Non-resident taxpayers do not submit annual returns for their incomes from immovable property which are taxed wholly by the withholding in Türkiye. Also, in case they submit the annual return for other incomes, they do not include their incomes which are subject to the withholding in their returns.

Taxpayers whose income subject to declaration consists only of the rental income will submit the annual tax return, if;

• Those whose housing rental income obtained in a calendar year exceeds the exemption amount of 9,500 TL for 2022 (21,000 TL for 2023),
• Those who obtain rental income not taxed by withholding tax as a result of renting goods and rights within a calendar year. On other saying, rental incomes that are not subject to the withholding and the exception must be declared the annual tax return regardless of the amount.

Every member of a family has to submit a return on their own behalf for the rental income they obtained from the property and rights belonging to them.

On the occasion that minor and restricted persons are taxpayers; the annual return to be submitted on behalf of them is signed by their parents, guardians or curators. In case of having property and rights with shares, every partner need to declare the rental income corresponding to his/her own shares.

DEDUCTIONS TO BE MADE FROM INCOME INCLUDED IN ANNUAL TAX DECLARATION

Deductions with respect to income to be declared by an annual tax return are specified in Income Tax Law and in other relevant laws. In order to make the following deductions from the income to be declared in income tax return while income tax base is being determined, there must be an income to be declared in an annual tax return and deductions to be made should satisfy the requirements specified in the relevant legislation.

The revenue that is declared at the annual tax return before the other deductions and the revenue loss of former years are deducted would be taken as the base revenue to calculate the amount that would be deducted.

Accordingly, here are some of the matter that may be made subject to the discount:

10.1. Life / Individual Insurance Premiums

The 15% of life / individual insurance premiums paid, can be deducted for determining the tax base in the annual tax returns.
The premiums that should be taken into account for determining the tax base are as follows:

• 50% of life insurance payments of the taxpayers’, their spouses and children,
• 100% of death, accident, health, disability, maternity, child birth and education individual insurance premiums.

The total amount that would be deducted cannot exceed the 15% of total revenue and annual amount of minimum wage. (The gross annual minimum wage for 2022 is 68.850,00 TL.)*

The premiums paid to the individual retirement insurance cannot be deducted.

*The gross minimum wage amount for 2022 was calculated in line with the Minimum Wage Determination Commission Decisions, which were determined as: 166.80 TL per day between 1/1/2022-30/6/2022 and TL 215.70 TL per day between 1/7/2022-31/12/2022.

10.2. Education and Health Care Expenses

The education and health care expenses done as stated below would be deducted from the annual revenue declared in tax return in condition not to exceed the 10% of total revenue:
• The education and health care expenses should be performed in Türkiye.
• The expenses should be verified by the documents received from the individual or legal personalities who are personal or corporate income taxpayers.
• The expenses should be regarding the taxpayers’ oneself or their spouse and small children.

The term” small child” refers to children under the age of 18 or under the age of 25 in the education who live with a taxpayer or who are cared for by a taxpayer (including those who are given alimony, those who have been adopted and those who live with a taxpayer from grandchildren who have lost their parents).

10.3. Donations and Aids
10.3.1. Donations and Aids Which Can Be Deducted As Limited to 5% of Income to be Declared

Personal income taxpayers, general and private budgeted public administrations, provincial administrations, municipalities, villages and non-profit associations and the foundations that are exempted from tax by President of the Republic, can deduct the donations and aids against receipt from their annual income in condition that it would not exceed the 5% of total income. (It would not exceed 10% of total income if donations are made to the stated organizations, associations and foundations in the development priority zone.)

10.3.2. Donations and Aids Which Are Completely Deductible

a) The donated schools, health institutions, the student dormitories and day care centers which have bed capacity not less than 100 (in development priority zones not less than 50), orphanages, rest houses, care and rehabilitation centers to the general and private budgeted public administrations, provincial administrations, municipalities, villages and all expenses for the construction of the place of worship constructed by the permission of authorized public administration and director, the institutions where there ligious education is given under inspection of the Directorate of Religious Affairs, youth centers and youth and scouting camps belong to the Ministry of Youth and Sports or all donations and aids in kind or in cash made for the construction or for the maintenance of their activities of these establishments can be deducted.

b) The total cost of food, cleaning supplies, clothing and heating donated to the foundations and associations established as food banks for helping poor people in line with the procedures an principles determined by the Ministry of Treasury and Finance can be deducted from the income to be declared.

c) General and private budgeted public administrations, provincial administrations, municipalities, villages, non-profit associations, the foundations that are exempted from tax by President of the Republic, the expenses done by institutions which makes scientific research or the expenses for the studies that are supported by the Ministry of Culture and Tourism and all donations and aids made for these purposes can be deducted.

d) The total amount of the donations and aids in kind or in cash against receipt to the aid campaigns initiated by President of the Republic.
e) The total amount of the donations and aids in cash against receipt to Turkish Association of Crescent and Turkish Green Crescent Society except their commercial enterprises can be deducted.

10.4. Sponsorship Expenses

According to Article 89/8 of the Income Tax Law the sponsorship expenses done can be deducted from the income declared at annual tax return as follows:
• 100% of expenses for amateur sports,
• 50% of expenses for professional sports.

10.5. Donations and Aids Which Are Completely Deductible in Accordance with Other Laws

Donations and aids which are completely deductible in accordance with other laws are as follows:
• Donations made in accordance with the Law No. 222 on Primary Education and Training,
• Donations made according to the Law No. 278 on the Establishment of the Scientific and Technical Research Council of Turkey,
• Donations made according to the Higher Education Law No. 2547,
• Donations made according to the Social Services Law No. 2828,
• Donations and aids made according to the Law No. 2876 on Atatürk Culture, Language and History Institution,
• Donations and aids according to the Law No. 3294 on Encouraging Social Assistance and Solidarity,
• Donations and aids made in accordance with the Law No. 3388 on the Turkish Armed Forces Foundation,
• Donations made according to the Anti-Terrorism Law No. 3713,
• Afforestation, maintenance and protection costs in forests established according to the National Afforestation and Erosion Control Mobilization Law No. 4122,
• Donations and aids made in accordance with the Republic of Turkey Pension Fund Law No. 5434,
• Donations, aids and sponsorship expenditures made in accordance with the Law No. 6546 on the Establishment of Çanakkale Wars Gallipoli Historic Site Presidency,
• Donations and aids made in accordance with the Law No. 6569 on the Establishment of the Presidency of Turkish Health Institutes and Amendments to Certain Laws and Decree Laws,
• Donations, aids and sponsorship expenditures according to the Law No. 7174 on Cappadocia Area,
• Donations and aids made in accordance with the Law No. 7269 on Measures to be Taken and Aids to be Made in Case of Disasters Affecting Public Life.

In case the donations and aids are not in cash, the equal value of the donated property or the right; if the equal value is not exist then the value determined by the Assessment Committee according to provisions of the Tax Procedure Law shall be taken into account.

Source: 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.

“Equivalent rental value” is taken as bases in case of low or no value for rental income. According to this basis, equivalent rental income principle shall be applied on the conditions of;

• leaving the immovable property to the usage of other persons for free,
• lower value of rental income of rented immovable property than the equivalent rental value.

The equivalent rental value in rented buildings and lands is the rental value determined by authorized specific authorities or courts, if it is available.

If there is no renting determination or judgment for the aforementioned building or land, equivalent rental value is 5% of its real estate tax value.

The equivalent rental value in property and rights for other than buildings or lands is 10% of their cost price. If this cost is not known, it is 10% of determined values of them calculated in accordance with valuation of property provisions of Tax Procedure Law.

Example: Taxpayer (A) gave up a flat valued 400.000 TL to one of his friends without charge in 2019.

Accordingly, although taxpayer does not obtain rental income, he should be supposed to obtain rental income in accordance with the amount reached after the calculation of equivalent rental value.

Equivalent rental value: 400.000 x 5% = 20.000 TL. This amount should be considered as income to be declared.

Equivalent rental value principle is not applied under the following conditions:

• Leaving empty immovable properties to other person’s residence in order to protect the immovable,
• Allocating the buildings to the residence of the property owner’s children, mother and father or siblings (But, if more than one house allocated to the residences of each of these persons, equivalent rental value is not calculated only for one of these

For example, if owner of property has allocated two houses to the residence of his child, it will not be calculated equivalent rental value for one house and for the second one it will be calculated.)

• Accommodating of relatives with the property owner in the same house or flat,
• Leasing done by General Budget and by Annex Budget Offices, by provincial administrations and municipalities and by other public institutions and organizations.

Source: Revenue Administration – Guidebook on Rental Income for Non-Resident Taxpayers
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.

Is the company responsible for withholding tax for the vehicle purchased from a person who is not a taxpayer?

Income tax withholding and VAT cannot be calculated in the expense note to be issued for the vehicle purchased from the person who is not a taxpayer.

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.

All of the double taxation agreements Turkey has concluded, contain provisions related to the Mutual Agreement Procedure. MAP is generally stipulated under Article 25 of the agreements. Texts of the agreements concluded by Turkey which are still in force and the information about these agreements are available on our website: www.gib.gov.tr

Despite comprehensive and carefully designed provisions of the Double Taxation Agreements, erroneous procedures and misinterpretations may sometimes occur in the course of the application of such provisions by related tax authorities of the Contracting States. It could also be seen that sometimes the provisions of the Double Taxation Agreements are not taken into consideration at all.

A common way for taxpayers who face such undesired circumstances and cannot solve their problems with the related tax authority is to have recourse to national remedies such as litigation and reconciliation procedures. The “Mutual Agreement Procedure” in the Double Taxation Agreements offers to taxpayers a way of solution to present their case either to the competent authority of the Contracting State of which they are residents or as the case may be, to the competent authority of the Contracting State of which they are citizens, irrespective of the national remedies provided by the domestic laws of those States. In this sense, the aim of this guideline is to inform taxpayers on the “Mutual Agreement Procedure” Article included in all Double Taxation Agreements as well as on the application of this Article.

The Mutual Agreement Procedure Article included in a Double Taxation Agreement explains the steps to be followed by the residents of one of the Contracting States when they consider that the actions taken by one or both of the Contracting States in respect of them are not or will not likely be in accordance with the provisions of the agreement.

Taxpayers facing such a situation have the right to present their cases;

• to the competent authorities of the Contracting State of which they are residents, irrespective of the remedies provided by the domestic law of the Contracting States,
• to the competent authorities of the State of which they are citizens if they are subject to an unfavorable taxation in the other State due to their nationalities compared to the citizens of that other State.

The taxpayers, who consider that they have been subject to taxation in the other Contracting State not in accordance with the Double Taxation Agreement notifies the competent authorities of the State of which they are residents of their situation in a certain period of time. This period is regulated under the Double Taxation Agreements and varies as to the Agreements. The table illustrating these periods is available on the web site of the Revenue Administration.

Under the same Mutual Agreement Procedure Article, competent authorities of the Contracting States may try to resolve the problems arising from the interpretation or application of an Agreement with the use of the Mutual Agreement Procedure.

Accordingly, competent authorities of the Contracting States may commence a Mutual Agreement Procedure process for an incomplete or an ambiguous definition in a Double Taxation Agreement.

Additionally, the Mutual Agreement Procedure Article also states that competent authorities may consult to each other in situations where double taxation arises for transactions not covered by the Double Taxation Agreement.

According to this Article, competent authorities are not obliged to communicate through diplomatic channels in order to reach a mutual agreement; but they prefer to communicate directly with each other.

If the competent authority of the State receiving the taxpayer’s demand on the basis that he is subject to taxation not in accordance with the provisions of the agreement, cannot resolve this problem on their own, the case may be presented to the competent authority of the other Contracting State and, depending on the situation, written or oral discussions may be held to reach a mutual agreement.

Who can make a request for the commencement of the Mutual Agreement Procedure?

A taxpayer may request the commencement of a Mutual Agreement Procedure process if he is a resident of one of the Contracting States. However, persons whose cases fall under the scope of paragraph 1 of the Article titled “Non-discrimination” of a Double Taxation Agreement, namely citizens who have been subject to a discriminative treatment because of their nationalities, may also ask for the commencement of a Mutual Agreement Procedure process.

Source: GİB – Revenue Administration / Link: https://www.gib.gov.tr/sites/default/files/fileadmin/CifteVergilendirme/MAP_Guidelines2019.pdf
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.

My taxpayer wants to establish a car rental company. Is there any specific taxation procedure?

It is no different from other lines of work in tax applications related to car rental business.

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.

My taxpayer, who transports with a service vehicle, is selling his vehicle in December. He buys the vehicle of an association. The association cannot issue invoices. Can I book this with the notary sales contract?

The expense note must be printed before the date of the transaction or certified by a notary.

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.

Do those who have gross sales revenue is 5 million TL and above in 2018 and/or subsequent years, and use the e-Invoice application optionally before the mandatory date, have to use the e-Ledger too?

Yes, these taxpayers must start to use e-Ledger application on 01.01.2021.

Source: ebelge.gib.gov.tr
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.

We have a travel agency taxpayer selling only air tickets and having certificates of air tickets. It may issue an accommodation invoice in the future, but it does not issue right now. Should we submit the petition of tourism declaration and give blank declarations or will our liability for tourism share start when we face such a situation?

Travel agencies shall provide a blank declaration for the months when there is no transaction to be carried out.

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.

The services to be provided by the foreign taxpayer institution regarding oil exploration activities are within the scope of self-employment activity and the payments made in return for the expenses shall be accepted as self-employment payment to the limited taxpayer. Within this framework, followings are realized;

– If the activities are carrying out within the scope of commercial activities by having a permanent workplace or permanent representative in Turkey, corporation tax will not be deducted from payments and the income will be taxed under the commercial income provisions according to our internal legislation.

– 5% corporate tax must be deducted from all payments made if the activities are carried out without having a workplace or permanent representative in Turkey or without the connection with commercial activity carried out in those workplaces even if they have a workplace or permanent representative in Turkey, pursuant to Article 30/1-b of the Corporate Tax Law and in accordance with the Decisions of the Council of Ministers numbered 2009/14593.

On the other hand, if there is an agreement on the prevention of double taxation between the country where the limited taxpayer served as self-employed is located and Turkey, the provisions of this agreement will be considered for the tax deduction.

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.

Ordinary partnerships are regulated in Articles 620 – 645 of the Code of Obligations. In Article 620 of the said Law, the ordinary partnership agreement is defined as the agreement in which two or more persons undertake to combine their labor and property to achieve a common purpose. Ordinary partnerships do not have a legal entity and are not taxpayers.

If two or more corporate taxpayers operate by establishing ordinary partnerships, the profits from the partnership shall be included in the corporate earnings of the companies in proportion to their shares and they shall be taxed.

If the limited taxpayer organizations enter into ordinary partnerships engaged in construction contract works, the said ordinary partnership shall be deemed to be the workplace of the limited taxpayer organizations and taxation shall be made in accordance with the provisions of commercial earnings.

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.