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2024/71 Tax Newsletter in Türkiye (November 2024)

Please find out our summary with respect to the latest developments on tax regulations, aiming to provide you an update on the recent changes along with their possible effects on your business.  

The New Omnibus Tax Law and inflation accounting are the main subjects for the second half of the year. Tax Communiques regarding with different tax procedural applications are on the way. After corporate and income tax legislations, VAT issues, withholding tax on e-commerce starting in 2025, new tax penalties and other important items are described recently with new secondary legislations.

Ongoing investment will be treated with a different “inflation accounting taxation” than other assets and inventories. Those investments will be tracked in a “special fund” account.

E-ledger will be a must for all companies starting in 2025. e-invoice limit will be decreased and there will be no paper invoice in Türkiye in 2026. There are more e-audit applications on the table.

VAT rate is redetermined for special medical foods like medical devices starting on November 15th.

Budget for FY25 is in the Parliament. Tax revenue is estimated as 11 trillion 138,8 billion TRY.

Major Tax Issues

VAT rate is redetermined for some specific medical products and foods.

• The rate change started on November 15th.
• Special medical foods’ VAT rate will be 10% on like medical devices.

New Tax Law is accepted in the Parliament easing the inflation accounting for some firms.

• Scope in the inflation accounting is getting narrow. The government owned enterprises are out of scope. Broke firms and companies in liquidation process are not subject to the inflation accounting with this new amendment. Investment amounts in balance sheets will be adjusted with a different “special fund method” to give a tax effect extension for those firms.
• Inflation adjustment gains related to the ongoing investments will be recognized as income in installments after the completion of the investment with this amendment.
• According to the statistics published by TURMOB, 60% of the firms declared “inflation accounting gain” in Türkiye so far. It is very important data.
• Other important subjects such as levying new burdens on owning vehicles, credit cards and others are postponed after President’s direction to the Parliament.

Turkish Tax Administration updates digital tax services with new tools and applications.

• You can see and review all the bank accounts (IBAN) in digital tax website.
• It seems that tax authorities are working on it for tax audit and compliance.

Withholding tax application on money deposits and others is extended.

• Withholding income tax rates calculated on interests earned from TRY deposit accounts and dividends paid by the participation banks have been redetermined by the President.

Small firms are not subject to inflation accounting in Türkiye for provisional tax periods in 2024.

• The Ministry of Finance published an amendment stating that small firms having less than 50 million TL gross sales are not supposed to prepare financial tables with inflation accounting for the second and third provisional tax quarters.
• But all companies will have to adjust the balance sheet for the year end.

New Tax Communiques are published regarding tax penalties, rental payments, and other payments by banks, e-invoices, e-ledgers, and e-applications.

• Rental payments are to be paid via banks regardless of the amount of rental type.
• Payment exceeding TRY 7.000 will be paid via banks, non-compliance will be punished.
• Incremental tax penalties will be applied. The practice of implementing progressive penalties for special irregularities has begun.
• E-books will be used by all the company types starting in 2025. E-invoices limit is decreased and it will be used for all the companies and transactions in 2026.
• Revenue Administration updated e-invoice system for the firms using direct e-invoice system rather than a special “integrator software”
• You can find the details by clicking the link.

New Tax Communique is published for “withholding tax on e-commerce” in Türkiye.

• It has not yet been announced what the tax rates will be regarding the withholding application that will start in 2025. The President has the authority on this matter to define the rates.
• You can read the details by clicking the link

Türkiye-Argentina Double Tax Agreement has been announced to enter into force on September 13, 2024. The number of Turkey’s double taxation agreements is increasing.

Tax Treaty with Burundi is Parliament’s agenda.

New Tax Communique is published for “VAT issues” in Türkiye.

Pillar II will be applied in Türkiye and we are looking forward to seeing the Draft Communique.

• A new Chapter was added to the current Corporate Tax Code in Türkiye.
• Türkiye chooses the income inclusion rule (IIR) and the undertaxed profits rule (UTPR). Also, a qualified domestic minimum top-up tax (QDMTT) is used.
• Türkiye has signed a new agreement on minimum global corporate tax (STTR).
• There will be a huge Draft Communique for the Pillar II application.

The government discussed the Budget for FY25 in the Parliament.

• You can find the details of the budget in President’s website. 
• You can also follow the “discussions and presentations” in Parliament’s website.

 

Banking & Finance

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

• You can find the details by clicking the link.
• Policy rate might not be lowered by the Bank in this year.

The BRSA (BDDK) has prepared Draft Communiqués regarding the display of inflation accounting-based items in financial tables.

• Those legislation are still in BRSA’s website and not published yet.

Treasury Financing Program (2024 Developments and 2025 Projections) is announced.

There are 3 new digital banks in Türkiye with a new announcement.

• BRSA has announced that Colendi, Ziraat Dinamik and FUPS are the new ones.
• We are glad to work with Colendi Bank and Colendi AI in tax matters.

R&D and Incentives

Comuto SA (Blablacar) has bought the shares of Obilet in Türkiye.

• BlaBlaCar, the world’s leading community-based travel app, had entered into a share purchase agreement for the acquisition majority stake in Obilet, which is a leading online travel platform operating in the bus, flight, train and ferry ticketing, car rental and hotel booking businesses in Türkiye and near region.
• Taxia tax team is glad to assist Blablacar in this project.

Insider raises USD 500 million in series E funding led by General Atlantic.

• Insider, a marketing technology platform founded in Türkiye, secured USD 500 million in Series E funding in a recent round led by prominent global growth investor General Atlantic.
• The new investment will support Insider's continued development of innovative marketing software and accelerate its R&D efforts to expand the company's advanced AI capabilities.

The 3% fund allocation requirement for R&D incentives is still ongoing.

• It will be calculated on the tax exemption of R&D and Technopark firms.
• You can access the article written by Certified Public Accountant Şaban Küçük about Collective Investment Funds in Turkey submitted in IFA Conference by clicking the link.

Commercial Regulations

EMRA (EPDK) increased the capital adequacy requirements for energy companies.

• These companies must submit their CPA-approved reports regarding the mandatory increased minimum capital to the Board before June 1, 2026.

Amendments on the “Consumer Protection and e-Commerce Law” is accepted in the Parliament.

• The Law dated 30 October 2024 introduces significant amendments to Consumer Protection Law and Electronic Commerce Law.
• Changes regarding the direct selling system and administrative fines to be imposed for violations of this system will be entering into force on 30 July 2025. Other provisions entered into force as of 30 October 2024.

Miscellaneous

Social security agreements with other countries are becoming more important.

• There are 35 different agreements that Türkiye is a part of.
• You can find the details of the Guide that we updated by clicking the link.

UTTS system will cover all the vehicles in Türkiye to track the oil / gas consumption.

• It will cover the vehicles owned by the firms first. The deadline for this is the year end FY24. The system will be applicable for the new cars in the second half of FY25.
• The Revenue Administration updated the “Guide of the System”

The Medium-Term Program (MTP) has started to implement.

• The MTP (2025-2027) focuses on green and digital transformation. It is very important to know “green” is mentioned 45 times and “digitalization” 53 times. “AI and usage of artificial intelligence” is countless in the document. It shows that the Administration is using the new systems in auditing and implementing the programs and initiatives.
• You can find the details of the Program by clicking the link.

Minimum wage will be increased for FY25

• The minimum wage was set as TRY 17,002.12 net, TRY 20,002.50 gross for FY24.
• The daily wage is set as TRY 666.75 gross.
• There is no income tax and stamp tax in Türkiye for the minimum wages.
• Government seems to increase it not more than %30 this year if nothing changed.

Best regards,  

Taxia Partners