28 July 2024
The Turkish Parliament (TBMM) has approved a comprehensive bill introducing significant amendments to tax and social security regulations. This legislation, officially named the Law on Amendments to Tax Laws and Certain Laws, encompasses various critical changes aimed at bolstering tax security, addressing administrative concerns, and enhancing social security benefits.
Key Provisions of the New Law:
Increase in Minimum Pension: The minimum monthly pension for retirees has been raised to 12,500 Turkish Lira.
Income Tax Exemption for Tech Start-Ups: Income tax exemptions are introduced for shares provided to employees by qualifying tech start-ups, as determined by the Ministry of Industry and Technology. The exemption applies to the value of shares up to the equivalent of one year’s gross salary.
Revenue Discrepancy Audits: Businesses will be invited to explain discrepancies if their declared revenue deviates by more than 20% from the average revenue identified through tax office inspections. This applies to both individual and corporate taxpayers and will be enforced from 1 January 2025.
E-Commerce Payment Obligations: Online marketplace intermediaries must ensure tax deductions on payments to vendors, aiming to enhance tax compliance and reduce informal economic activities.
Administrative Penalties: New and increased penalties for tax violations, including doubled fines for issuing documents outside the scope of the law, and a tripled fine if violations are self-reported within five working days.
Valuation of Precious Metals: Precious metals such as gold, silver, platinum, and palladium traded on the stock exchange will be valued at market rates, with cost prices used only if market rates are deemed artificially manipulated.
Enhancements to Social Security Payments: Monthly minimum payments for disability, old-age, and survivor pensions are increased to 12,500 Turkish Lira. Additionally, the short-term insurance premium rate is set at 2.25%, with the President authorised to adjust this rate.
Incentives for Voluntary Tax Compliance: The new law seeks to promote voluntary tax compliance by removing certain tax reconciliation mechanisms and increasing penalties for non-compliance. It also stipulates additional compensation for Tax Administration personnel for overtime work.
Tax Incentives for Foreign Earthquake Aid: VAT exemptions will apply to construction and donation activities undertaken by foreign entities in the regions affected by the 6 February 2023 earthquakes, covering donations such as housing, schools, and hospitals.
Corporate Tax Adjustments: The law introduces a minimum local and global corporate tax rate of 15%, affecting multi-national corporations with consolidated annual revenues exceeding €750 million. New regulations are also established for mergers, acquisitions, and corporate restructurings, facilitating tax deferrals for asset and liability transfers.
Additional Judiciary Provisions: Significant changes in the administrative judiciary process include adjustments to monetary thresholds for appealing tax and administrative decisions and introducing new procedural guidelines for such cases.
These legislative changes aim to enhance transparency and efficiency in tax collection, reduce the shadow economy, and provide better social security support for Turkish citizens.
The adjustments, particularly in the realms of e-commerce and corporate taxation, reflect Turkey's efforts to align more closely with global standards and practices.
If you think that these amendments may have affected you, contact us for further details or legal assistance regarding these changes.
You can access the relevant issue of the Official Gazette from here.
Disclaimer: This article is intended for informational purposes only and does not constitute legal advice.