QUESTIONS:
- If the agreement is made before the delivery date of workplace in construction works, which date will be the starting date of employment?
- Which date will be taken into consideration whether aforementioned work is extending to years’ work or not?
1- Which works are regarded as extending to years works?
Profit or loss should be calculated very definitely at the end of the work in construction and repair works which are extending to years. Furthermore, the whole amount (profit and loss) should be counted as current year revenue and indicated in declaration made in aforesaid year. (article 42 of the Income Tax Law No 193.)
2- Starting Date of Employment in Construction Works
The conditions for extending to years construction and repair works;
2.1- It should be construction and repair work.
2.2- That construction and repair works should be extended over more than one calendar year.
2.3- That construction and repair works should be private or official contract works.
Starting date of employment for construction and repair works:
2.4- construction site delivery date will be based on, if the construction site delivery date is not specified in the agreement.
2.5- starting date of the work will be based on, if the construction site delivery date is not specified in the agreement.
2.6- the effective date of contract will be based on, if none of them is mentioned in the agreement.
3- What is the withholding rate in extending to years construction and repair works?
If the construction and repair works will be completed the next year(s) after the work is started, it is compulsory to make a deduction in the ratio of 3% through progress payment. (In line with the Cabinet Decision numbered 2009/14592)
4- Who will make the deduction of withholding?
The principal should make the deduction on behalf of the contractor (builder) and pay that amount into the tax office.
5- Can the contractor (builder) deduct that amount from his/her tax?
That contractor (builder) can deduct that amount from calculated tax (if any), If there is no tax or the amount of tax is less than the amount of deduction, he/she may claim the difference back from the tax Office.
Source: Revenue Administration
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