legislation – Muhasebe News

Uncertainty Regarding Unlicensed Renewable Energy Facilities in Turkey Has Been Resolved

MuhasebeNews — Tue, 08 Dec 2020 12:45:01 +0000

The Amendment Law on the renewable energy market was published in the Official Gazette in Turkey on 25 Nov 2020.

With the new legislations, uncertainty regarding unlicensed renewable energy facilities beyond 10 years has been resolved. Unlicensed renewable energy facilities will be able to start licensed production under the condition that 15 percent of the hourly market clearing price formed in the electricity market during the license period is paid as a contribution fee to the RES Support Mechanism.

Another important change is the application of the current USD prices in terms of TRY krş / kWh for the facilities within the scope of the current unlicensed generation activity since the end of the 10-year period. Prices in TRY will also be applied for renewable energy facilities that will be activated after July 2021.

Renewable power plants commissioned after July 2021 will be able to benefit from TRY-denominated domestic component contribution prices for 5 years. Until now, only licensed renewable energy facilities could benefit from TRY-denominated domestic component contribution prices.

According to new regulations, there will be an 85 percent discount on the cost of using state land such as rent and permit fee for power plants that will be activated by the end of 2025.

Source: Republic of Turkey Investment Office
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.

Tax Guide for Foreigners

MuhasebeNews — Wed, 13 Nov 2019 09:00:25 +0000

Tax Guide for Foreigners

Turkey has one of the most competitive corporate tax rates among OECD member countries. The Turkish corporate tax legislation has noticeably clear, objective, and harmonized provisions that are in line with international standards. The Turkish tax legislation may be classified under three main headings:

Income Taxes

The Turkish tax legislation includes two main income taxes, namely personal income tax and corporate income tax.

1.1. Personal Income Tax

Real persons’ income is subject to personal income tax. Income is defined as the net amount of all earnings and revenues derived by an individual within a single calendar year. An individual’s income may consist of one or more income elements listed as follows:

Individual income tax rates vary from 15% to 35%. Individual income tax rates applicable for 2019 are as follows:

Income Scales (TRY) (Employment Income)	Rate (%)	Income Scales (TRY) (Non-Employment Income)	Rate (%)
Up to 18,000	15	Up to 18,000	15
18,001-40,000	20	18,001-40,000	20
40,001-148,000	27	40,001-98,000	27
148,001 and over	35	98,001 and over	35

1.2. Corporate Income Taxes

In case income elements specified in the Income Tax Law are derived by corporations, taxation is applicable on the legal entities of these corporations. Corporate taxpayers defined in the law are as follows:

In Turkey, the corporate income tax rate levied on business profits is 20%. The rate for corporate income tax has been increased to 22% for the tax periods 2018, 2019, and 2020; however, the Council of Ministers is authorized to reduce the 22% rate to a rate as low as 20%.

Taxes on Expenditure

2.1. Value Added Tax (VAT)

The generally applied VAT rates are set at 1%, 8%, and 18%. Commercial, industrial, agricultural, and independent professional goods and services, goods and services imported into the country, and deliveries of goods and services as a result of other activities are all subject to VAT.

2.2. Special Consumption Tax (SCT)

There are four main product groups that are subject to SCT at different tax rates:

Petroleum products, natural gas, lubricating oil, solvents, and derivatives of solvents
Automobiles and other vehicles, motorcycles, planes, helicopters, yachts
Tobacco and tobacco products, alcoholic beverages
Luxury products

Unlike VAT, which is applied to each delivery, SCT is charged only once.

2.3. Banking and Insurance Transaction Tax

Banking and insurance company transactions remain exempt from VAT but are subject to a Banking and Insurance Transaction Tax. This tax applies to income earned by banks, such as loan interest. Although the general rate is 5%, some transactions, such as interest on deposit transactions between banks, are taxed at 1%. No tax has been levied on sales from foreign exchange transactions since 2008.

2.4. Stamp Duty

Stamp duty applies to a wide range of documents, including contracts, notes payable, capital contributions, letters of credit, letters of guarantee, financial statements, and payrolls. Stamp duty is levied as a percentage of the value of the document at rates ranging from 0.189% to 0.948% or is collected as a fixed price (a pre-determined price) for some documents.

Taxes on Wealth

There are three kinds of taxes on wealth:

Property taxes
Motor vehicle tax
Inheritance and gift tax

Buildings, apartments, and land owned in Turkey are subject to real estate tax ranging at a rate between 0.1% and 0.6%, while Contribution to the Conservation of Immovable Cultural Property is levied at a rate of 10% of this real estate tax. Motor vehicle taxes are collected on the basis of fixed amounts that vary according to the age and engine capacity of the vehicles each year. Meanwhile, inheritance and gift taxes are levied at a rate of 1% to 30%.

Source: Republic of Turkey Investment Office (link: https://www.invest.gov.tr/en/investmentguide/pages/tax-guide.aspx)
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.

What is the tax withholding legislation for rental payments?

MuhasebeNews — Sat, 23 Mar 2019 08:58:13 +0000

Persons, corporations and entities who rented property and rights in accordance with Article 94 of Income Tax Law are obliged to withhold income tax on the gross amount of payments made for rent.

Those people and enterprises that are tenants have to withhold income tax from the gross amount of their rental payments at the rate of 20%.

This withholding tax will also be made from the rent paid in advance for the upcoming months and years.

For example; when the rent is paid in advance for 3 months or 1 year for a workplace, the total rent paid will be subject to tax withholding.

If tenants are taxpayers whose commercial earnings determined according to simple method, they shall not withhold in rental payments.

In case that the immovable property leased out is used both as house and workplace; the total rent is subject to withholding as long as it is used as workplace partially or in whole.

Source: GİB
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.

If the Corporation is handed over after it goes into Action, How Can the Transferor and the Transferee Benefit from Reduced Corporate Tax?

MuhasebeNews — Thu, 16 Aug 2018 14:00:04 +0000

If the Corporation is handed over before it goes into action or after it partially or completely goes into action, the transferor and the transferee may benefit from reduced corporate tax as they fulfill the conditions stated below:

1- If the Corporation is handed over before it goes into action: The transferee can benefit from reduced corporate tax if they fulfill all the conditions stated in the related legislation.

2- If the Corporation is handed over before it goes into action: It is not possible for the transferor to benefit from reduced corporate tax with reference to that corporation.

3- If the Corporation is handed over after it partially or completely goes into action: The transferor (from the date of reduced corporate tax until the transfer date) and the transferee (after the transfer) can benefit from it as they fulfill all the conditions stated in the related legislation.

Source: Corporate Tax Law

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.