the Draft does not have this amendment.

  • First Draft: As the income tax rates’ increasing the corporate tax rates were planned to be increased as well other than banks and financial institutions. The corporate tax rates are %22 for 2018 and 2019 and it was going to be 20% for FY2020 and 18% for upcoming years. For banks and other financial institutions 22% was going to be the applicable rate. Publicly held companies were planned to be promoted in this new legislation. The President of Turkey was going to be entitled to reduce the corporate tax rates 2% points for the publicly held
    companies for the first 5 years.
  • A new tax called “tax on high-valued real estates” are introduced in Turkey. Houses whose value is above than 5 million TRY, is subject to this new tax and the rate will be %1, 0,3% and 0,6% depending on the value.
  • Exhange transaction tax rate will be 0,2%. The current rate is now 0,1%.
  • Tax exemption for the intellectual property rights is changed with this new regulation. (starting from 2020, the incomes from the intellectual properties will not be exempted if it exceeds 4th brackets of the tariff. Below the 4th bracket, the incomes of IP, will be taxed just witholding taxes. If it exceeds that limit all of this income will be declared to the Tax Office.)
  • Witholding tax rates will be increased for Exchange nominated incomes with a Presidantial decree.
  • Referees’ income will not be exempted from income tax with the new law.
  • Daily transportation costs’ for employees will be tax exempted for 10TRY, exceeding amount will be subject to income tax.
  • Taxation system on sportsmens’ income will be changed. The special regime for them will be used until 2023. The tax rate will be 20% rather than 15%. The sportsmens will submit annual income tax returns if they earn more than the 4th bracket yearly basis.
  • Special refund mechanism for taxes witheld from sportsmens’ income is abolished.
  • Tourism tax is proposed in Turkey first time in history. It is a common tax abroad. The tax rate will be 2%. It will be provisionally calculated as 1% for 2020

One of the very important changes in the proposal is about the vehicles’ expenses, taxes and depreciation. The new rules will be applied for real persons and corporate taxpayers as well.

  • The rental cars’ monthly rental payments will be deductible up until 5.500TRY. Above will not be deductible expense in corporate or income tax returns.
  • If the cars are preferred to be bought rather than renting a car, the total VAT and special consumtion tax deductible will not exceed 115.000TRY for each car.
  • 70% of the expenses of the cars will be deductible as well. Regardless with the amount of car expenses 30% of those expenses cannot be deductible.
  • The cars will be depreciated for their values below 250.000TRY if the VAT and special consumption tax is included or if they are used ones. If the value is below 135.000 excluding the VAT and special consumption tax, the total value can be depreciated. The figures above cannot be used as depreciation expenses.

This new proposal is not enacted yet, we will keep you posted accordingly.
Regards,

/by

2019/26 – October, 22nd 2019 – New Proposed Tax Legislations and affects to be expected to submit to Turkish Grand National Assembly

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Tax-IA Bulletin

Bulletin nr: 2019-26

To : The clients and company web site

From : Şaban Küçük, Partner/ IA, Turkey

Date : October, 22nd 2019

Subject: New Proposed Tax Legislations and affects to be expected to submit to Turkish Grand National Assembly

A new legislation related mostly very crucial tax issues including digital taxation has been in the news recently. It is not publicly announced yet, we will keep you posted accordingly.

Exact name of the proposed legislation is “The Digital Service Tax Code and Amendments on some Tax Laws Proposal”

In summary,

  • There is going to be a new tax in Turkey called “digital service tax”. Digital service tax rate will be 7,5% regardless with the services providers’ residence or identity. It is one of the popular topics in international taxation area recently in the World.
  • 45% income tax rate will be introduced in Turkey. There are 4 tax brackets in Turkey now including 15,29, 27 and 35%. It is proposed to be 39, 43 and 45% for high income levels. The bracket number will be 7 and 45%tax rate will be for the incomes higher than 1.000.000TRY. This new schedule will be used for 2019 as well but not fort he wages and salaries. The new tax tariff will be used for wage/salaries earners for FY2020.
  • Wage and salaries are not supposed to be declared to the tax authority by the people in Turkey unless some conditions are realized. With the new amendments, the salaries and wages income earners will submit an annual tax return to the tax office if exceeding the 4th bracket of the tariff. It will start in 2020.
  • As the income tax rates are increasing the corporate tax rates are planned to be increased as well other than banks and financial institutions. The corporate tax rates are %22 for 2018 and 2019 and it will be 20% for FY2020 and 18% for upcoming years. For banks and other financial institutions 22% will be calculated.
  • Publicly held companies are planned to be promoted in this new legislation. The President of Turkey is entitled to reduce the corporate tax rates 2% points for the publicly held companies for the first 5 years.
  • A new tax called “tax on precious immovables” are introduced in Turkey. Immovables whouse value is above than 5 million TRY, is subject to this new tax and the rate will be 1%.
  • Exhange transaction tax rate will be 0,2%. The current rate is now 0,1%.
  • Tax exemption for the intellectual property rights is changed with this new reguation. (starting from 2020, the incomes from the intellectual properties will not be exempted if it exceeds 4th brackets of the tariff. Below the 4th bracket, the incomes of IP, will be taxed just witholding taxes, above will be submitted.) • Witholding tax rates will be increased for Exchange nominated incomes with a Presidantial decree.
  • Referees’ income will not be exempted from income tax with the new law.
  • Daily transportation costs’ for employees will be tax exempted for 10TRY, exceeding amount will be subject to income tax.
  • Taxation on sportsmens’ income will be changed. The special regime for them will be used until 2023. The tax rate will be 20% rather than 15%. The sportsmens will submit annual income tax returns if they earn more than the 4th bracket yearly basis.
  • Special refund mechanism for taxes witheld from sportsmens’ income is abolished.

One of the very important changes in the proposal is about the vehicles’ expenses, taxes and amortisation. The new rules will be applied for real persons and corporate taxpayers as well. o The rental cars’ rent paymetns will be deductible for 4.000TRY. Above will not be deductible.

  • If the cars are preferred to be bought rahter than rent a car, the total VAT and special consumtion tax deductible will not exceed 115.000TRY for each car.
  • 70% of the expenses of the cars will be deductible as well.
  • The cars’ will be depreciated for their values below 250.000TRY if the VAT and special consumption tax is included or if they are used ones. If the value is below 135.000 excluding the VAT and special consumption tax, the total value can be depreciated. The figures above cannot be used as depreciation expenses.

This new proposal is not publicly announced yet, we will keep you posted accordingly.
Regards,

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