Non-resident taxpayers do not submit annual returns for their incomes from immovable property which are taxed wholly by the withholding in Türkiye. Also, in case they submit the annual return for other incomes, they do not include their incomes which are subject to the withholding in their returns.

Taxpayers whose income subject to declaration consists only of the rental income will submit the annual tax return, if;

• Those whose housing rental income obtained in a calendar year exceeds the exemption amount of 9,500 TL for 2022 (21,000 TL for 2023),
• Those who obtain rental income not taxed by withholding tax as a result of renting goods and rights within a calendar year. On other saying, rental incomes that are not subject to the withholding and the exception must be declared the annual tax return regardless of the amount.

Every member of a family has to submit a return on their own behalf for the rental income they obtained from the property and rights belonging to them.

On the occasion that minor and restricted persons are taxpayers; the annual return to be submitted on behalf of them is signed by their parents, guardians or curators. In case of having property and rights with shares, every partner need to declare the rental income corresponding to his/her own shares.

DEDUCTIONS TO BE MADE FROM INCOME INCLUDED IN ANNUAL TAX DECLARATION

Deductions with respect to income to be declared by an annual tax return are specified in Income Tax Law and in other relevant laws. In order to make the following deductions from the income to be declared in income tax return while income tax base is being determined, there must be an income to be declared in an annual tax return and deductions to be made should satisfy the requirements specified in the relevant legislation.

The revenue that is declared at the annual tax return before the other deductions and the revenue loss of former years are deducted would be taken as the base revenue to calculate the amount that would be deducted.

Accordingly, here are some of the matter that may be made subject to the discount:

10.1. Life / Individual Insurance Premiums

The 15% of life / individual insurance premiums paid, can be deducted for determining the tax base in the annual tax returns.
The premiums that should be taken into account for determining the tax base are as follows:

• 50% of life insurance payments of the taxpayers’, their spouses and children,
• 100% of death, accident, health, disability, maternity, child birth and education individual insurance premiums.

The total amount that would be deducted cannot exceed the 15% of total revenue and annual amount of minimum wage. (The gross annual minimum wage for 2022 is 68.850,00 TL.)*

The premiums paid to the individual retirement insurance cannot be deducted.

*The gross minimum wage amount for 2022 was calculated in line with the Minimum Wage Determination Commission Decisions, which were determined as: 166.80 TL per day between 1/1/2022-30/6/2022 and TL 215.70 TL per day between 1/7/2022-31/12/2022.

10.2. Education and Health Care Expenses

The education and health care expenses done as stated below would be deducted from the annual revenue declared in tax return in condition not to exceed the 10% of total revenue:
• The education and health care expenses should be performed in Türkiye.
• The expenses should be verified by the documents received from the individual or legal personalities who are personal or corporate income taxpayers.
• The expenses should be regarding the taxpayers’ oneself or their spouse and small children.

The term” small child” refers to children under the age of 18 or under the age of 25 in the education who live with a taxpayer or who are cared for by a taxpayer (including those who are given alimony, those who have been adopted and those who live with a taxpayer from grandchildren who have lost their parents).

10.3. Donations and Aids
10.3.1. Donations and Aids Which Can Be Deducted As Limited to 5% of Income to be Declared

Personal income taxpayers, general and private budgeted public administrations, provincial administrations, municipalities, villages and non-profit associations and the foundations that are exempted from tax by President of the Republic, can deduct the donations and aids against receipt from their annual income in condition that it would not exceed the 5% of total income. (It would not exceed 10% of total income if donations are made to the stated organizations, associations and foundations in the development priority zone.)

10.3.2. Donations and Aids Which Are Completely Deductible

a) The donated schools, health institutions, the student dormitories and day care centers which have bed capacity not less than 100 (in development priority zones not less than 50), orphanages, rest houses, care and rehabilitation centers to the general and private budgeted public administrations, provincial administrations, municipalities, villages and all expenses for the construction of the place of worship constructed by the permission of authorized public administration and director, the institutions where there ligious education is given under inspection of the Directorate of Religious Affairs, youth centers and youth and scouting camps belong to the Ministry of Youth and Sports or all donations and aids in kind or in cash made for the construction or for the maintenance of their activities of these establishments can be deducted.

b) The total cost of food, cleaning supplies, clothing and heating donated to the foundations and associations established as food banks for helping poor people in line with the procedures an principles determined by the Ministry of Treasury and Finance can be deducted from the income to be declared.

c) General and private budgeted public administrations, provincial administrations, municipalities, villages, non-profit associations, the foundations that are exempted from tax by President of the Republic, the expenses done by institutions which makes scientific research or the expenses for the studies that are supported by the Ministry of Culture and Tourism and all donations and aids made for these purposes can be deducted.

d) The total amount of the donations and aids in kind or in cash against receipt to the aid campaigns initiated by President of the Republic.
e) The total amount of the donations and aids in cash against receipt to Turkish Association of Crescent and Turkish Green Crescent Society except their commercial enterprises can be deducted.

10.4. Sponsorship Expenses

According to Article 89/8 of the Income Tax Law the sponsorship expenses done can be deducted from the income declared at annual tax return as follows:
• 100% of expenses for amateur sports,
• 50% of expenses for professional sports.

10.5. Donations and Aids Which Are Completely Deductible in Accordance with Other Laws

Donations and aids which are completely deductible in accordance with other laws are as follows:
• Donations made in accordance with the Law No. 222 on Primary Education and Training,
• Donations made according to the Law No. 278 on the Establishment of the Scientific and Technical Research Council of Turkey,
• Donations made according to the Higher Education Law No. 2547,
• Donations made according to the Social Services Law No. 2828,
• Donations and aids made according to the Law No. 2876 on Atatürk Culture, Language and History Institution,
• Donations and aids according to the Law No. 3294 on Encouraging Social Assistance and Solidarity,
• Donations and aids made in accordance with the Law No. 3388 on the Turkish Armed Forces Foundation,
• Donations made according to the Anti-Terrorism Law No. 3713,
• Afforestation, maintenance and protection costs in forests established according to the National Afforestation and Erosion Control Mobilization Law No. 4122,
• Donations and aids made in accordance with the Republic of Turkey Pension Fund Law No. 5434,
• Donations, aids and sponsorship expenditures made in accordance with the Law No. 6546 on the Establishment of Çanakkale Wars Gallipoli Historic Site Presidency,
• Donations and aids made in accordance with the Law No. 6569 on the Establishment of the Presidency of Turkish Health Institutes and Amendments to Certain Laws and Decree Laws,
• Donations, aids and sponsorship expenditures according to the Law No. 7174 on Cappadocia Area,
• Donations and aids made in accordance with the Law No. 7269 on Measures to be Taken and Aids to be Made in Case of Disasters Affecting Public Life.

In case the donations and aids are not in cash, the equal value of the donated property or the right; if the equal value is not exist then the value determined by the Assessment Committee according to provisions of the Tax Procedure Law shall be taken into account.

Source: Revenue Administration
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

In the taxation of rental income, the net amount of the income obtained is determined in two different ways as follows:

• Actual expenses method,
• Lump-sum expenses method (for other than those who lease out rights).

The selection of the actual expenses or the lump-sum method must cover all immovable property, which means that it is not possible to choose the actual expenses method for some part and the lump-sum expenses method for the remaining part.

Taxpayers opting for the lump-sum expenses method cannot return to the actual expenses method unless two years have passed.

Deduction of Expenses in Actual Expenses Method

In case the actual expense method is chosen, the following expenses stated in Article 74 of the Income Tax Law can be deducted from the gross income in order to find the net income.

• Lighting, heating, water and elevator expenses paid by lessor for rented property,
• Management costs which are measured according to the importance of property and related with the administration of the rented property,
• Insurance expenses relating to the rented property and rights,
• Interest of debts relating to the rented property and rights,
• 5% of acquisition value of one rented house for 5 years beginning from the date of acquisition (This deduction applies only to rental income of the rented house; non- deductible part is not evaluated as expenditure surplus. This deduction is not valid for houses acquired before 2018),
• Taxes, duties and fees paid for the rented property and rights and rates paid to municipalities for expenses by lessor,
• Depreciation setting aside for rented property and rights, and heat insulation and energy saving expenditures which are made by the lessor and that increase the economic value of the real estate. (These expenditures can be considered as cost if it exceeds 2.000 TL for the year 2022.)
• Repair and maintenance expenses incurred by lessor for the rented property,
• Rents and other actual expenses paid by sub-lessors,
• Rent of the house accommodated by the lessors who rent their own property, (non-deductible part is not evaluated as expenditure surplus),

It is not allowed for taxpayers not residing in Türkiye, (including Turkish nationals who reside abroad for a continuous period of more than six months with a residence or work permit) to deduct the amount of rents they pay in a foreign country from their rental income obtained in Türkiye.

• Cost of loss, detriments and compensations paid for rented property and rights based on a contract, law or court decree. Non-residents who have opted for the actual expenditure method should keep the documents showing the expenses incurred for a period of 5 years and submit to the tax office when required.

Calculation of Deductible Expenses in Case of Exception in Actual Expenses Method

In case, a taxpayer chooses the actual expenses method and benefits from the exception applied to rental income from house, the part of actual expenses corresponding to the exception shall not be deducted from gross revenues.

The part of deductible expenses corresponding to the taxable revenue will be calculated using the following formula:

(*) Taxable Revenue = Total Revenue – Amount of Exception for Rental Income from House

Example: Taxpayer (D) rented his/her house in 2022 and obtained 120.000 TL of rental income. Taxpayer, who has no any other income, incurred 30.000 TL of expenditure for his/her property and chooses the actual expenses method.

The amount that taxpayer can deduct as actual expenses will be the amount that corresponds to the taxable revenue of the total expense for 30.000 TL.

Taxable revenue = 20.000 – 9.500 = 110.500 TL
Deductible expense = (30.000 X 110.500) / 120.000 = 27.625 TL

In case, the amount of actual expense to be deducted from the rental income is 27.625 TL.

Deduction of Expenses in Lump-sum Expenses Method

Taxpayers opting for the lump-sum expenses method can deduct the lump-sum expense at the rate of 15% from their revenue against actual expenses. The lump sum expense, for taxpayers who obtain a rental income and who will be able to benefit from the residence exemption, will be calculated over the remaining amount after deducting the exception amount.

It is not possible to opt for lump-sum expenses method in the case of renting rights. Taxpayers who earn income from the rental of rights along with the rental income of the workplace must choose the actual expense method in their income tax returns.

Source: Revenue Administration
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

50% of the previous period’s losses were used regarding the tax base increase made with Law No. 6736. However, the tax base has been increased again with Law No. 7143 due to the fact that the losses of the previous period are transferred and continue. In this case, will we continue by deducting 50% of the previous period’s loss?

It is not deducted from loss twice. 50% loss which cannot be deducted, remains on the balance sheet.

Source: İSMMMO
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

Being valid from 01.01.2006, with the Law numbered 5479, Article 19 of the Income Tax Law headed “Exemption of Investment Deduction on Business and Agricultural Earnings” has been abolished, and Temporary Article 69, attached to this Law, regulates the transition period implementations. According to this;

• Exemption amount which could not be deducted before the date of 01.01.2006, by reason of insufficient earnings in previous years,
  • Exemptions which will be calculated on account of investment expenditures which is done after the date of 01.01.2006 within the context of incentive certificates based on applications submitted before the date of 24.04.2003 for the investments which begun within the framework of Additional Articles1-6 of the Income Tax Law abolished previously,
  • Exemptions which will be calculated on account of investment expenditures following the date of 01.01.2006, given that providing economic and technical integrity with investments which began before the date of 01.01.2006 within the scope of Article 19 of Income Tax law,

can be deducted as exemption of investment deduction.

(Income Tax Law a.19; Income Tax Law Temporary Article 61; Income Tax Law Temporary Article 65; Income Tax Law Temporary Article 69; Income Tax Circular/1; Income Tax Circular/22; Income Tax Circular/23; Income Tax Circular/32)

Source: Revenue Administration (link: https://www.gib.gov.tr/en/references-and-resources/tax-incentives/a)
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

Can I deduct the VAT amount calculated separately in the invoices of the foreign companies providing service with VAT ID number (Microsoft etc.) in Turkey? Do I also need to submit a VAT 2 declaration?

If VAT is shown on your invoice, you can deduct it. Otherwise, the VAT 2 declaration will be submitted.

Source: İSMMMO
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

1-) In August, this number decreased to 4. So, won’t I deduct PRI now?

2-) If I won’t, will I deduct in the event that the number increases to 5 again?

1. If the number of employees decreases to 5, PRI will not be mandatory.

2. If the number of employees increases again to 5, PRI will be mandatory.

Source: İSMMMO
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

I had surgery in a private hospital. It says on the medical invoice that is it exempt from VAT and Corporate tax.
Is it possible to deduct the medical invoice in the rental income declaration?

It is not possible to deduct it.
The Party who prepares the invoice shall be subject to Income Tax or Corporate Tax.
Paragraph 2 of Article 89 of Income Tax Law is submitted below.

Education an health expenses of the taxpayer, their spouse, children and workers who benefit from tax discount due to education and health expenses in accordance with repeating Article 121 can not deduct these expenses from tax base by benefitting from this provision on condition that the expenses do not exceed the 10% of the declared income, are made in Turkey and are authenticated with documents taken from real or legal persons who are subject to INCOME or CORPORATE tax.

Source: İSMMMO
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

It is possible to apply discount on the VAT on the invoice of the property which is bought and delivered from a construction company with a deed on condition that the VAT is entered on the books.

Source: İSMMMO
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

On condition that the cost values of clothes that are donated to the association ensure the requirements in the General Comminique on Income Tax with serial number 251 and subparagraph (10) of the first article of article 40 of Personal Income Tax Law…by your company… it is possible to write them off as expenses when determining the net income.

On the other hand, … within the scope of statements in the section titled ‘’10.3.2.” Limited donations and aids with 5% of company profit’’ in General Communique on Corporate Income Tax serial number 1, it is possible to make a deduction on donations that do not meet the requirements or donations in kind that are not related to food, cleaning, clothing and fuel materials when determining your corporate tax base.

Source: İSMMMO
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

VAT rate for textile outsourcing is 8%. For intermediary services on outsourcing works including textile outsourcing, apparel, bag and shoe outsourcing between taxpayers and specific buyers, 5/10 VAT deduction is applied by the buyers.

Source: İSMMMO
Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.