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2023-72 / July 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 important financial news of last month is 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 July 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 March 2023 is announced by the Central Bank

• The current account recorded a deficit of USD 4.484 million. Gold and energy excluded current account indicated net surplus of USD 1.372 million.
• Click to view the announcement.

Turkish Statistical Institute announced inflation figures for May 2023.

• Consumer price index increased by 39.59% annually and 0.04% monthly.
• Domestic producer price index increased by 40.76% on annual basis, by 0.65% on monthly basis.
• Click to view the announcement.

Turkish Statistical Institute announced the GDP for 1Q2023.

• The quarterly GDP has increased by 4.0% compared with the previous year.
• Click to view the announcement.

The Ministry of Treasury and Finance announced the foreign trade statistics for April 2023.

• According to the general trade system exports decreased by 17.1% and imports decreased by 4.8% in April 2023.
• According to the provisional data, produced with the cooperation of the Turkish Statistical Institute and the Ministry of Trade, in April 2023; exports were 19 billion 33 million dollars with a 17.1% decrease and imports were 28 billion 69 million dollars with a 4.8% decrease compared with April 2022.
• Click to view the press release.

The Ministry of Finance and Treasury announced the domestic borrowing strategy and debt statistics June – August 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

Withholding tax on F/X time deposits set as 25%.

• It used to be 18-20% depending on the maturity.

0% withholding tax for exchange-rate adjusted certificates of deposits is extended till the year end.

• It is a big tax advantage for those time deposits.

Additional budgets and tax regulations are expected from the newly elected cabinet.

• Since the additional tax yielded poor returns and new expenses occurred during the elections, along with the increase in the minimum wage, tax increases are expected.
• We wish that the new regulations are implemented with prior notice, in accordance with fair principles, keeping in mind the inflationary economy, without causing further uncertainty.

The deadline for tax amnesty and stock amnesty applications have been extended until the 3rd of July.

• We recommend taxpayers who may be within the scope of the programs to consider their situations and analyze whether utilizing the programs is a viable choice.

Businesses who fit the following criteria are required to migrate to the e-invoice system by the 1st of July.

• Gross revenues exceeding TRY 3M for FY2022 and the following years.
• For e-commerce businesses – gross revenues exceeding TRY 500k for FY2022 and the following years.
• For businesses manufacturing, trading, or leasing real estate or motorized vehicles, along with businesses brokering such services – gross revenues exceeding TRY 500k for FY2022 and the following years.

The second round of negotiations among Turkey and Cuba regarding the double taxation treaty has commenced.

Social Security

The minimum wage has been increased by 34%.

• The new gross wage is TRY 13,414.50 and the new net wage is TRY 11,402.32 per month.
• After all deductions, the total cost for the employer is TRY 15,762.04 per month.

Banking & Finance

Check whether you need to file a FX Position Summary Report.

• The previous threshold of TRY 5M in credits has been updated as TRY 10M.
• For credits up to TRY 50M the reporting requirement starts in January 2024.
• For credits greater than TRY50M the reporting should be done by the end of June 2023.

The Central Bank has announced interest rate decisions.

• The weekly repurchase agreement award rate is announced as 15%.
• New rediscount and advance rates have been set as well as 15,75% and 16,75%.

R&D and Incentives

The incentive programs managed by TUBITAK-TEYDEB have been changed.

• The reporting deadline has been shortened to two months.
• The incentivization ratio will be determined by the scale of the project at its inception.
• The required decrease of unused incentives as if they were used is no longer required.
• Regulations have been made to prevent double incentivization.
• Regulations have been made regarding the presentation of personnel costs.
• The expenses of non-micro businesses will not be incentivized.
• CPA evaluation reports on project expenditures will be submitted electronically.
• CPA costs after the end of the initial incentive period will be supported.

Judiciary

The Constitutional Court has overruled the objection on the timeout clause within the obsolete Law on Liabilities.

Best regards,

Partners, Taxia