Tax Alert 1/2017
Q1/2017 Implementation of Income Withholding Tax Incentive Introduced for Employers with respect to Newly Hired Employees

Under the Statutory Decree (Decree No. 687) (published in the Official Gazette dated February 09, 2017 and numbered 29974), income tax withholding incentive was introduced for employers to be applicable with respect to the social security covered employees who are additionally hired between the dates of February 1, 2017 and December 31, 2017.

Q1/2017 Decrease on Stamp Tax and Fees Rates Applicable to Certain Real Estate Transactions

The stamp tax rates which are applicable to documents with respect to the construction sector that are introduced between the Sub-Paragraphs (No. 14) and (No. 17) of the Paragraph titled as “A. Documents including quantifiable amount of money” regulated in the Section “l. Documents related to contracts” of the Table (No. 1) attached to the Stamp Tax have been determined as 0% by the Decree of the Council of Ministers (Decree No. 2017/9973) (published in the Official Gazette dated March 15, 2017 and numbered 30008).

Q1/2017 Decrease on RUSF rate over TL Dominated Loans Extended Abroad to Turkish Residents

As known, previously Resource Utilization Support Fund (“RUSF”) was applied at the rate of 3% over the interest amount for TL dominated loans obtained by Turkish individuals or legal entities (except for banks and financing companies) from abroad, regardless of the maturity of the loan.

Q1/2017 Procedure and Principles in relation to the Taxation of Electronic Cash and Payment Institutions

Procedure and principles with respect to the taxation of electronic cash and payment institutions carrying on business with the approval of the Banking Regulation and Supervision Agency in accordance with the Law No. 6493 and as well as the taxation of their branches and representatives are regulated under the Expenditure Taxes General Communiqué (Serial No. 91) (published in the Official Gazette dated March 11, 2017 and numbered 30004).

Q1/2017 VAT Exemption on the Delivery of Residences and Offices to Non-Resident Taxpayers and Turkish Citizens Living and Working Abroad

Through Article 7 of the Law regarding the Restructuring of Certain Receivables and Amendments on Certain Laws and Statutory Decrees (Law No. 6824) (published in the Official Gazette dated March 8, 2017 and numbered 30001), Value Added Tax (“VAT”) exemption is introduced for the delivery of residences and offices to non-resident taxpayers and Turkish citizens living and working abroad, by adding a new Sub-Paragraph to Article 13 of the Value Added Tax Law (Law No. 3065) (published in the Official Gazette dated November 2, 1984 and numbered 18563) (“VAT Law”).

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Q1/2017 Tax Reduction for Compliant Taxpayerss

Under the Law No. 6824, an opportunity of tax reduction is introduced for compliant taxpayers.

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Q1/2017 Amendments to Stamp Tax Law and Fees Law

The following amendments are made under the Stamp Tax Law and Fees Law through the Law No. 6824.

By introducing the new sub-paragraphs introduced under the Table (No. 1) attached to the Stamp Tax Law, agreements in relation to the construction sector are added among the documents that are subject to stamp tax. Accordingly, making future changes by the Council of Ministers on the stamp tax rates over the agreements related to the construction sector is enabled.

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Q1/2017 Income Tax and Real Estate Tax Exemptions for Free Zones

Income tax and real estate tax exemptions with respect to free zones are introduced under the Law making Amendments on Free Zones Law and Certain Laws and Statutory Decrees (Law No. 6772) (published in the Official Gazette dated February 24, 2017 and numbered 29989). Such exemptions would be stated as follows

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Q1/2017 Amendments made by the VAT General Communiqué (Serial No. 11) to the VAT General Implementation Communiqué

Through the VAT General Communiqué (Serial No. 11) (published in the Official Gazette dated February 15, 2017 and numbered 29980), numerous amendments are made to different sections of the VAT General Implementation Communiqué.

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Q1/2017 Reduced Corporate Income Tax applicable to SME Mergers and the Application of Exemption for the Transfer of Ships Registered to TISR

Under the Corporate Income Tax General Communiqué (Serial No.12) (published in the Official Gazette dated February 11, 2017 and numbered 29976), explanations are made in relation to the application of reduced corporate income tax on mergers of Small and Medium Sized Enterprises (“SME”) and the application of corporate income tax exemption for the income derived through the transfer of ships registered to Turkish International Ship Registry (“TISR”).

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Q1/2017 Amendments to the VAT General Implementation Communiqué in relation to Investments made through Investment Incentive Certificate

As known, certain amendments were made on the VAT Law in relation to investments made with incentive certificate by the Law No. 6770.

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Q1/2017 Stamp Tax Rates applicable to Promise to Sell Agreement and Pre-Paid Residence Sales Agreement

Through Article 28 of the Law on the Amendment of Certain Laws for the Improvement of the Investment Landscape (Law No. 6728) (published in the Official Gazette dated August 9, 2016 and numbered 29796), “Promise to Sell Agreements” and “Pre-Paid Residence Sales Agreements” were added to the Table (No. 1) which is attached to the Stamp Tax Law and includes the documents that are subject to stamp tax.

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Q1/2017 Special Consumption Tax Rates on certain White Appliances and Vessels

Through the Decree of the Council of Ministers (Decree No. 2017/9759) (published in the Official Gazette dated February 3, 2017 and numbered 29968); Special Consumption Tax (“SCT”) rates applicable to certain goods and vessels are re-determined as below:

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Q1/2017 Reduction on VAT Rates on the Delivery of Vessels and Furniture

VAT rates applicable to the delivery of following goods are re-determined by the Decree of the Council of Ministers (Decree No. 2017/9759) (published in the Official Gazette dated February 3, 2017 and numbered 29968).

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Q1/2017 Amendments on VAT Rates Applicable to the Delivery of Certain Residences

Under the Decree of the Council of Ministers (Decree No. 2017/9759) (published in the Official Gazette dated February 3, 2017 and numbered 29968), VAT rates applicable to residence construction projects the building licenses of which are obtained after January 1, 2017 (including this date) and residence construction projects to be tendered by public institutions and their affiliates after January 1, 2017 are re-determined.

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Q1/2017 Amendments on the Application of VAT Law and Corporate Income Tax Law regarding the Investments made through Investment Incentive Certificate

Certain amendments are made on the application of VAT Law and Corporate Income Tax Law through the Law No. 6770 (published in the Official Gazette dated January 27, 2017 and numbered 29961) regarding the investments made with investment incentive certificate.

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Q1/2017 Amendments to Turkish Tax Legislation by the Law No. 6770

The Value Added Tax rate in supply of fertilizer, raw materials used in the production of fertilizer and animal feeds is reduced to 1% by the Council of Ministers through its Decree (Decree No. 2015/8353) (published in the Official Gazette dated January 1, 2016 and No. 29580).

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Q1/2017 Amendments to Turkish Tax Legislation by the Law No. 6770

The Value Added Tax rate in supply of fertilizer, raw materials used in the production of fertilizer and animal feeds is reduced to 1% by the Council of Ministers through its Decree (Decree No. 2015/8353) (published in the Official Gazette dated January 1, 2016 and No. 29580).

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Tax Team

The award winning Pekin & Pekin Tax practice team leaves regular compliance support to accounting firms and instead focuses on more complex cases, giving clients direct practical and innovative advice.

To discuss how these developments affect your business interests please contact either:

Fethi Pekin
Managing Partner
fpekin@pekin-pekin.com
or

Firat Yalçin
Partner, Tax
fyalcin@pekin-pekin.com

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