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22November2021

Amendments in Tax Procedural Law and Other Laws

Amendments in Tax Procedural Law and Other Laws

A- AMENDMENTS IN INCOME TAX LAW

1- Income Taxed in the Simple Method Are Exempted from Income Tax

With the relevant regulation, the earnings of taxpayers who fulfill the requirements stated in Articles 47 and 48 of the Law No. 193 and those who are taxed in the simple method and who are not among those who cannot benefit from the simple method listed in Article 51, are exempted from income tax. An annual statement will not be submitted for exempted earnings.

The earnings of the taxpayers who are taxed in the simple method in 2021 are exempted from income tax. The taxpayers concerned will not file an annual income tax declaration, and even if they file an annual tax return due to other incomes, they will not include these earnings in their declarations.

Even if the taxpayers who are subject to the simple procedure will not file a declaration, they will issue and receive documents in accordance with the provisions of the tax procedure law.

2- Contributions Provided from Public Institutions to Farmers are Exempted from Income Tax

With the recurrent Article 20/C added to the Income Tax Law, agricultural support payments provided from public institutions are exempted from income tax with the purpose of supporting farmers and the agricultural sector.

3- The Fourth Period Provisional Tax Declaration Has Been Canceled

With the amendments made in the recurrent Article 120 of Income Tax Law, the first nine months of the current taxation period have been determined as quarterly provisional tax periods. Within the scope of relevant amendments, three, six, and nine-month periods are considered as temporary tax periods within the current taxation period.

Accordingly, as of 01.01.2022, temporary tax periods will be as follows:

First Period : January - February - March
Second Period : April - May - June
Third Period : July - August - September
Fourth Period : Cancelled

4- Liability to Apply Tax Deduction is Introduced for Income Earned from Social Media

With the recurrent Article 20/B added to the Income Tax Law, income exemption is to be applied for social media content creation and software development for mobile devices.

Related people called YouTubers, Vloggers, TikTokers, but generally considered social media/content producers, generate various incomes such as advertising revenues, sponsorship, sales revenues, donations, tips, and paid subscription revenues through social media networks.

All revenues are exempted from income tax for those people, with the condition of opening an account in a bank established in Türkiye. Banks will apply a tax deduction of 15% over the monthly incoming amount and submit it to the tax office. Liabilities of bookkeeping, document preparation, declaration submission, and retaining will not be applicable for those people.

5- Improvements Made on 5% Tax Discount Application of Compliant Taxpayers

Within the scope of the regulation, amendments have been made in the 2nd paragraph of the recurrent Article 121 of Income Tax Law, which regulates the tax discounts. The condition of benefiting from the discount, which is the year of the declaration for which the discount is calculated. The condition that they have not been assessed a tax debt in the previous 2 years is subject to the finalization of the assessments made. Taxpayers will continue to benefit from the discount if their tax debts have not become definite.

“Related amendments will be applicable for income tax and corporate tax returns to be declared as of 01.01.2022. Hence, related provision will be applied to income tax and corporate tax returns to be declared for 2021.”

B- AMENDMENTS MADE ON TAX PROCEDURAL LAW

1- Electronic Tax Offices Can Be Established

The Ministry of Treasury and Finance is authorized to provide faster and more effective service to taxpayers by establishing a tax office in an electronic environment independent from physical tax offices and designating those as branches of physical tax offices.

2- Additional regulation on notifications made by announcement

If the subject of the notification made via the announcement relates to taxes or tax penalties of more than 3,600 TRY separately, The Ministry of Treasury and Finance has been authorized for the announcement to be made on the official website of the relevant institution and the website of the Revenue Administration for tax offices. The Ministry of Treasury and Finance has been authorized to announce and determine the limits.

3- Notifications to be made to those in foreign countries

Provisions regarding the procedures to be followed in notifications to be made to Turkish citizens in foreign countries and the documents of tax offices to be notified to people in foreign countries are to be sent directly to foreign representation offices to be verified by Tax Office Directorates and Offices, where directorates are not present, have been added to the Article 97 of Tax Procedural Law.

4- Tax Inspections Will Be Made in the Digital Environment, and Business Start Report Will Not Be Prepared

As inspection processes move to the digital environment, developments can be followed remotely. According to the regulation, the report will not be issued prior to the inspection, and the taxpayer will be notified regarding the start of the inspection.

5- Certification of e-ledgers and preparation of expense notes are clarified

If the documents, which are obliged to be used by the taxpayers in the application of the Law, do not carry the required information, the documents that need to be issued as electronic documents are also included in the scope of the practice of considering these documents as not issued in terms of tax laws.

With the Amendment, the obligation of issuing notes of expense has been clarified, and it has been frankly stated that the issuance period for the document is 7 days.

6- In Cases of the Certification Report is Necessary, Sworn CPAs are Given 60 Days of Additional Time

7- Purchase Cost is Added to Valuation Measurements, and Cost Price is Identified Again

8- Inflation Adjustment and Revaluation Systems are Amended

With the paragraph (Ç) added to Article 298 of Tax Procedural Law, income or corporate taxpayers who are subject to full liability and bookkeeping on the balance sheet basis, including collectives, limited and ordinary partnerships (within the scope of subparagraph (9) of the paragraph (A) of the mentioned article, excluding those allowed to conduct inflation adjustment without referring to the related Article (1) and those allowed to keep their books in foreign currencies). As of the end of accounting periods in which the conditions for making inflation adjustments in paragraph (A) of the said article are not met, it is possible to revalue the economic assets subject to depreciation included in the balance sheet (excluding those subject to the sale-lease-repurchase transaction or the issuance of lease certificates, as long as they maintain these qualities) and the depreciation shown in the liabilities of the balance sheets, under the conditions specified in the aforementioned article.

9- New Amendments Made for the Depreciation Period

Taxpayers are granted freedom to extend the amortization periods by taking into account longer useful lives if the same ratio is applied for each year and if the useful life period determined by the Ministry of Treasury and Finance does not exceed fifty years and twice of useful life.

Excluding those that are not subject to the scope of the 2nd paragraph of the article, depreciable financial assets that will be newly registered in the active assets can be depreciated on a daily basis, starting from the date of activation, as a preferable option.

After initiating the calculation of depreciation with one of the mentioned methods, the calculation method cannot be changed for the financial assets which are granted freedom of separation in terms of yearly and daily depreciation.

10- The maximum Amount Has Been Determined After the Amendment Regarding Bad Debts

With the Amendment made in Article 323 of Tax Procedural Law, the uncertainty is eliminated by determining a maximum amount (3,000.- TRY) for the receivables that are too small to be worth initiating lawsuit and enforcement proceedings, which have not been paid by the debtor despite the protest or written request more than once. On the other hand, it is possible to apply the bad debt provisions for taxpayers who keep books on the basis of operating accounts.

11- Amendments have been made in the provisions of irregularity fine, special irregularity fine and penitence

With the Amendment, in situations where notes of expense are considered to be never issued, a special irregularity fine will be charged.

Amendments have also been made in favor of taxpayers regarding the liability of notifying printing houses for document printing.

In accordance with the recurrent Article 227 of the Law;in case of the certified public accountant certification report, which is required to be submitted regarding the subjects included in the scope of certification, is not submitted within the time specified in the third paragraph of the same article, a special irregularity fine to be issued over 5% of the amount subject to the submission of the certification report, not less than 50,000 TRY and not more than 500,000 TRY, on behalf of the taxpayer who does not fulfill the submission obligation.

With the amendments made on penitence provisions, it has become possible for taxpayers to submit a declaration with penitence for tax audit and a tax type different from the tax type related to the discretionary referral process.

12- Irregularity and Special Irregularity Fines Exceeding 5000- TRY are Included in the Scope of Reconciliation

13- Amendments Have Been Made Regarding Renewal Fund for Insurance Indemnity and Sale of Products which are Subject to Depreciation

14- Mutual Agreement Procedure

With Articles EK-14-15-16-17-18 added to Tax Procedural Law, amendments have been made to Mutual Agreement Procedure within the scope of PREVENTION OF DOUBLE TAXATION TREATIES. Amendments will be in effect as of 01.01.2022 to be executed with the applications.

15- Accelerated Depreciation for New Machines and Equipment

With the Amendment to be implemented until 31.12.2023, it is possible to calculate the depreciation rates and periods to be applied for the new machinery and equipment acquired, taking into account half of the determined and announced useful life periods.

16- Revaluation to be Done within the Scope of Tax Procedural Law Provisional Article 32

With Law No. 7338, taxpayers who can make revaluation within the scope of the temporary Article 32 added to the TPL and the (Ç) paragraph added to the recurrent Article 298, according to the aforementioned paragraph, as of the end of the accounting period before the accounting period in which they will revaluate for the first time. Taxpayers have been given the opportunity to revalue the immovables registered in the balance sheets and other economic assets subject to depreciation under the conditions specified in the article.

C- AMENDMENTS IN STAMP TAX LAW AND SPECIAL CONSUMPTION TAX LAW

It has been ensured that directorates for evaluation and coordination of investments to be included in the scope of governmental agencies with the execution of Stamp Tax Law No. 488. Amendments have been made to the section titled “IV- Papers Related to Commercial and Civil Issues” of table no (2) attached to the Stamp Tax Law.

Additionally, the President has been given the Authority;

To increase the limits regarding the minimum fixed tax amounts for tobacco products up to three times,

Increasing the lower and upper limits of the special consumption tax bases based on the rates determined for motor vehicles up to three times,

To create different tax base groups for passenger cars and to differentiate the rates for these vehicles in terms of engine power.

D- ACCOMMODATION TAX HAS BEEN POSTPONED

The "ACCOMMODATION TAX" application date introduced with Law No. 7194 on the Amendment of the Digital Service Tax and Certain Laws and the Decree-Law No. 375 has been changed to 01.01.2023.

E- AMENDMENTS IN CORPORATE TAX LAW

1- Interest Discount on Cash Capital Increase

Within the scope of the relevant regulation, an additional advantage is provided for the portion covered by cash brought from abroad in the application of interest discount in cash capital increase. According to the proposed regulation, the 50% discount rate will be applied as 75% for foreign-sourced capital.

2- The incentive of Discounted Corporate Tax Rate

With the new regulation, 10% of the amount is determined by applying the investment contribution rate to the investment expenditure on the basis of the investment incentive certificate, if the corporate tax return is requested until the end of the following second month in which the tax return must be submitted, other accrued taxes excluding the special consumption tax and value-added tax can be used by deleting tax debts. Thus, the return to the taxpayer of the investment contribution amount earned due to the investment expenditures is accelerated, and the support provided to the investor is increased.

Within this scope, a maximum of 10% of the earned investment contribution amount can be deleted from tax debts, excluding special consumption tax and value-added tax.Along with this amount, a multiple of this amount will be deducted from the total investment contribution amount as the amount of contribution to the foregone investment.In the calculation of the total amount that can be claimed to be canceled as a whole of the investment, it will not be possible to exceed 10% of the amount determined by applying the investment contribution rate to the total investment expenditure of the taxpayer within the scope of the relevant investment incentive certificate.

The regulation will become effective to be applied to investment expenditures to be made as of 01.01.2022 within the scope of both existing and new investment incentive certificates. Investment contribution amounts earned due to investment expenditures made before 01.01.2022 but has not yet been used due to insufficient earnings will not be included in this scope.

You can reach the Official Gazette via the link (In Turkish.)

Should you have any queries or need further details, please contact your customer representative.

Written by Selma Kıy, Posted in Taxation Law

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About The Author

Selma Kıy

Certified Public Accountant - SMMM
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