Numara : 12
Tarih : 14.11.2022


NO: 2022/12

Subject: Law No. 7420 Promulgated in the Official Gazette

Law No. 7420 on the Amendment to the Income Tax Law and Certain Laws and Decrees was promulgated in the Official Gazette dated 09/11/2022 and numbered 32008.

In addition to some other regulations in Law No. 7420, the following tax regulations have been made:

  • "Taxation in capital reduction" is regulated as a law article,
  • Currency Protected Deposit conversion period is extended until 31 December 2023,
  • Taxpayers who waive their small receivables are given the opportunity to remove these receivables from their records by accepting them as "bad debt",
  • Mail allowance provided to the employees in cash up to 51 TL, is exempted from income tax,
  • Electricity, natural gas and heating allowances up to 1,000 Turkish Liras made to employees are exempt from income tax,
  • Salaries paid to employees in construction, repair, installation works and technical services abroad are included in the scope of income tax exemption,
  • Incentive limit is increased to 50 kW in electricity production based on renewable energy sources in residences,
  • Individual participation investor discount application period is extended until 31/12/2027,
  • Tourism share taxpayers and applicable share rates have been rearranged.

Taxation in capital reduction

With Article 22 of the Law numbered 7420, Article 32/B has been added to the Corporate Tax Law.

As per the relevant article, in capital reduction, taxation is foreseen to be made in two different ways depending on the reduction before or after 5 years from the addition of capital elements to the capital.

In case the equity items added to the capital are subject to capital reduction after five full years from the date of addition to the capital; the capital elements within the amount subject to the reduction will be determined by proportioning the cash or in-kind capital and other elements added to the total capital, and taxation will be made accordingly.

In case of capital reduction before the completion of the five full-year period from the date on which the shareholders' equity items are added to the capital; it will be accepted that the reduction is made first of the items that will be subject to corporate tax and dividend distribution withholding tax, then to the items that will only be subject to dividend distribution withholding tax, and finally to the non-taxable in-kind or cash capital items.

Effective Date: November 9, 2022

Corporation tax exemption for gains on conversions to Turkish Lira time deposit accounts

The application period for FX-protected TL deposit/participation account exemptions, which will expire at the end of 2022, has been extended until the end of 2023.

You can review our previous Bulletin for details

Effective Date: November 9, 2022

Exception for Benefits Provided for Payment of Electricity, Natural Gas and Heating Expenses

Income tax shall not be calculated over the monthly payments not exceeding 1,000 Turkish liras made by the employers to the employees in return for electricity, natural gas, and other heating expenses in addition to their current wages.

The exemption is foreseen for a temporary period and will be valid for payments made in addition to the current wages from the effective date of the article until 30.06.2023. The details for application of the exemption will be determined via secondary legislation (communiques) to be published.

Effective Date: November 9, 2022

Income Tax Exemption Has Been Introduced for Meal Allowances Paid to Employees in Cash

In the current practice, meal payments made by employers in the workplace or meal allowances up to 51 Turkish Liras per day with meal vouchers are exempt from Income Tax.

With this Law, in addition to the monthly salary of the employee, an income tax exemption has been introduced for cash payments up to 1,000 TL per month.

According to the amendment; in cases where meals are not served to the employees at the workplace or its premises, the portion of the meal costs provided to the employees in cash, which does not exceed the determined amount (51 TL as of 1 July 2022), will be exempt from income tax.

Effective Date: December 1, 2022

Tourism share

Tourism share taxpayers and applicable share rates have been rearranged as follows;

Tourism share;

a) Five per thousand from compound facilities and accommodation facilities, 

b) Five per thousand from Food & Beverage and entertainment facilities licensed from the Ministry,

c) Five per thousand from Sea Tourism Facilities,

ç) Five per ten thousand from travel agencies (except for individual air ticket sales),

d) Five per ten thousand from Airlines (commercial passenger transportation activities).

Effective Date: January 1, 2024


Yours sincerely,

Deloitte Turkey

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