Turkey -Tax And Social Security Legislation Annual Update 2011

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Important Changes to Tax and Social Security Legislation enforced from 1st Janaury 2011 in Turkey
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Turkey -Tax And Social Security Legislation Annual Update 2011

  1. 1. TURKEY - JANUARY 2011 REGULATIONS MADE IN TAX AND SOCIAL SECURITY LEGISLATION TO BE ENFORCED IN 2011 New regulations and practices that are issued at Official Gazettes, present in Tax and Social Security legislation to be effective as from the date of 01.01.2011 are summarized below: SECTION A – REGULATIONS MADE IN TAX LEGISLATION 1. Limit for Making Out Cash Register Slips (Invoice): Limit for making out cash register slips by first and second types of tradesmen, people whose income is determined by simple entry and farmers that are obliged to keep books, has been raised to TL 700,00 from 680,00 as from the date of 01.01.2011 in accordance with article 232 of Tax Procedural Law. (Official Gazette No. 27800 and Dated 30.12.2010, T.P.L. General Communiqué No. 402 ) 2. Limit as to Fixed Assets to be Recorded as Direct Expense: Limit as to recording goodwill and tools, devices, furniture and fixtures value of which does not exceed TL 680,00 as direct expense by not making them subject to depreciation has been raised to TL 700,00 as from the date of 01.01.2011 in accordance with article 313 of Tax Procedural Law. (Official Gazette No. 27800 and Dated 30.12.2010, T.P.L. General Communiqué No. 402 ) 3. Food Allowance Given to Staff: Exemption amount that is TL 10,00 daily as a benefit obtained by giving food allowance to staff at places outside of the place of business or extensions of the place of business by employers as per in Article 23/8 of Income Tax Law shall be TL 10.70 in 2011. (Official Gazette No. 27800 and Dated 30.12.2010, Income Tax General Communiqué No. 278 ) 4. Tariff Based in Taxation of Incomes Subject to Income Tax: Tariff based in taxation of incomes subject to income tax in article 103 of Income Tax Law: The tax base has been determined again for 2011 calendar year incomes – as salaried income and other income. (Official Gazette No. 27800 and Dated 30.12.2010, Income Tax General Communiqué No. 278) Salary Up to TL 9.400 15% TL 1.410 for first TL 9.400 then up to TL 23.000, for excess 20% TL 4.130 for first TL 23.000 then up to TL 80.000 for excess 27% TL 19.520 for first TL 80.000 then above TL 80.000 35% www.kapitalsmm.com | www.kapitalonline.net | www.kapitalnetwork.com January 2011
  2. 2. Example Calculation for Salary employee 2011 15% up to 9,400 TL 20% for 9,400 to 23,000 TL (first 9,400 tax = 1,410TL thereafter 20% rate for excess) 27% for 23,000 to 80,000TL (first 23,000 tax = 4,130TL thereafter 27% rate for excess) 35% for above 80,000TL (first 80,000 tax = 19,520TL thereafter excess at 35%) Other - all incomes (not salary) 2011 Up to TL 9.400 15% TL 1.410 for TL for first 9.400 of TL 23.000, then for excess: 20% TL 4.130 for first TL 23.000 of TL 53.000, then for excess: 27% TL 12.230 for first TL 53.000, then of excess of TL 53.000, 35% As compared to 2010: Basic rate to be applied to incomes obtained in 2010 was determined before as follows: (Official Gazette No. 27447 and Dated 29.12.2009, Income Tax General Communiqué No. 273) Up to TL 8.800 15% TL 1.320 for TL 8.800 of TL 22.000, for excess 20% TL 3.960 for TL 22.000 of TL 50.000, 27% TL 11.250 for TL 50.000 of excess of TL 50.000, 35% 5. Special Irregularity Penalties: a) In accordance with T.P.L article 353/1.; Special Irregularity Penalty for each document, of at least TL 170,00 shall be imposed to persons who do not give or take Note of Expenses, Producer Receipts, Self-employment Receipts or who place amounts different from actual amount in these documents as from the date of 01.01.2011. Total penalty to be imposed as to type of each document can not exceed TL 80.000,00 within a calendar year. (Official Gazette No. 27800 and Dated 30.12.2010, T.P.L. General Communiqué No. 402 ) b) In accordance with T.P.L article 353/2.; In case it is determined that retail sale receipt, receipt given by cash registers, entrance and passenger transport ticket, delivery note, package list of transport, passenger list, daily customer list and documents reguired by the Ministry of Finance to be arranged which are not arranged, not used and not made available, a Special Irregularity Penalty of TL 170,00 shall be in 2011 for each document. However, total penalty for each document cannot exceed TL 8.000,000 and total penalty to be imposed as to type of each document can not exceed TL 80.000,00 within a calendar year. (Official Gazette No. 27800 and Dated 30.12.2010, T.P.L. General Communiqué No. 402 ) www.kapitalsmm.com | www.kapitalonline.net | www.kapitalnetwork.com January 2011
  3. 3. 6. Revaluation Rate: As it is known, there is provision of “Revaluation rate is the average price increase rate occurred in Producer Prices General Index of Turkey Statistical Institution in October (including October) of the year of revaluation compared to the same period of the previous year. This rate is announced at Official Gazette by the Ministry of Finance in clause (B) of duplicated article 298 of Tax Procedural Law no. 213. In accordance with this provision, revaluation rate has been determined as 7,7% (seven comma seven) for 2010. This rate shall also be applied for the last temporary tax period belonging to 2010 at the same time. (Official Gazette No. 2775700 and Dated 12.11.2010, T.P.L. General Communiqué No. 401 ) 7. Statement and Exemption in Real Estate Capital Revenues (Rental Incomes): TL 2.600,00 of proceeds obtained from hiring buildings as houses within a calendar year is exempted from income tax in 2010. This exemption can not be benefited in case proceeds over exemption limit is obtained and not declared or declared deficiently. Exemption amount to be applied to 2011 incomes has been determined as TL 2.800,00. (Official Gazette No. 27800 and Dated 30.12.2010, Income Tax General Communiqué No. 278) In case proceeds obtained from renting buildings as business places (with withholidng tax ‘stoppage’) within a calendar year does not exceed TL 22.000 in 2010 (amount that is present in the second income bracket of tariff written in article 103 of Income Tax Law), a statement shall not be given, but a statement shall be given for the whole in case this figure is exceeded. (Article 86/c of Income Tax Law) In calculation of limit of TL 22.000,00; sum of gross amount of real estate capital revenue subject to withholding tax / stoppage shall be considered. Note: 2010-In case annual (Gross) business place rental income is TL 22.000,00 or below, it shall not be declared. Statement limit of gross proceeds obtained within a calendar year after renting the buildings as business places (with withholding tax /stoppage) shall be considered as TL 23.000 for 2011. 8. Stamp Duty: New practices put into effect as from the date of 01.01.2011 are as follows: Statements and abstract accounts shall be subject to stamp duty in amounts stated below: Agreements mentioning a sum of money: - Contracts, letters of undertaking and letters of conveyance (8,25 a thousand) - Rental Contracts (1,65 a thousand) (At rental price according to contract period) Statements and Declarations: - Money taken against service such as wage, salary, daily fee (6,6 a thousand) - Annual income tax statements TL 30,00. - Corporate tax statements TL 40,10. - Brief Statements TL 19,90. - Value added tax statement TL 19,90. - Others TL 19,90. www.kapitalsmm.com | www.kapitalonline.net | www.kapitalnetwork.com January 2011
  4. 4. - Statements given to municipalities TL 14,80. - Insurance premium declarations given to Social Security Institutions TL 14,80. - Statements Given to Customs Administrations TL 40,10. Balance Sheet and Operating Account Abstracts: - Balance Sheets TL 23,20. - Income Statements TL 11,30. - Operating Account Abstract TL 11,30. (Official Gazette No. 27800 and Dated 30.12.2010, Stamp Duty General Communiqué No. 54 ) 9. 2011 Statements of Persons Obtaining Property Capital Revenue as to 2010: a) Discount Rate to be Considered in Statement of Property Capital Revenues Obtained in 2010 Calendar Year: Since provisions in effect on the date of 31/12/2005 are to be based in taxation of incomes obtained from all kinds of bills and Treasury bonds issued before the date of 1/1/2006, following explanations have to be considered related to discount rate practice. Discount rate is determined by dividing revaluation rate determined for that year in accordance with Tax Procedural Law into compound interest rate occurred in Government bond and Treasury bond tenders in the same period. Revaluation rate determined for 2010 in accordance with provisions of Tax Procedural Law is 7,7%. Compound interest rate occurred in Government bond and Treasury bond tenders in the same period is 8,24%. According to that, discount rate to be applied to 2010 incomes is (7,7%/8,24%=) 93,4 %. b) Property Capital Revenues to be Stated by Applying Discount Rate: Interests of every kind of bill and Treasury bonds issued before the date of 1/1/2006 and listed in subclause (5) of second clause of article 75 of Income Tax Law and incomes obtained from securities issued by Housing Development Administration and Privatization Administration among securities capital revenues obtained in 2010 calendar year shall be declared by applying discount rate. Discount rate shall not be applied in statement of property capital revenues obtained from foreign exchange, gold or another value indexed securities and securities issued in foreign currency. Discount rate shall not be applied for gains and revenues included by commercial enterprises. c) Practice of Exemption in Incomes Obtained from Government Bonds and Treasury Bonds Issued before the date of 1/1/2006: In accordance with provision of Temporary article 59 of Income Tax Law, 50 billion liras of sum of interest incomes obtained from Government bonds and Treasury bonds issued between dates of 26/07/2001-31/12/2005 and other revenues obtained by selling them in 2001 and this amount or the amount to be found by increasing this amount by the rate of revaluation rate determined for each year in 2002 and following years were exempted from income tax until the date of 31/12/2007. In accordance with this provision, since exemption practice as to incomes obtained from Government bonds and Treasury bonds issued before the date of 01.01.2006 was ended on the date of 31.12.2007, exemption practice is not the case related to interest incomes obtained in 2010 and other incomes obtained by selling these securities. (Official Gazette No. 27800 and Dated 30.12.2010, Income Tax General Communiqué No. 273) www.kapitalsmm.com | www.kapitalonline.net | www.kapitalnetwork.com January 2011
  5. 5. 10. Succession and Inheritance Tax: Exemption amounts in (b), (d) and (e) clauses of article 4 of Sucession and Inheritance Tax shall be considered as follows by the date of 01.01.2011; - TL 118.438,00 in heritage shares falling to each of descendants and spouse including adopted children (TL 237.018,00 in heritage share falling to spouse in case there is no descendant), - TL 2.730,00 in successions occurring gratuitously, - TL 2.730,00 in lottery prizes won in contests and lotteries arranged on money and goods. On the other hand, tax tariff tax base bracket amounts present in article 16 of Succession and Inheritance Tax has been determined by increasing by (7,7%) at revaluation rate to be valid as from the date of 1/1/2011. Therefore, sucession and inheritance tax shall be calculated according to tariff below in inheritances occurring through sucession or gratuitously as from the date of 1/1/2011. In inheritance through succession In gratuitous inheritances Tax base tax rate (percentage) tax rate (percentage) For the first TL 170.000 1 10 For subsequent TL 370.000 3 15 For subsequent TL 800.000 5 20 For subsequent TL 1.600.000 7 25 For part of base exceeding TL 2.940.000 10 30 (Official Gazette No. 27800 and Dated 30.12.2010, Succession and Inheritance Tax General Communiqué No. 42) 11. Motor Vehicles Tax: Tariffs no (I) and (II) as to taxation of motor vehicles as from the date of 01.01.2011 are as follows. A. Motor Vehicles Tax Tariff No (I) Automobile, station wagon, land vehicles and similar ones and motorcycles shall be taxed according to tariff no (I) below. TARIFF NO (I) Ages of Vehicles and Annual Tax Amount to be Paid (TL) Engine Displacement (cm3) 1 – 3 ages 4 – 6 ages 7 – 11 ages 12 – 15 ages 16 ages and above 1- Automobile, station wagon, land vehicles and similar ones 1300 cm3 and below 436,00 304,00 172,00 129,00 48,00 Up to 1301 - 1600 cm3 697,00 523,00 304,00 215,00 84,00 Up to 1601 - 1800 cm3 1.227,00 961,00 566,00 346,00 136,00 Up to 1801 - 2000 cm3 1.931,00 1.490,00 876,00 523,00 208,00 Up to 2001 - 2500 cm3 2.897,00 2.105,00 1.315,00 787,00 313,00 Up to 2501 - 3000 cm3 4.038,00 3.513,00 2.196,00 1.183,00 436,00 Up to 3001 - 3500 cm3 6.150,00 5.534,00 3.334,00 1.666,00 613,00 Up to 3501 - 4000 cm3 9.667,00 8.348,00 4.918,00 2.196,00 876,00 Up to 4001 cm3 and above 15.820,00 11.863,00 7.027,00 3.160,00 1.227,00 2-Motorcycles Up to 100 - 250 cm3 84,00 65,00 48,00 31,00 14,00 Up to 251 - 650 cm3 172,00 129,00 84,00 48,00 31,00 Up to 651 - 1200 cm3 436,00 260,00 129,00 84,00 48,00 1201 cm3 and above 1052,00 697,00 436,00 346,00 172,00 www.kapitalsmm.com | www.kapitalonline.net | www.kapitalnetwork.com January 2011
  6. 6. B. Motor Vehicles Tax Tariff No (II) Motor land vehicles not written in tariff no (I) shall be taxed according to tariff no (II) below. TARIFF NO (II) Vehicle Type and Sitting Ages of Vehicles and Annual Tax Amount to be Paid (TL) Place/Maximum Total Weight 1 – 6 ages 7 – 15 ages 16 ages and above 1) Minibus 523,00 346,00 172,00 2) Panel van and motor caravans (Engine Displacement System) 1900 cm3 and below 697,00 436,00 260,00 1901 cm3 and above 1.052,00 697,00 436,00 3) Autobus and similar ones (Number of Seats) Up to 25 persons 1.315,00 787,00 346,00 Up to 26 - 35 persons 1.578,00 1.315,00 523,00 Up to 36 - 45 persons 1.755,00 1.490,00 697,00 46 persons and above 2.105,00 1.755,00 1.052,00 4) Light truck, truck, hauler and similar ones (Maximum Total Weight) Up to 1.500 kg 470,00 313,00 155,00 Up to 1.501 - 3.500 kg 946,00 550,00 313,00 Up to 3.501 - 5.000 kg 1.420,00 1.183,00 470,00 Up to 5.001 - 10.000 kg 1.578,00 1.340,00 630,00 Up to 10.001 - 20.000 kg 1.894,00 1.578,00 946,00 20.001 kg and above 2.369,00 1.894,00 1.102,00 (Official Gazette No. 27800 and Dated 30.12.2010, Motor Vehicles Tax General Communiqué No. 37 ) 12. Real Estate Tax: Building, land and building plot tax values of taxpayers belonging to 2011 have been determined again according to Province, District, Avenues and Streets and they shall be calculated considering square meter unit values. 13. Environment Tax: Environment tax belonging to houses and business places and buildings used in other ways shall be collected according to amounts below as from the date of 01.01.2011. a) Environment Tax Belonging to Houses Environment tax belonging to houses shall be calculated as 21 Kurus in Metropolitan Municipalities per cubic meter and 17 Kurus in other municipalities per cubic meter based on water consumption amount. b) Environment Tax Belonging to Business Places and Buildings Used in Other Ways Environment tax belonging to business places and buildings used in other ways shall be applied according to tariff below in Metropolitan municipalities and municipalities except Metropolitan municipalities. www.kapitalsmm.com | www.kapitalonline.net | www.kapitalnetwork.com January 2011
  7. 7. Environment Tax to be Applied in Municipalities Except Metropolitan Municipalities Building Degrees and Annual Tax Amounts (TL) 1st Degree 2nd Degree 3rd Degree 4th Degree 5th Degree Building Groups 1st Group 2.000,00 1.600,00 1.290,00 1.000,00 850,00 2nd Group 1.290,00 960,00 750,00 600,00 500,00 3rd Group 850,00 640,00 500,00 400,00 320,00 4th Group 400,00 320,00 240,00 200,00 160,00 5th Group 240,00 200,00 140,00 129,00 100,00 6th Group 129,00 100,00 170,00 59,00 43,00 7th Group 43,00 35,00 24,00 21,00 17,00 Environment Tax to be Applied in Metropolitan Municipalities Building Degrees and Annual Tax Amounts (TL) Building Groups 1st Degree 2nd Degree 3rd Degree 4th Degree 5th Degree 1st Group 2.500,00 2.000,00 1.612,00 1.250,00 1.062,00 2nd Group 1.612,00 1.200,00 937,00 750,00 625,00 3rd Group 1.062,00 800,00 625,00 500,00 400,00 4th Group 500,00 400,00 300,00 250,00 200,00 5th Group 300,00 250,00 175,00 161,00 125,00 6th Group 161,00 125,00 187,00 73,00 53,00 7th Group 53,00 43,00 30,00 26,00 21,00 In accordance with Cabinet Decree no. 2005/9817, amounts stated for house, business place and other used buildings shall be applied as discounted by 50% in municipalities in development priority regions and municipalities population of which is below 5.000 except the ones within borders of Metropolitan Municipality. (Official Gazette No. 27800 and Dated 30.12.2010, 39 Municipality Incomes Law General Communiqué No. 39) 14. Minimum Living Allowance Practice: Minimum living allowance amounts calculated at minimum wage for 2011 Calendar year are shown in the table below. The allowance is deducted from the final tax liability calculation. Monthly Minimum Monthly Minimum Living Allowance Living Allowance Marital Status Marital Status Amount Amount Single TL 59,74 Married spouse employed TL 59,74 Married spouse unemployed TL 71,69 Married spouse employed 1 TL 68,70 Married spouse unemployed 1 TL 80,65 child child Married spouse employed 2 TL 77,66 Married spouse unemployed 2 TL 89,61 children children Married spouse employed 3 TL 83,63 Married spouse unemployed 3 TL 95,58 children children Married spouse employed 4 TL 89,61 Married spouse unemployed 4 TL 101,55 children children www.kapitalsmm.com | www.kapitalonline.net | www.kapitalnetwork.com January 2011
  8. 8. SECTION B– REGULATIONS MADE IN SOCIAL SECURITY LEGISLATION 1. Minimum Wage: Minimum (gross) wage, calculated per month of 30 days, to be applied for people older than 16 ages has been determined as TL 796,50 monthly, TL 26,55 daily for the first half of 2011 (01.01.2011 - 30.06.2011) and TL 837,00 monthly, TL 27,90 daily, for the second half of 2011 (01.07.2011 – 31.12.2011) by Minimum Wage Determination Commission. (Decree of No. 2010/01 and Dated 28.12.2010 of Minimum Wage Determination Commission issued at Official Gazette Dated 31.12.2010) 2. Lower and Upper Limits of Daily and Monthly Earnings Basic for Insurance Premiums, Unemployment Insurance Premium and Social Security Support Contribution: For Private Sector, it has been determined as: Between dates of 01.01.2011 – 30.06.2011; Daily lower limit = TL26,55 Monthly lower limit = TL 796,50 Daily upper limit = TL 172,58 Monthly upper limit = TL 5.177,40 Between dates of 01.07.2011 – 31.12.2011; Daily lower limit = TL 27,90 Monthly lower limit = TL 837,50 Daily upper limit = TL 181,35 Monthly upper limit = TL 5.440,50 3-Severance Payment Exemption amounts to be applied for the payments to be made by the insurance companies to those insured and severance pay and child allowance payments exempt from income tax, which are calculated based on the coefficients specified under article 21 of 2010 Central Management Budget Law accepted by the Turkish Grand National Assembly in their General Assembly dated 26 December 2010 and which will be applied during 01.01.2011-30.06.2011 period, are presented below. * Maximum severance pay amount to be exempted from income tax TL 2.617,70. For further information and to join our mailing list please contact Mr. Zeki Öcal Kapital Business Partners E: zocal@kapitalnetwork.com T: +90 212 213 9393 ends. www.kapitalsmm.com | www.kapitalonline.net | www.kapitalnetwork.com January 2011

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