Are the salaries paid to spouses in sole proprietorships taxed and premiums recorded as expenses?
Monthly salaries, wages, bonuses, commissions and compensations paid to the owner of the enterprise, their spouse and minor children from the enterprise are not accepted as expenses in determining the tax base.
INCOME TAX LAW
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Payments Not Accepted as Expenses
Article 41
The following payments are not accepted as expenses. 1. Cash withdrawals or other values taken by the owner of the business, their spouse and children from the business (Values taken in kind are evaluated with the comparable value and added to the withdrawals of the owner of the business.)
2. Monthly salaries, wages, bonuses, commissions and compensations paid to the owner of the business, their spouse and minor children from the business;
3. Interests to be carried out for the capital invested by the owner of the business;
4. Interests to be carried out on the receivables of the owner of the business, their spouse and minor children in the business in current accounts or other forms;
5. (Paragraph added by Article 3 of Law No. 5615 Entry into force; effective as of 04.04.2007, effective as of 1/1/2007) Except for the transactions specified in paragraphs 1 to 4 of this paragraph, if the owner of the enterprise purchases or sells goods or services with related parties at prices or prices determined in violation of the principle of conformity with arm’s length, the differences between the prices or prices in accordance with arm’s length and the price or price applied by the owner of the enterprise, which are against the enterprise, shall be deemed to have been withdrawn from the enterprise.
The spouse, ascendants and descendants of the owner of the enterprise, collateral and in-laws including the third degree, companies in which the owner of the enterprise is a direct or indirect partner, partners of these companies, other companies under the control of these companies in terms of management, supervision or capital shall be deemed to be related parties.
In the application of this clause, manufacturing and construction, renting and leasing, borrowing or lending money, wages, bonuses and similar payments that require transactions are considered as purchase or sale of goods or services in all cases and conditions.
If the differences deemed to have been withdrawn from the enterprise are taken into account in the calculation of the income or corporate tax base declared by the related person, the taxation transactions of the related person are adjusted accordingly. In terms of matters not included in this article regarding related persons and transactions made with these persons, the provision of Article 13 of the Corporate Tax Law No. 5520 shall be applied.
6. All kinds of fines and tax penalties and compensations arising from the crimes of the enterprise owner (Compensations stipulated as a penalty condition in contracts are not considered as compensation of a punitive nature.)
7. (Paragraph added by Article 8 of Law No. 3571) 50% of the advertisement and advertising expenses of all kinds of alcohol and alcoholic beverages and tobacco and tobacco products ((0) zero with the Decree Law No. 90/1081) ((Expression amended by Article 45 of Decree Law No. 700; Entry into force: 09.07.2018) The President(*) is authorized to increase this rate up to 100% and reduce it to zero).
8. (Paragraph added by Article 25 of Law No. 4008, Entry into force: 1.1.1995) Expenses and depreciation of motorized sea vehicles such as yachts, cutters, boats, speedboats, and aircraft such as airplanes and helicopters, which are acquired through leasing or registered with the business, and which are not related to the main field of activity of the business;
(Paragraph regulated by Article 6 of Law No. 6322, Entry into force: 15.06.2012)9. In businesses where the foreign resources used exceed their own resources, the part decided by the President(**) not to exceed 10% of the total of the expenses and cost elements under the names of interest, commission, maturity difference, profit share, exchange rate difference and similar, related to the foreign resources used in the business, excluding those added to the cost of the investment, exclusively for the exceeding part. (Expression amended by Article 45 of Decree Law No. 700; Entry into force: 09.07.2018).
The President(*) is authorized to differentiate the rate to be determined by sectors (phrase amended by Article 45 of Decree Law No. 700; Entry into force: 09.07.2018), and the Ministry of Finance is authorized to determine the procedures and principles regarding the implementation of the clause
10. (clause added by Article 28 of Law No. 4756 Entry into force: 21.05.2002) Compensation expenses paid due to material and moral damages arising from acts committed through the press or radio and television broadcasts.
In the implementation of this article, partners of collective companies and limited partners of ordinary and registered limited partnerships are considered as enterprise owners.
11. (Article 1 added to Law No. 7394. Entry into force: 15.04.2022) Expenses for advertisements given to those who are subject to an advertising ban within the scope of additional article 4 of Law No. 5651 on the Regulation of Publications Made on the Internet and Combating Crimes Committed through Such Publications, dated 4/5/2007.
(*) Previously amended: Council of Ministers
(**) Previously amended: Council of Ministers
Source: Istanbul Chamber of Certified Public Accountants
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