TAXIA Kişisel Rıza Formu

2024-43 / Taxademy Newsletter (July 2024)

Find out the latest developments on tax and related regulations and be updated on recent changes along with their effects on your business through our monthly tax bulletins.  

Ministry of Trade’s Circular on inflation accounting for firms about the capital and reserves is finally accepted. There is a new Omnibus Tax Law restricting some tax incentives and exemptions especially capital gain taxation on immovables, bringing minimum corporate tax in line with Globe rules and CMB’s road map for crypto asset service providers are the main items this month.

Good news is that Türkiye is de-listed from the grey list by FATF after enacting Crypto Asset Law. e-bookkeeping will be starting for commercial books in addition to tax ledgers in Türkiye.

Major Tax Issues

Pillar II will be coming to the Parliament soon.

• The Revenue Administration has been working on the Draft Law and it is ready. It has been circulated in the media and heavily discussed with other tax amendments.

Omnibus Tax Law is ready;

• It was presented to the public somehow before the pre-approval of the President.
• It may be possible to request a tax on expenditures whose source cannot be explained through expenditure tracking (with a margin of error of up to 20%). This is heavily discussed in public, but it may not be in the amendment because of the social and political costs of this shift.
• The tax-free period for REIT/REIF is ending, the requirement to distribute 50% of the profit is coming, and this will become taxable with the dividend withholding tax to be collected.
• We are coming to the end of the current practice of selling subsidiary shares with a 75% exception. For newly acquired subsidiaries, we will have to pay corporate tax on the profit on sale, while the exemption rate for existing ones will be 25% instead of 75%.
• Minimum corporate and income tax implementation is coming.
• Some VAT exemptions are being removed and the scope of others is being narrowed.
• In free zones, corporate tax exemption will only cover exports.
• A gradual exemption is envisaged in the field of income tax for share options. It is seen that the 2-year period for capital gains envisaged on the disposal of shares has been increased to 5 years and partnership shares are also included.
• It is understood that withholding taxation will be applied to rental income, and the declaration of these incomes that do not exceed a certain limit will become optional.
• An upper limit is imposed on the income tax exemption applied to R&D personnel. In current practice, no matter how much salary s/he receives, all of it is exempt from income tax.
• The removal of the VAT exemption and guarantee method applied within the scope of the inward processing regime is being discussed.
• While transaction tax is foreseen for crypto assets, a low-rate withholding tax on tips in service businesses, and income tax withholding for motor couriers, it appears that the period-based withholding tax for stock market earnings has been waived.

The Circular on inflation adjustment was published by the Ministry of Trade.

• Circular is explaining the financial tables to be considered in different cases such as profit distribution, capital increase and capital reserves to be converted to the capital.
• Banks are not in the scope of this Draft. It is published after a long time as Draft.

Another Tax Omnibus Law in the Parliament.

• There are different items in the Law. Some of them are related with public spending and tax. It is aimed to encourage hybrid electric vehicles that meet the stipulated conditions by changing the Special Consumption Tax rates, and to exempt investment contracts signed between the Minister of Industry and Technology and investors, which contain provisions regarding investment incentives, from stamp duty, like those applied based on investment incentive documents.

Second installments should be paid for motor vehicle tax and income tax in July. 

Minimum equity requirements for the companies should be adjusted until 2026.

Crypto Assets Law enacted after some revisions in the General Assembly of the Parliament.

• We have announced that “The law on crypto assets is on its way to the Assembly.” in our November Tax Newsletter.
• After this law Türkiye exits from the gray list of the FATF.
• Draft Bill on Crypto Assets (Draft Bill), was submitted to the Grand National Assembly of Turkey on May 16, 2024 and is accepted in General Assembly with some revisions.
• The Bill aims to regulate the operations of crypto asset service providers (CSPs), the activities of crypto asset platforms, the custody of crypto assets, and the buying, selling, and transfer transactions of crypto assets that can be conducted by individuals residing in Turkey on these platforms. It also seeks to establish regulations for CSPs to obtain permission from the Capital Markets Board (CMB) to operate and function, ensuring that the principles and rules they must adhere to during their activities will be issued by the CMB based on articles to be added to the Capital Markets Law.
• You can read more about the law in an expert’s blog by Srp-Legal, in English.

Banking & Finance

CMB announced transition period after the enactment of Crypto Asset Law.

• According to the announcement on CMB’s web site, service providers should decide to keep doing in one month and apply to CMB.
• The list of service providers and the ones applied for liquidation will be published.

Suspicious Transaction Reporting Guide has been updated.

An amendment has been made to the Communiqué on the conversion of foreign currencies of companies into Turkish Lira!

The Monetary Policy Committee (the Committee) has decided to keep the policy rate (the one-week repo auction rate) constant at 50 percent.

R&D and Incentives

BYD Announces Landmark USD 1 Billion EV Plant Investment in Türkiye

• The Turkish Ministry of Industry and Technology signed a USD 1 billion landmark investment agreement with China's BYD, the world's largest EV manufacturer, at an official ceremony held in the Presidential Working Office in Dolmabahçe, Istanbul.

Mutual Incentive of Investment Agreements signed between Türkiye, Uruguay and Venezuela were presented to the Parliament.

Draft Communique regarding with “Local Production” is ready but not published yet.  

• Local and national products can be provided “price advantage” in public tenders in Türkiye.
• It is understood from the Draft that there is a need to activate the domestic goods certificate application to ensure the development of the domestic industry through public procurement in the ongoing system with the current Communiqué dated 2014.
• According to the Statistics there are 168.263 industrial firms in Türkiye and 15.536 “domestic goods certificate” is prepared for 4.393 firms in 2023 in Türkiye.

Commercial Regulations

Non-Financial Books might be kept online.

• According to a Draft Communique by the Ministry of Finance and Ministry of Trade, shareholders book, resolution book and other non-financial books will be kept online.
• Türkiye developed its online book keeping system for a long time.

Amendments in some Transportation and related legislations.

• With the Bill accepted in the Parliament, determining the base and ceiling fees for services provided to ships in ports, piers and coastal structures; Regulation of issues regarding the execution of pilotage and tugboat services; It is envisaged that the amounts calculated with carbon pricing tools for the verified greenhouse gas emissions of commercial ships arriving at or leaving ports will be recorded as a special appropriation in the budget of the Ministry of Transport and Infrastructure in order to support research, development, transformation and new construction activities for green shipping.
• This Law numbered 7519 will be published in Official Gazette after President’s approval.

The Free Trade Agreement between Türkiye and Ukraine is ready!

The Electronic Ledger Communiqué, which has been in draft form for a long time, has been published.

• With the Communiqué published in the Official Gazette dated 21/05/2024, important regulations were made regarding the electronic ledger application.

Very important changes have been made in the Urban Transformation Implementation Regulation.

Miscellaneous

Personnel Data Protection Authority announced the Bylaw on “Personnel Data Transmission Abroad” in July 10th in Official Gazette.

The financial holiday has begun.

• In this context, the Financial Holiday application started on Tuesday, July 2, 2024 this year and will end on Saturday, July 20, 2024.
• During this period, tax-related periods are extended.

Significant updates and changes have been made in the Public Procurement Legislation.

• Regulations and Communiqués amending the public procurement legislation were published in the Official Gazette dated 18/5/2024 and numbered 32550.

KGK published a report on the results of surveillance activities.

• A total of 43 thousand notifications were examined by the institution and 700 finding areas were identified, and no findings were reported this year regarding income declarations, professional liability insurance and transparency reports, which were found in previous years.

KGK has published the 2023 Audit Report.

BOBİ-FRS large business limit has been increased.

• After the change the terms of large enterprises were redefined as "total assets of 400 million and above Turkish lira" and "annual net sales revenue of 800 million and above Turkish lira". These limits were previously applied as "total assets of 200 million Turkish liras and above" and "annual net sales revenue of 400 million Turkish liras and above".

Constitutional Court published 2 important decisions.

• While the Constitutional Court did not find the tax reduction envisaged in the Istanbul Financial Center to be unconstitutional, it found the fee exemption envisaged for Asset Management Companies to be unconstitutional.

Consumer Price Index for June 2024 as announced by TURKSTAT;

• Consumer price index (CPI) increased by 71.60% annually and 1.64% monthly.

Best regards,

Taxademy