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2023-17 / February 2023 Financial/Tax Bulletin

Find out the latest developments on tax regulation and be updated on regulatory changes along with their effects on your business through our tax bulletins. The recent financial news are briefly explained below.

We are glad to share these summaries with our clients and network. As a result of productive and comprehensive research, we present you the February 2023 bulletin.

Let’s briefly start with the headings and then examine the details. We will share information about Turkish economy in general, and the latest figures in labor, inflation, growth, main tax developments, social security obligations, banking and financial issues, R&D and incentives, and other issues below.

Main Economic Indicators

The balance of payments statistics for November 2022 is announced by the Central Bank of Turkey Republic (CBRT).

• The current account recorded a deficit of USD 3,666 million, against a surplus of USD 5,265 million observed in the same month of the previous year, hence bringing the 12-month rolling deficit to USD 41,814 million.
• Click to view the announcement.

Turkish Statistical Institute announced inflation figures for January 2023.

• Consumer price index (CPI) increased by 57.68% annually and 6.65 monthly.
• Domestic producer price index increased by 86.46% on annual basis, by 4.15% on monthly basis.
• Click to view the announcement.

Ministry of Finance and Treasury announced the domestic borrowing strategy and debt statistics February – April 2023.

• Central Government Debt Statistics were published as well by currency, interest and instrument type.
• Click to view the domestic borrowing strategy.

Major Tax Issues

Exemptions for exchange rate adjusted certificates of deposits will be applied to the foreign currencies held through the end of 2022.

• Companies can convert their foreign currencies as stated in their balance sheets dated 31.12.2022, and utilize them in the exchange rate adjusted certificate of deposit program with a minimum duration of 3 months to have their gains exempted from corporate tax.

The declaration requirements for taxpayers have been eased.

• After 01.02.2023, for any declarations made to the Registry of Commerce, an additional declaration for the Tax Office will no longer be needed.

A new Remission Law has been presented to the Grand Assembly.

• The proposal will allow for the increasing of tax basis, correcting of records and accounting, restructuring of accounts receivable, and liquidation of doubtful accounts.

The minimum amount for VAT refunds has been set as TRY 2k for 2023.

The Revenue Administration has announced the 2023 tax calendar.

The international treaties signed by Turkey have been presented to the Grand Assembly.

• Double Taxation Treaties
  • Congo
  • Sierra Leone
  • Cambodia
  • Senegal
  • Sri Lanka
  • Nigeria

• Other Treaties
  • Angola – Customs
  • Congo – Investment Incentivization

The RUSF withholding is set as 0% for the overseas loans of financial leasing institutions.

• This decision is in addition to the 0% withholding application for banks.

Collateral requirements for taxpayers who deal motorized vehicles have been set.

Tax refund amounts have been set for 2023.

• Up to TRY 151.0k of withheld taxes may be refunded.
• Up to TRY 1,518k may be refunded after a full certification from a Sworn-In CPA.

The proposal on the taxation of capital reduction is still open for comments.

• The communique draft in question regulates corporate tax in the following scenarios:
  • Capital increase
  • Capital decrease
  • 50% discount on transit activities based in the Istanbul Finance Center
  • 75% discount on cash capital from overseas sources
    • Altered to be limited by 5 years (was originally planned as indefinite)

Social Security Issues

A proposal regarding the amendment of Social Security and General Health Insurance Law has been presented to the General Assembly.

The social security premium exemptions have been determined.

• Foodstuff: TRY 333.60 * 23.65% = TRY 78.90
• Family Support: TRY 10,008.00 * 10.00% = TRY 1,000.80

Banking & Finance

The equity requirements for electronic payment institutions have been increased, effective 30.06.2023.

A 2% incentive has been provided to sell foreign currency to the Central Bank.

• Any funds denominated in foreign currency and originated overseas may be sold to the Central Bank.
• Upon promising not to buy the foreign currency back, a 2% incentive will be provided.
• If at least 40% of the funds are directly sold to the Central Bank, the remaining amount may be invested in an exchange rate adjusted certificate of deposit, and still receive the 2% incentive.

The Central Bank has kept the award rate for weekly repurchase agreements stable at 9.0%.

The Ministry of Strategy and Budgeting has published a communique regarding the 2023 budget.

The responsibilities for banks regarding unbacked cheques have been updated.

R&D and Incentives

New project-based incentives have been provided.

• A polymer chip production plant has been incentivized in Gaziantep.
• An integrated animal husbandry plant has been incentivized in Bingol.
• An aluminum works plant utilizing direct cooled slab casting and hot rolling has been incentivized in Konya.
• A polypropene production plant has been incentivized in Hatay.
• A high-carbon ferrochrome production plant has been incentivized in Bursa.
• A gunpowder production plant has been incentivized in Corum.
• A high-tech welding equipment manufacturing plant has been incentivized in Sakarya.
• An ammonia and urea fertilizer production plant has been incentivized in Kocaeli.
• An ammunition, military-grade rifle, and semi-automatic pistol manufacturing plant has been incentivized in Duzce.
• An electric-driven compressor manufacturing plant has been incentivized in Bursa.
• A recycled polymer chip production plant has been incentivized in Bursa.
• A photovoltaic solar cell manufacturing plant has been incentivized in Ankara.

The criteria for Design and R&D Discounts program has been expanded.

New energy-based incentives have been announced.

• Solar energy incentives have been amended.
• Biomass energy incentives have been published.

Small and medium sized businesses have been called to apply for R&D and innovation incentives.

Commercial Regulations

An amendment on the laws regarding retail has been amended.

The price increase for private schools has been determined by the Ministry.

The gain rate for Licensed Warehousing Disposal Fund has been decreased to zero.

Climate and Environment

A standard on assurance statements has been published regarding the declaration of greenhouse gases.

The regulations on the management of waste oils have been amended.

Other Issues

The regulations on real asset title transfers through notaries has been published.

• The processes will be carried via the e-Government system.

FIFO calculations for exchange rate adjusted certificates of deposits are no longer valid.

Best regards,

Partners, Taxia