7162 Numbered the Law on Amending the Income Tax Law and Other Laws

7162 numbered “the Law on Amending the Income Tax Law and Other Laws” (the “Law”) is published on 30.01.2019 dated and 30671 numbered Official Gazette. The Law has made some crucial amendments on the Income Tax Law, the Value Added Tax Law, the Corporate Tax Law and the Municipality Incomes Tax Law.

Some important amendments brought with the Law as follows:

1. AMENDMENTS ON THE INCOME TAX LAW (“ITL”)

TRADESMEN EXEMPTED FROM THE TAX

Art. 1 of the Law has made an addition to the ITL. With this addition, the ones that sell online some products produced at home without establishing a workplace shall be in the scope of tradesmen exemption for the income tax. (Effective Date: 30.01.2019)

THE SCOPE OF UNEMPLOYMENT BENEFIT

Art. 2 of the Law has altered Art. 25 of the ITL. This alteration has brought clarity as for the scope of exemptions for unemployment compensations. The previous version of the article that states “the compensation given for unemployment reasons” has changed as “the unemployment allowance paid due to the Unemployment Insurance Law and compensation for not to initiate employment due to the 4857 numbered Labour Law”. (Effective Date: 01.02.2019)

TAX REDUCTION FOR THE COMPATIBLE TAXPAYER

Art. 3 of the Law has altered Art. 121 of the ITL and a new clause has added to this article. With this amendment, the 10 Turkish Liras limit has increased to 250 Turkish Liras in the compatible taxpayer application regarding %5 reduction. Thus, the short change payments up to 250-TL per each declaration shall not be deemed as a breach of tax reduction. Besides, the clause that states “payments are not the breach of this provision” is added to the same Art. of ITL, which means that non-payment of cancelled taxes within 15 days will not be a breach of the provision of paying the taxes within their legal duration. (Effective Date: this clause has entered into force on the date of publish to be considered in terms of the reduction conditions in Annual Income and Corporate Tax declarations that have to be provided as of 01.01.2019)

TAX REFUND IN SETTLEMENT AGREEMENTS

The Art. 4 of the Law has added a Temporary Article to the ITL. With this addition, the employees who left their jobs with a settlement agreement before 27.03.2018 (and those who didn’t apply to court or waive from their present cases), shall be entitled to refund their income tax from the compensations to be paid under the said agreement. (Effective Date: 30.01.2019)

It should be noted that the income tax refund is not possible for the payments which are not additional compensation even these payments are made in the scope of the settlement agreement.

2. THE AMENDMENTS ON THE VALUE ADDED TAX LAW (“VAT”)

THE VAT EXEMPTION FOR UEFA ORGANIZATIONS

The art. 6 of the Law has added a temporary clause to the VAT, that states: the deliveries of goods and performance of the services shall be exempted from VAT for UEFA and the legal entities which are responsible at the participant football clubs that are non-resident in Türkiye, as regards to 2019 UEFA Super Cup Final and 2020 UEFA Champions League Final. (Effective Date: 30.01.2019)

3. THE AMENDMENTS ON THE CORPORATE TAX LAW (“CTL”)

TAX EXEMPTION FOR PATENTS AND UTILITY MODELS

The Art. 11 of the Law has altered the Art. 5/B of CTL. 50% of tax exemption is provided for the acquisitions that arise from the usage or marketing of the inventions that are existed in Türkiye, under Industrial Property Law for the protected part of the inventions by providing patent or utility model certificate. (Effective Date: 30.01.2019)

THE TAX EXEMPTION FOR UEFA ORGANIZATIONS

Art. 12 of the Law has added a temporary clause to the CTL. According to this, UEFA and the legal entities which are responsible at the participant football clubs that are non-resident in Türkiye, as regards to 2019 UEFA Super Cup Final and 2020 UEFA Champions League Final, shall be exempted from income and corporate tax, just like the VAT regulation mentioned above. In addition, it is stated that the tax exemption herein, also consists the taxes to be collected by means of deduction upon the acquisitions and revenues to be provided. (Effective Date: 30.01.2019)

4. THE AMENDMENT ON THE MUNICIPALITY INCOMES LAW

E-TICKET IN THE CINEMA

The Art. 5 of the Law has altered the Art. 21 of the Municipality Incomes Law; thus, the managements that deal with domestic and foreign cinema screening, can use e-ticket without having the obligation to use cash register. (Effective Date: 30.01.2019)

5. THE AMENDMENT ON THE SOCIAL INSURANCE and GENERAL HEALTH INSURANCE LAW

MINIMUM WAGE SUPPORT

The Art. 10 of the Law has added a temporary article to the Social Insurance and General Health Insurance Law. According to this, the minimum wage support will continue for also 2019 and will be 5,00-TL daily for the workplaces with total insured employee number is less than 500 and will be 3,36-TL for the workplaces with total insured employee number is more than 500. The regulation also states that the employers who have debt to SSI as premium, administrative fine penalty and related penalty for delay along with default interest penalty, cannot benefit from this support. However, the ones who restructure their debts and pay this amount regularly, can benefit from this support.

As per January – December months of 2019, this article will not be applicable for the insured employees who registered to tax declaration and premium service declaration given to the Ministry or monthly premium and service documents given to the SSI by not performing in the legal duration provided.

Moreover, the abovementioned amount shall be refunded with its default penalty and interest from the workplaces of which actualize collusive transaction.

You may reach the full text of the Law in Turkish via this link.