Communique on Income Tax Incentive Originating From Law No 7103 was Published

General Communique on Income Tax with serial no. 304, which stipulates the procedures and principles regarding the implementation of Provisional Article 21 added to the Unemployment Law No. 4447 by virtue of Law no 7103 dated 21/3/2018 on the Amendment of Tax Laws and Certain Laws and Decree Laws, was published on July 6, 2018.

The wage earners who have been employed within the scope of Provisional Article 21 of Law No 4447 as well as Provisional Articles 19 and 20 of the same Law and who possess the requisite qualifications specified therein, will be entitled to income tax withholding incentive by abatement of the amount, which remained after applying the minimum living allowance to the income tax calculated on the basis of minimum pay by taking into consideration the number of premium payment days, by way of deducting the same from the tax accrued in the tax return.

A. Incentive for personnels employed within the scope of Provisional Article 19 of Law No 7103

Incentive Entitlement Conditions

• The employment of the employee should have started between 01.01.2018 and 31.12.2020 within the scope of the relevant law;
• No notification should have been made to the Social Security Institution for the insured for more than 10 days in total within the three-month period before the commencement of the insured’s employment and the insured should not be registered with Bağkur (the Social Security Organization for Artisans and the Self-Employed) except for voluntary insurance;
• The person should be an unemployed person registered with the Turkish Employment Agency;
• The insured should be employed as an addition to the average of the number of insured employees stated in the monthly premium and service documents or withholding, premium and service returns submitted by the employer of the insured in the calendar year prior to the year of the insured’s employment.

Provided that the above mentioned conditions are satisfied in accordance with the exemption practice, the income tax withholding incentive provided to the insured employees employed within the scope of the said regulations shall be applicable for a maximum term of 12 months for each employee who falls within the scope of the incentive, to be applicable within the period from 01.01.2018 till 31.12.2020.

This term is 18 months for disabled, female employees above 18 years of age and male employees above 18 years of age and below 25 years of age.

B. Incentive for personnels employed within the scope of Provisional Article 20 of Law No 7103

Incentive Entitlement Conditions

• The employer should satisfy the prescribed terms within the scope of the relevant law and be a private sector employer operating in the manufacturing sector;
• The person should be an unemployed person registered with the Turkish Employment Agency;
• The employee should have been employed as from 01.01.2018;
• The insured should be employed as an addition to the average of the number of insured employees stated in the monthly premium and service documents or withholding, premium and service returns submitted by the insured’s employer in 2017;
• No notification should have been made to the Social Security Institution for the insured for more than 10 days in total within the three-month period before the commencement of the insured’s employment and the insured should not be registered with Bağkur (the Social Security Organization for Artisans and the Self-Employed) except for voluntary insurance;
• The insured should be above 18 years of age and below 25 years of age as of the date of commencement of the employment;
• The employer should possess a certificate of mastery;
• The average of the number of insured employees stated in the monthly premium and service documents submitted by the employer to the Social Security Institute in 2017 should be 1 to 3.

Provided that the above mentioned conditions are satisfied in accordance with the exemption practice, the incentive within the scope of the said regulations shall be applicable to the eligible employees between 01.01.2018 and 31.12.2018, the last day being 31.12.2018. The workplaces where the average of the number of insured employees is above 3 as stated in the monthly premium and service documents submitted to the Social Security Institute in 2017 cannot benefit from income tax withholding incentive within the scope of this article.

The primary consideration for the taxation of the wages which will be subjected to income tax withholding incentive within the scope of Law No 7103 shall be the minimum living allowance.

The employers who would like to benefit from the incentive should fill in the “Notification for Employment Incentive” and submit the same as an enclosure of the withholding tax return.

The amount to be abated by way of being deducted from the withholding tax return within the scope of the law should not exceed the amount that will remain as a result of setting off the minimum living allowance against the income tax calculated on the basis of the number of eligible insureds and over the portion of the monthly gross amount of the minimum wage to be applicable in the year that the incentive will be benefited from, which corresponds to the number of days employed.

Within the scope of the practice which will take effect as of 01.01.2018, the income tax withholding incentive amounts that could not be benefited from due to eligible employees by the date of issue of the Communique, shall be set off against the first withholding tax return to be submitted after the said date.