Income and Corporate Tax Regulations with the New Omnibus Law Numbered 7420

"The New Omnibus Law on the Amendment of the Income Tax Law and Other Laws" (In Turkish) published on Official Gazzette dated 9th November 2022 and numbered 32008 has brought about the regulations to the Income Tax Law and Corporate Tax Law and Other Laws.

With the new Omnibus Law published, below regulations have been made:

• With article 1 of the Law; the phrase "up to 25 kW (including 25 kW)" in the exemption statement regarding electricity generation facilities based on renewable energy sources established in homes has been changed to "up to 50 kW (including 50 kW)".
• With article 2 of the Law; in the case where meals are not served to the employees at the workplaces and its outbuildings, it is foreseen that the condition of making the payment of the meal fee to the taxpayers who provide the catering service will be abolished. the cash meal allowance of up to 51 TRY per day shall be exempt from tax.
• With the same article of the Law, the payments which are paid through the employer's overseas earnings for their employees work in construction, repair, assembly and technical services abroad, shall be exempted from income tax.
• With article 14 of the Law, it has been regulated that Due to Covid-19, no responsibility can be imposed on the personnel of the Ministry and the Authority regarding the procedures related to the receipt, evaluation and payment of short-time work applications and cash wage support procedures due to the compelling reason made by the employers, and/or in the event that it is determined that the employee benefiting from the overpayments and unjustified payments and cash wage support payments arising from the erroneous transactions in the short-time working allowance and cash wage support payments paid due to Covid-19 is being worked by the employer who has applied for, the administrative fines imposed on the employer shall be abandoned and those that have not been collected as of the effective date of this article shall be abandoned and those collected shall not be refunded or deducted, and the proceedings and collection procedures initiated for these receivables will not be continued, andin the files transferred to the judicial authorities, the expense of the proceedings against the Authority and the Ministry will not be ruled. However, during the period in which short-time work is applied, except for the reasons specified in subparagraph (II) of the first paragraph of Article 25 of Law numbered 4857, it is stated that the excessive and unjustified payments arising from the dismissal of the employee by the employer and the short-time working allowance and cash wage support payments that have been the subject of criminal investigation or prosecution are excluded from the scope of this article.
• With article 22 of the Law, If the equity items (own capital) added to the capital by the institutions are subject to capital reduction within five full years from the date of added to the capital, capital factors that need to be taxed shall be considered as distributed.
• With article 23 of the Law, within the scope of supporting the conversion of foreign currencies and gold account balances into Turkish lira deposit accounts, the deadline for conversion to Turkish lira on the basis of conversion rate/price was changed to 31st December, 2023.
• With provisional Article 1, the monthly payments not over 1.000 TRY paid by the employers to the employees for the electricity, natural gas and other heating expenses until 30.06.2023 shall be exempted from the income tax.
• With provisional Article 2, it is regulated that receivables whose enforcement proceedings have been initiated in accordance with the Enforcement and Bankruptcy Law (In Turkish) numbered 2004 and the Law Numbered 7155, whose debtor is a natural person and whose follow-up amount does not exceed 2,000 Turkish Liras on the date the enforcement proceedings are initiated, including the original receivables and ferries, and the collections made in the file as of 15.8.2022, although the follow-up has started more than this amount, the receivables subject to follow-up will be considered as worthless receivables within the scope of Article 322 of the Tax Procedure Law (In Turkish) Numbered 213, provided that the creditors terminate their enforcement proceedings by giving up their receivables until the end of the sixth month following the date of entry into force of this article from the receivables whose balance amount falls below 2,000 Turkish Liras or less.
• With provisional Article 4, it is regulated that in order to prevent the spread of the Covid-19 epidemic disease in the country within the scope of the Public Sanitation Law No. 1593 and the Misdemeanors Law No. 5326, the administrative fines imposed from 11.3.2020 until the date of entry into force of this article and which have not been notified to the relevant person as of the date of publication of this Law will not be notified and the collection of those that have been notified will be waived; it is provided that no administrative fines shall be imposed for such misdemeanors committed before the effective date of this article, and that administrative fines shall not be refunded in respect of those who have been collected.

Article 2 of the Law will enter into force as of 01.12.2022 and the other provisions, except for the provisions specified as exceptions in the Law, shall be deemed to have entered into force as of the date of publication.

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