With Law No. 7161, published in the Official Gazette dated January 18, 2019 and numbered 30659, there are new amendments to the Certain Tax Laws.

Here are the amendments to the Income Tax Law, VAT and Excise Duty:

1- Amendments to the Income Tax Law

a)  By Article 3 of the Law No. 7161, adding the following paragraph to the first paragraph of Article 23 of the Income Tax Law, 70% of the real net value of the wage incomes are becoming tax-exempt.

“17. 70% of the actual value of the monthly wage paid to the pilots and licensed cabin crew working for Turkish Aeronautical Association or Aviation Institutions having their legal or business centers in Turkey, excluding Public Institutions and Organizations”

President is entitled to increase this rate to 100%, or to reduce it to zero)

b) By Article 4 of the Law No. 7161 Number 2 of the first paragraph of article 29 of the Income Tax Law that regulates the exceptions to bonuses and awards has been amended and extended as follows.

2. Compensations, casuals, bonuses and other increases given to Officers, non-commissioned officers, civil servants and civilian mechanics in military service in regard of services such as flying or diving; and such payments made to the pilots, divers, cabin crew actually engaged in such services.

c) Exemptions for the earnings gained by selling product warrants related to the licensed warehousing of agricultural products have been extended until 31.12.2023.

2- Amendments to the Corporate Tax Law

By Article 4 of the Law No. 7161, exemption on discount rate applied for investment expenditures within the scope of certificates of investment incentives on manufacturing sector.

The Presidency has been granted authority to extend the exemption by amendment to the same article.

3- Changes in the Value Added Tax Law

a) As “renewable and other energy” phrases have been added to the Article 17 of the Law, delivery of goods and services aiming the construction of facilities for such energy sources at the small industrial sites and organized industrial zones are being tax-exempt.

In addition, by adding the clause “n” to the same paragraph, deliveries of books and periodical publications published by the publishers certified by the Ministry of Culture and Tourism VAT are exempt.

b) By the Article 18 of the Law No. 7161, foreign exchange differences are also included in the Article 24 of the VAT Law to be included in the VAT base.

c) By the Article 19 of the Law No. 7161, The VAT exemption period of the transactions of handover or delivery of the immovables within the content of improvement, renewal and transformation projects is extended to 31.12.2020.

d) By the Article 20 of the Law No. 7161, due to the incentive investment in the manufacturing industry, refunds for VAT of investment expenditures which could not be compensated by deducting from VAT payables, will be continued in 2019.

Presidency has been granted the authority to extend the deadline.

4- Amendments to the Law on Excise Duty

a) With reference to Article 37 of the Law No. 7161, on List number III annexed to the Law on Excise Duty “fruity carbonated drinks” phrase has been amended as “fruity carbonated drinks; turnip juice; Turkish food According to the codex flavored and flavored / aromatized drinking milk, baby ve follow-on milk”

b) By the Article 38 of the Law No. 7161, Provisional Article 8 is added to the Law on Excise Duty. It is stated that no tax assessment regarding to turnip juices and baby ve follow-on milk, milks flavored and flavored/aromatized according to Turkish Food Codex which were imported or delivered prior to the date of publication of this Article will be made in terms of VAT, and Excise Duty, or any tax penalties will not be issued, previous tax penalties held to the court will be canceled.

It is also stated that the amounts paid will not be rejected or returned.

5- Amendments to the Expenditure Tax Law

By the Article 2 of the published law no. 7161, the following paragraph is added to the first paragraph of the article that regulates banking ve insurance transactions tax  exemptions.

“Obtained money due to transactions of asset financing funds in capital markets”

According to Article 69 of the Law no.7161;

• The amendments to articles 23 and 29 of the Income Tax Law and the article 17 / n of VAT Law come into effect on the date of publication in order to be implemented by the beginning of the month following the publication in the Official Gazette,
• The amendment to the Provisional Article 76 of the Income Tax Law comes into effect on the date of publication in order to be valid from 1/1/2019
• Other changes come into effect on the publication date.

Please be informed,

Kind Regards,

Yusuf OZER

Certified Auditor