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19October2022

Income and Corporate Tax Regulations with the New Omnibus Law

Income and Corporate Tax Regulations with the New Omnibus Law

"The New Omnibus Law on the Amendment of the Income Tax Law (In Turkish) and Some Laws and Delegated Laws" proposed to the Speakership on 07.10.2022 will bring about the regulations to the Income Tax Law and Corporate Tax Law.

The Tax Exemption for Cash Meal Allowance for Employees;

In the case where meals are not served to the employees at the workplaces, it is expected that the cash meal allowance cost per workday, not over 51 TRY, will be exempted from income tax, and the payments over this amount and other benefits provided for this purpose will be taxed as wages. In the case, the cash meal allowance is transferred into the bank account of the employees and these amounts are used outside of the catering service firms, it will be possible to benefit from the related exception.

The Tax and SSI Premium Exemption for Electricity and Natural Gas Support to Employees;

It is expected that the payments for electricity, natural gas, and other heating expenses, not over one thousand (1,000) TRY per month (for those who exceed this amount, up to a thousand TRY per month), in addition to their current wages until 30.06.2023, will not be included in the SSI Base and income tax base.

Tax Exemption in Wages of Employees in Overseas Constructions;

With the new Omnibus Law, it is expected that the payments which are paid by the employer's overseas earnings to their employees work in the construction, repair, assembly, and technical services abroad, will be exempt from income tax.

Extension of Time in the Discount Application for Informal Investors;

Taxpayers which are individual participation investors, can benefit from a discount rate of 75% of the earnings and revenues on their annual declarations of at the time the shares are acquired, on the condition that holding the participation shares at least two full years.However, the annual discount amount cannot be more than1 Million TL. The part that cannot be deducted from the related year's earnings is taken into account in the following yearsby considering the revaluation rate determined for these years. The end date for this regulation was 31st December, 2022.

With the new regulation, it is expected that the application period will be extended until 31st December, 2027 and the amount that can be deducted in the income tax return of the related year will be increased from 1 Million TL to 2.5 Million TRY.

The Period of The Exchange Rate Protected Deposit Account Regulation Will Be Extended Until the End of 2023;

With the new Omnibus Law, it is expected that the period of the exemptions provided for the exchange date protected deposit accounts and the participation accounts, is being extended until the end of 2023. In addition, it is expected that the President will be authorized to apply the exemption separately or together for foreign currencies in the balance-sheets of institutions as of the end of each advance tax or annual accounting period until 31st December, 2022.

The Participation Share Rates of Tourism are Being Updated;

With the new Omnibus Law; it is expected that the share of tourism will be; 5 per thousand instead of 7.5 for the compound facilities and accommodation facilities, catering and entertainment facilities and sea tourism facilities; 5 per ten thousand instead of 7.5 per ten thousand for the travel agencies and airline companies. It is expected that the related regulation will enter into force on 1st of January, 2024.

In addition, the regulation regarding the receipt of tourism share from marine tourism vehicles with tourism operation certificate from the Ministry of Culture and Tourism is being abolished.

Clarifying Taxation in Capital Reduction;

If the capital has been reduced at the end of the related period, in the institutions that have not made a capital reduction for five years from the date of transfer of the various resources, it is expected that the capital elements within the amount subject to the reduction will be determined and taxed by proportioning the cash or in-kind capital added to the enterprise and other elements

In case of capital reduction with previous years losses, it is expected that the capital elements subject to reduction will also be determined within the scope of these provisions regulating taxation in capital reduction, however, no tax deduction is made on these amounts within the scope of profit distribution or the amount transferred to the head office It is expected that these would only be subject to corporate tax.

Electricity, Water, Natural Gas and Telephone Subscription Receivables Below 2 Thousand TL Will Be Considered as "Worthless Debt";

With the related regulation; to encourage the termination of small-scale enforcement proceedings arising from subscription contracts such as electricity, water and natural gas, these receivables are expected to be written as worthless debt and removed from the operating records.

It has not been published in the Official Gazette yet.

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

Author Selma Kıy, Category Taxation Law

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About The Author

Selma Kıy

Certified Public Accountant - SMMM
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