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Turkey Enacts New Law To Increase Tax Revenues

Recent Changes in Turkey Tax Legislations

Turkey introduces new measures to increase tax revenues 2019

With the proposal of the Law on the Amendment of the Digital Service Tax and Certain Laws and Decree Law no. 375, which entered the agenda of the Turkish Grand National Assembly on 24.10.2019

Tax Changes introduced by Turkish Government

This article summarizes the key changes.

Accommodation Tax Turkey

Accommodation tax will be imposed; accommodation services such as hotels, motels, holiday villages, pensions, apartments, guesthouses and camping, and all other services such as eating, drinking, activity, entertainment services and use of the pool, beach, thermal and similar areas will be subject to 2% tax over the cost of service

Digital service tax Turkey

Digital service tax will be put into force in Turkey for the first time in the world. Responsible of digital service tax is the companies which give digital services in Turkey. The ratio of the digital tax service is % 7,5

Valuable Housing Tax Turkey

According to draft tax law people having a house worth between 5–7.5 million Turkish liras ($862,000-$1.300 million) will pay 0.3% valuable Housing Tax, 0.6% tax will be applied on houses worth between 7.5 million Turkish liras and 10 million Turkish liras ($1.724 million), and houses worth over 10 million Turkish liras will be taxed with 1%.

Increase for income tax ratios

Previously individual income tax rates vary from 15% to 35%. With draft tax legislation income tax rates vary from 15% to 40 % .

Individual income tax rates applicable for 2019 are as follows:

Decrease for Corporate Income Tax

In Turkey, the corporate income tax rate levied on business profits is 22%. The rate for corporate income tax will be decrease to 20 % for the tax period 2020 and will be decrease to 18 % for the tax period 2021.

Tax exemption for the transportation allowances

The transportation fee up to TL 10, which is provided to the employees by providing public transportation card, ticket or payment means used for this purpose, will be accepted as a tax exception.

Banking and Insurance Transactions Tax Increase

Sale of foreign exchange which has been subject to (0.1%) percent Banking and Insurance Transactions Tax (“BITT”) taxation since May 2019, is now subject BITT taxation at the rate of one per thousand percent (0.2%) , excluding certain transactions.

Limitations for the amortization of vehicles

Vehicle Rental Contracts: According to Draft tax law monthly rent amount for vehicles can only be deducted up to 5.500 TRY when calculating tax base

Maximum 115,000 TRY of the taxes paid in the purchase of vehicles will be considered as an expense in the tax calculation.

70% of the expenses related to vehicles will be considered as an expense in the tax calculation.

The highest amount subject to depreciation base in the purchase of new or used vehicles is determined as 250.000 TL.


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