Recent Regulatory Developments - November 2022

Meal Allowance – Daily TRY 51 – Effective December 1, 2022

Previously, daily allowances loaded onto meal cards such as Multinet/Sodexo were exempt from income tax. Starting from December, a daily meal allowance of TRY 51 may be paid directly in cash added to wages, and no income tax or Social Security (SSI) contributions will be assessed on this amount.

- What if a payment exceeds TRY 51 per day? … Income tax and SSI contributions will be calculated on the excess amount paid.

- Can payments continue to be made to meal cards such as Multinet/Sodexo? … The law does not impose any restriction; you may continue to pay meal allowances via meal cards.

- For how many days in a month can I pay a meal allowance? … Payments must correspond to actual days worked; if paid for non-working days, income tax and SSI contributions must be calculated thereon.

- Is this more advantageous compared to the previous system? … Under the previous system, TRY 51 + VAT could be loaded onto meal cards. If paid in cash under the new system, there will be no VAT paid and only TRY 51 can be disbursed. This may result in a loss for the employee equivalent to the VAT amount. The advantageous aspect is eliminating the requirement to work with an intermediary provider and granting the employee complete freedom in spending the funds.

- If TRY 51 is paid in cash under the new system, will the employee need to provide invoices/receipts? … There is no clarification on this point yet; we are awaiting explanatory communiqués. However, in our view, collecting receipts would contradict the spirit of the law, so we do not anticipate an documentation requirement.

Electricity, Natural Gas, and Heating Aid – November 9, 2022 – June 30, 2023

Cash payments made to employees up to TRY 1,000 for electricity, natural gas, and other heating expenses will be exempt from income tax and SSI contributions.

- Payments may be made starting from the publication date of the law.

- Valid until the end of June 2023.

- It is not yet clear whether supporting documentation will be required for the payment, and if so, whether such documents must be issued in the employee's name.

Renewable Energy Tax Incentive Threshold Increased from 25 kW to 50 kW

In order to encourage electricity generation, the capacity limit for the tax incentive provided for unlicensed electricity generation facilities installed on residential rooftops and facades has been revised from 25 kW to 50 kW.

Individual Participation Investor (Angel Investor) Tax Deduction

The term of the Individual Participation Investor deduction, commonly known as the Angel Investor tax relief, has been extended until December 31, 2027. Additionally, the maximum exempt investment cap has been increased from TRY 1 million to TRY 2.5 million.

Income Tax Exemption on Wages of Personnel Working Abroad in Construction, Repair, Assembly, and Technical Services

Wage payments made to employees working abroad in construction, repair, assembly, and technical services, in consideration of their actual work abroad and covered out of the employer's foreign-earned income, shall be exempt from income tax.

FX-Protected Deposit (KKM) Tax Exemption Extended Through the End of 2023

The tax exemption applicable to interest and profit shares earned under the FX-Protected Deposit (KKM) scheme has been extended until the end of 2023.

Rules Defined for Tax Calculations on Corporate Capital Reductions

Regulation Issued Regarding Corporate Insolvency and Capital Loss Calculations

When calculating capital loss and deep indebtedness (insolvency), the entirety of foreign exchange losses arising from unfulfilled foreign currency liabilities, as well as half of the total lease expenses, depreciation, and personnel expenses accrued in 2020 and 2021, shall not be taken into account until January 1, 2023.

Passenger Accompanied Mobile Phone Imports Limited to 1 Device – Effective November 1, 2022

It is mandatory to register mobile phones brought into the country from abroad.

- A passenger may only bring in 1 mobile phone every 3 calendar years.

- The mobile phone must be registered within 120 days of entering the country.

- The mobile phone can only be registered under the Turkish ID Number (TCKN) of the passport holder.

If a passenger entering the country has previously brought and registered another phone under their name within the past 3 years, they will be required to surrender the newly brought phone at customs. If they have not exercised this allowance, they will be permitted to import the phone.

Details Regarding the Early Retirement Scheme (EYT)

There is currently no enacted legislation or confirmed information; we understand that the Ministry is actively working on the subject.

Our observations on this matter are strictly limited to press coverage. The final legislation may turn out to be substantially different.

Those potentially covered under the scope:

- Employees registered into the social security system prior to September 8, 1999

- For women: completing 5,000 premium days and 20 years of service

- For men: completing 5,400 premium days and 25 years of service

Employees meeting the above criteria may, at their discretion, apply for retirement and claim severance pay from their current employer.

Even if an employee meets the criteria, they may choose not to retire and may wish to continue working without claiming retirement.

- Following an application for retirement, the employer may choose not to continue employing the individual.

- After retiring, the individual may face difficulties finding employment elsewhere.

Employers should compile an inventory of employees falling under the EYT scope and calculate severance liability exposure for personnel likely to apply for retirement.

If these employees decide to leave upon applying for EYT, workforce planning must be conducted to address the roles that will become vacant.