withholding – Muhasebe News

Persons, corporations and entities who rented property and rights in Türkiye are obliged to withhold income tax on the gross amount of payments made for rent

MuhasebeNews — Tue, 18 Apr 2023 06:00:05 +0000

IN CASE OF OCCURRING LOSS – RENTAL INCOME IN TÜRKİYE

At the adding up income, losses arising from part of the sources of income (except those arising from other income and gains written in Article 80 of the Income Tax Law) are deducted from the gains and losses of other sources.

Any decrease occurring in the capital itself which is subject to income from immovable property is not considered as loss and is not accepted as expense when determining the gross income amount.

Losses arising from the expenditure surplus in the calculation of the net amount of income from immovable property can be deducted from income to be declared in the following years not for more than 5 years.

There are two exceptions for this rule:

• In the event of any loss resulting from deducting the amount of the rent of the house or lodging paid by the lessor from the rental income of their house, such loss cannot be subject to deduction from the income from immovable property to be obtained in the following years.
• Non-deductible part of the amount corresponding to 5% of the acquisition value which has been subject to deduction of income from the one immovable rented as house is not considered as an expenditure surplus.

Accordingly, it is not possible to consider an expenditure surplus as loss in these situation.

TAX WITHHOLDING IN RENTAL PAYMENTS

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.

Persons, corporations and entities in question 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.

If tenants are taxpayers whose earnings are determined in the simple earning basis; Since they have not obligation to withhold taxes, they will not withhold on rent payments.

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

Source: Republic of Türkiye 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.

Can we state the wage to be paid to joint stock company partners in return for their work in the company as an expense?

MuhasebeNews — Mon, 06 Apr 2020 12:30:11 +0000

Two members of the board of whom we paid net daily allowance in the amount of 3.500 TL, since they are management members in a joint stock company with 5 partners, left the membership of the board of directors. They will continue to work as the unit manager in the company. How should we make the payment to them?

It is obligatory for the wages paid from these companies in return for all kinds of services, to joint-stock partners and limited-liability partners and limited partners to be subjected to tax withholding and it is possible to state these an expense, since these are the payments within the scope of the 61st Article of the Income Tax Law.

According to the Article 61 of the Income Tax Law, with its meaning in the law of obligations, labor law and social security law, the wages of the board of directors, which are not considered as service fee but are considered as counsel fees, are considered as wages, and thus they are subject to tax withholding on the Income Tax tariff, and pursuant to the Article 40 of the Income Tax Law, these are accepted as the expenses to be deducted from the commercial income by considering them as the wage paid to the employee.

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.

Income Tax Withholding Support in Turkey

MuhasebeNews — Thu, 21 Nov 2019 08:00:02 +0000

Income Tax Withholding Support in Turkey

The withholding tax imposed on the income tax of employees will not be levied for new staff employed for the investments made in Region 6. This support will be available for the investments in Region 6 only. There is no upper limit for income tax withholding support and it is applicable for 10 years.

Income Tax Withholding Support Example

Amount of Income Tax Withholding Support*

= (Additional Employment) x (Term**) x (Income Tax Withholding)
= 50 employees x 120 months x 119.91 TL
= 719,460 TL

* This is the maximum amount from which the subsistence allowance will be deducted.
** Term is expressed in “months”.
***The amount for the 2nd half of year 2012.

Source: Ministry of Trade (link: https://www.trade.gov.tr/investment/investment-content/income-tax-withholding-support)
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.

Which date should we consider when declaring the withholding statement for Google ads?

MuhasebeNews — Mon, 25 Feb 2019 13:15:53 +0000

When are we required to declare the 15% withholding we pay to Google, Facebook, Twitter and etc. for the ads? On the date of the invoice or the date of the payment?

The date of the invoice must be considered.

Are we required to pay withholding (15%) for our payment to Google adwords?

MuhasebeNews — Thu, 24 Jan 2019 12:30:17 +0000

Our company is making payments to Google via credit card for adwords. Pursuant to Decree numbered 476 and dated 19.12.2019, are we required to deduct 15% withholding for this service as of 01.01.2019?

IN TERMS OF VAT

In terms of General Communique on VAT Application it can be explained as; ‘’If the service brought to Turkey is in relation with the company’s activities in Turkey, the service is used in Turkey; if the service is not in relation with activities in Turkey, if its consequences are outside of Turkey, it is not used in Turkey.’’

In terms of General Communique on VAT, the VAT for services provided from abroad must be declared as reverse charge VAT by the addressee within the country making use of the service.

To deduce on VAT declaration (number: 1) the VAT
related to the import of services in accordance with Articles 1 and 2 of VAT Law;

Turkish persons and authorities shall give the reverse charge VAT declaration (Number: 2) and make payment to the related tax authority and deduce the VAT by showing it on the VAT declaration (Number: 1).

On condition that the utilization takes place in Turkey and there is no provision impeding the VAT;

-Getting technical, installation or consultancy services from abroad,

-Getting or renting incorporeal rights from abroad (know-how, brand etc.),

-Bringing a rented moveable (e.g. construction equipment) from abroad and using it in Turkey

-getting software services from abroad,

-getting repair-maintenance services from abroad,

-late interests related to the supply of goods from abroad,

-the service of a person who is an employee of a foreign company and works temporarily in Turkey

To not be subject to VAT for a service from abroad;

-It must be a service that is not subject to VAT,

– The service must not be imported to Turkey (or performed and made use of)

– The imported service must be one that is subject to VAT exemption.

All services provided from abroad and that do not fulfill these three conditions are subject to VAT.

A tax agreement between Turkey and the provider’s country of residence do not affect the VAT liability as tax agreements do not inclose VAT.

IN TERMS OF WITHHOLDING

Incomes of real and legal persons in Turkey obtained through their services abroad are subject to income and corporate tax in Turkey unless otherwise implied in tax agreements.

Withholding in the amount that is specified in Cabinet Decision in accordance with Corporate Income Tax must be deducted from the payments made abroad and declared with the withholding tax return.

In accordance with Article 30 of Corporate Tax Law numbered 5520, to withhold;

-The service provider must be a resident of a foreign country.

-In terms of its natüre, the service must be subject to withholding pursuant to Article 30 of Corporate Tax Law.

-A double taxation avoidance agreement can not be in force between the related countries and a there can not be a provision avoiding the withholding in the tax agreement.

Also payments that are within the scope of Article 94 of Income Tax Law and Article 30 of Corporate Tax Law, unless otherwise implied, the necessary ones must be withheld.

-salaries of employees from abroad (if a foreign person who is employed in another country also works as an employee or executive of a company in Turkey, their earnings are referred to as ‘’self-employment income’’, causing the payments made to that employee to be subject to withholding in accordance with Article 30 of Corporate Income Tax),

-remunerations of businesses regarded as self-employment such as engineering, maintenance, consultancy, education, writing a software, translating,

-payments for lease and rental services (financial or normal rents),

-interests for lending, deposit or similar fundings

-late interests related to the supply of goods from abroad

-payments for incorporeal rights such as copyrights, concession, business titles, trademark or know-how or rents

As well as;

-All kinds of commission payments,

-All kinds of payments regarding advertisements and notifications,

-Payments for overseas transport

-Insurance premium payments,

– Payments for businesses outsourced abroad

-Audit payments,

-Travel costs (hotel, restaurant, transportation, communication etc.)

-Fair participation costs,

-satellite rent payments,

Is a lawyer required to calculate withholding when drawing up a self-employment invoice for tutoring in law faculty?

MuhasebeNews — Fri, 18 Jan 2019 13:00:41 +0000

A taxpayer who is a lawyer has self-employment income. Would it be sufficient to draw up a self-employment invoice for tutoring law students?

Also, are we required to deduct withholding when drawing up an invoice for a non-taxpayer?

The taxpayer is required to only draw up a self-employment invoice for tutoring law students.
Non-taxpayers are not subject to income tax withholding.

Are we required to pay 15% withholding for the Google ads?

MuhasebeNews — Mon, 24 Dec 2018 16:00:53 +0000

We’re placing ads on Google. We pay with credit card. We do not receive and invoices for the transaction. We draw up an invoice any declare Vat on VAT Return No:2. Lastly, are we also subject to the regulation regarding 15% withholding on Google ads on the Presidential Decree Numbered 475? Are we required to pay 15% withholding as a company in addition to the VAT?

(24.12.2018 08:44)

As of 01.01.2019, 15% must be cut for taxes before making a payment.

Is the progress payment for construction work that extends to the month of January of the following year subject to withholding?

MuhasebeNews — Wed, 05 Dec 2018 14:00:42 +0000

My company which does contract works signed a contract with its client between 11.10.2018-25.01.2019. Normally, the progress payments are subject to a withholding when they are extending to years. But we will finish the work in 2018. So, will the progress payments be subject to a withholding?

If the work ends on 31/12/2018, there won’t be a withholding.

Are Stock Exchange Securities Subject to Tax?

MuhasebeNews — Tue, 06 Mar 2018 12:30:38 +0000

1- ARE STOCK EXCHANGE SECURITIES IN ISTANBUL STOCK EXCHANGE SUBJECT TO INCOME TAX?
The incomes of real persons, who buy and sell stock exchange securities in Istanbul stock exchange and make a profit from those transactions, are not subject to income tax.

2- ARE STOCK EXCHANGE SECURITIES IN ISTANBUL STOCK EXCHANGE SUBJECT TO WITHHOLDING?
No. Profits gained from stock exchange securities are not subject to income tax withholding.

3- THEY ARE SUBJECT TO WITHHOLDING, BUT THE RATIO IS ZERO SO IT IS REGARDED THAT THERE IS NO WITHHOLDING ACTUALLY.
The gains received through stock exchange securities are subject to tax according to provisional article 67 of the Income Tax Law. With the Cabinet Decision dated 27.4.2012 and numbered 2012/3141, withholding rate applied to future delivery and option contracts, based on stock exchange securities and share index by fully responsibles and limited taxpayers within the scope of provisional article 67, stock exchange securities including covered warrant in Istanbul stock exchange (excluding stock exchange securities of securities investment associations), gains received through stock funds participation certificate is determined as 0%. Consequently, withholding is not applied actually, because withholding rate is “0”.

4- VALUE INCREMENT GAINS ARE NOT SUBJECT TO INCOME TAX.
Furthermore, it belongs to fully responsible, gains received by selling stock exchange securities (kept more than one year and be traded at the exchange) out are not subject to withholding. There is no need to file annual income tax return as increment value tax because duplicated entry 80 of the Income Tax Law will not be applied to these gains

Consequently, there is no need to pay taxes for gains received through buying and selling of stock exchange securities in Istanbul stock exchange.

Source: Provisional article 67 added to article 30 of the Income Tax Law No. 5281

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.