Foreign Currency Payments, Income Tax Returns, Rental Incomes, Employment Contracts, Salary Deductions, Scholarships, and Court of Cassation Precedents
Foreign currency payments have been made more flexible. Foreign currency payments can now be made for the following transactions. It is highly recommended to seek legal consultancy on this matter.
- Free Zone transactions
- Transit Trade and customs deliveries
- Transactions denominated in foreign currency carried out in Borsa Istanbul A.S. precious metals and precious stones markets
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The submission of annual income tax returns for individuals has begun and can be filed until April 1st. Income such as wages, rental income, dividends, etc., must be declared by the end of this month.
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Rental incomes: key points to consider
- Rental income from past periods is subject to the cash basis principle. It is recognized as income when collected. For example, if rents for 2022 and 2023 are paid in 2023, the entire collected amount must be declared as income.
- Rental collections concerning future years are subject to the accrual basis principle. For example, if rents for the years 2023 and 2024 are paid in 2023, only the portion corresponding to 2023 shall be declared.
- Received checks are considered collections in cash.
- Foreign currency rental incomes are declared by converting them at the CBRT (Central Bank of the Republic of Turkey) foreign exchange buying rate on the date of collection.
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The threshold for issuing invoices with withholding tax has been set at 6,900 TRY including VAT. The regulation is effective as of March 1st.
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Stamp taxes paid on tenders can be refunded in cases where the tender is awarded to another party or cancelled.
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KVKK (Data Protection Law) penalties are quite high; therefore, it is essential to fulfill the necessary obligations. The lower limits for penalties are as follows:
- Failure to fulfill the disclosure obligation … 47,303 TRY
- Failure to fulfill obligations regarding data security … 141,934 TRY
- Failure to register with the Data Controllers' Registry (VERBİS) or non-compliance with notification requirements … 189,245 TRY
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Certificate of Residence (Tax Residency Certificate): Official documents obtained from the competent authorities of the country where real or legal persons are residents, indicating that the person is a resident and taxpayer in that country. Important for Double Taxation Avoidance Agreements (DTAAs). Issued by tax offices in Turkey. If a company wishes to benefit from the advantages of DTAAs due to its cross-border transactions, it will need this certificate of residence.
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Positive Discrimination Project for Women's Employment
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Employment contracts can be drafted in various forms. Severance pays, tax, SSI, and salary payment obligations may vary according to these contracts. It is highly recommended to obtain legal consultancy regarding employment contracts.
- Fixed-term – executed for fixed-term works or the completion of a specific task. Must be made in writing.
- Open-ended (Indefinite term)
- Full-time – working within the scope of normal weekly working hours
- Part-time – working for less than normal weekly working hours and during specific periods
- With a probation period – maximum 2 months
- On-call work – working upon need
- Remote work – performing work at home or outside the workplace using technological communication facilities
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For student scholarships granted by the company to be tax-deductible:
a- A contract must be drawn up stating that the scholarship recipient will work at the enterprise after graduation.
b- The scholarship recipients must be determined based on the results of an open exam accessible to everyone (e.g., the student ranking high in the university entrance exam).
c- The scholarship amount granted must be reasonable.
If a payment is made by the company but the above criteria are not met, even if the payment is recorded as an expense, it will not be considered as a deductible expense in tax calculations and will be treated as an NDE (Non-Deductible Expense). If the above conditions are not met but the payment is still desired to be made, a public-benefit association can be consulted. The company can make a donation to this association, and this association can make payments to these individuals if it accepts to do so.
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Making deductions from the employee's salary. The deduction amount cannot exceed 2 days' salary in 1 month, as set forth in Article 38 of the Labor Law. In order to impose a wage deduction penalty on employees:
- It must be included in detail in the employment contract.
- The imposition of the penalty along with its reasons must be notified to the employee in writing.
- The penalty imposed in 1 month cannot exceed 2 days' wages of the employee.
- The penalty amount must be remitted within 1 month from the date of deduction to the account opened by the Ministry of Labor and Social Security for this purpose. The monies collected in this account will be spent on the education and social services of employees.
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Conditions for unemployment benefit
- Becoming unemployed outside of one's own will and fault
- Having worked for the last 120 days (4 months) prior to the termination of the service contract
- Having paid unemployment premiums for at least 600 days in the last 3 years
- Applying to İŞKUR in person or electronically within 30 days following the termination of the service contract
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Court of Cassation Precedents
- An employee not coming to work by stating that they are using their annual leave constitutes absenteeism unless deemed on leave by the employer - Court of Cassation 9th Civil Chamber E:2007/21656 K:2008/18647
- Paying social security premiums based on a low wage instead of the employee's actual wage gives the employee the right to justifiable termination, and severance pay must be paid for this reason - Court of Cassation 9th Civil Chamber E:2017/14099 K:2020/2109
- Having multiple attachments on an employee's salary creates liability for the employer pursuant to Article 355 of the Enforcement and Bankruptcy Law (EBL), allowing the employer to make a justifiable termination - Court of Cassation 9th Civil Chamber E:2018/6238 K:2019/3907
- Unless the landlord gives written consent, the tenant cannot transfer the right of use to someone else. The fact that the person to whom the right of use is transferred is the tenant's sister, acts as a guarantor in the contract, and has personally made all rent and dues payments including the deposit does not change this situation - Court of Cassation 3rd Civil Chamber E:2017/5282 K:2017/16600
- Paying the rent amount higher than the calculated value does not tacitly indicate an agreement between the parties. The rent requested by the landlord is determined according to the contract and the mandatory provisions of the law - Court of Cassation 12th Civil Chamber E:2023/907 K:2023/2083
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Current Information
- Minimum wage; Gross: 20,002.50 TRY, Net: 17,002.12 TRY
- Minimum wage per capita SSI cost; without discount: 7,500.94 TRY, with discount: 6,500.81 TRY
- Bağ-Kur premium; without discount: 6,900.86 TRY, with discount: 5,900.73 TRY
- Per capita SSI incentive; 700 TRY
- Minimum unemployment benefit: 7,940.27 TRY, maximum unemployment benefit: 15,880.54 TRY. Rough calculation: approximately 40% of the earnings subject to premium for the last four months
- Severance pay ceiling: 35,058.58 TRY
- Expense deduction limit for vehicle rentals: 26,000 TRY per month
- Special Consumption Tax (SCT) + VAT amount that can be expensed in vehicle purchases: 690,000 TRY
- Vehicle depreciation expense limit excluding SCT + VAT: 790,000 TRY, including SCT + VAT: 1,500,000 TRY
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