Edition 36: 5 January 2017
Editorial Team:
Dr. E. Seyfi Moroğlu, LL.M., Işık Özdoğan, LL.M. and Bora İkiler, LL.M.
Turkey Completes Appointments to Data Protection Board

Turkey has taken the further steps towards the Data Protection Board (“Board”) being operational, with appointment of the final two members to the nine person panel: Murat Karakaya and Hasan Aydın. Further developments (such as establishment of the Data Controller Registry, or requirement to register to such Register) and secondary legislation are expected in the near future for Turkey’s data protection regime, now that the Board can commence operations (more).

The Data Protection Law numbered 6698 (“Law”) required a Data Protection Board to be established by 7 October 2016. However, there have been delays in establishing the Board and implementing the Law.

The first five members of the Board were appointed via decision number 1129 from the Turkish Grand National Assembly on 5 October 2016 (more).

Two further members were appointed by the President via decisions number 2016/103 and 2016/104, published in Official Gazette number 29920 on 16 December 2016.

With this latest development, the Council of Ministers appointed the final two Board members via decision numbered 2016/9597, published in the Official Gazette number 29934 on 30 December 2016.

Please see this link for the full text of the latest appointment decisions (only available in Turkish).

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Turkey Expands Scope of Support Scheme for Design Sector

Turkey’s Money Credit and Coordination Board has introduced a new support package, intended to support exporters. The package addresses the tendency by exporters to move towards e-commerce subscription activities. Key changes include expanding the scope of entities involved, as well as clarifying aspects of the financial support scheme for individuals who are undergoing related training. The wider scope means more entities will be involved in supporting designers and their e commerce activities.

Amendment Communique (No: 2016/1) (“Amendment Communique”) on Design Support Communique (No: 2008/2) was published in Official Gazette number 29898 on 24 November 2016.

Key changes introduced by the Amendment Communique include:

– The definition for “collaborative organizations” is expanded to now include:

– Turkish Union of Chambers and Exchange Commodities.

– Foreign Economic Relations Board.

– Chambers of commerce and industries.

– Industrial areas.

– Organized industrial sites.

– Technology development areas.

– Sectoral associations and institutions.

– Sectoral foreign trade companies.

– Commodity exchanges.

– Employer unions and associations.

– Manufacturers’ Unions and cooperatives.

– Graduates of college and technical high schools are added to the definition of “designer”.

– Conceptual architectural works, patent, utility models, industrial designs and trademark renewals by design companies are added to the support package.

– Promotion expenses paid to trademark-promotion agencies for strategic consultancy services are excluded from the support package.

– The number of contestants who can receive financial support from collaborative organizations towards obtaining a degree increases from thirty to sixty individuals. Up to US $1,500 can be paid to each person for educational and living expenses.

– Necessary documentation required to obtain support payments is clarified.

Please see this link for full text of the Amendment Communique (only available in Turkish).

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Turkey Amends VAT Arrangements for Free Trade Zones, VAT Rates for Certain Goods and Services, Plus Special Consumption Tax for Private Cars

Turkey has announced a range of amendments to the tax regime. Changes apply particularly to land tax and value added tax within free trade zones, as well as special consumption tax for private cars. The scope of good and services subject to 8% Value Added Tax has been extended

The Amendment Law on Public Finance Management and Control Law and Other Laws No. 6761 (“Omnibus Law”), was published in Official Gazette number 29898 on 24 November 2016. Also, Decision No. 2016/9542 on Redefinition of Proportions on Value Added Tax and Special Consumption Tax Applied to Some Goods and Services (“Decision”), was published in Official Gazette number 29899 on 25 November 2016.

Real Estate Tax Law 

Land which has been announced as a free trade zone is now exempt from land tax, until it is registered in favour of the using party (change to Article 15 of the Real Estate Tax Law No. 1319). The amendment is intended to ease tax liability for firms in free trade zones which own private property and intend to reserve the land for future investments.

Value Added Tax Law 

Freight activities from Turkey to free trade zones (and vice versa, if intended for export) are now partially exempt from Value Added Tax (change to Article 17 of the Value Added Tax Law No. 3065).

Further, the scope of good and services subject to 8% Value Added Tax has been extended. Among other things, it now also include preventive medicine, diagnosis, treatment and rehabilitation services for human or animal health, as well as other services provided by physicians performing these services.

Special Consumption Tax 

The Council of Ministers is now authorized to determine different Special Consumption Tax (“SCT”) rates for private cars. It can also now redefine SCT rates according to a private car’s engine displacement, price or segment (change to Article 12(c) of the Special Consumption Tax Law No. 4760).

The Decision subsequently determined the SCT rates for private cars, according to this criteria, varying between 45% and 100%.

Please see these links for the full text of the Omnibus Law and later Decision (only available in Turkish).

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Turkey Amends Methods for Banks to Rate and Evaluate Capital Adequacy

Turkey’s Banking Regulation and Supervision Agency (“Agency”) has amended regulations regarding how banks rate and evaluate capital adequacy. The Agency’s Board now has the power to set the threshold for an entity to qualify as a SME, as well as the maximum total debt amount which will apply in order to qualify as retail receivables.

The Regulation regarding the changes on the Regulation on Measurement and Evaluation of Capital Adequacy of Banks (“Regulation”) was published in Official Gazette number 29913 on 9 December 2016, entering into effect on the same date.

Notable changes introduced by the Regulation include:

– The definition of Small and Medium Enterprises (“SME”) is amended so that businesses whose turnovers are under an amount determined by the Banking Regulation and Supervision Board (“Board”) now qualify as SMEs.

– The Board now will now set the debt threshold for risk to be classified as retail receivables. Previously, the total maximum debt amount was set as 2.75 million TRY.

– The calculation method for acceptable security amounts for immovable properties is now explained in a more detailed way.

– Credit Rating Agencies assigned to determine risk weights applied by banks will no longer be notified to the Risk Centre. Instead they will now be notified to the Agency.

Please see this link for full text of the Regulation (only available in Turkish).

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Turkey Postpones Mandatory e-Invoices Until 1 July 2017

Turkey has postponed the requirement for certain taxpayers to issue e-Invoices. The requirement applies to taxpayers which exceed certain sale volumes, as well as those who import, export, or sell certain commodities. Taxpayers who export certain commodities (stated under Article 11 of Value Added Tax Law numbered 3065) are entitled to issue e-Invoices from 1 January 2017, if they choose to do so. However, the requirement for taxpayers to do so has been extended until 1 July 2017. Therefore, until July 2017, these taxpayers can continue to issue pre-prepared invoices if they wish (either paper or e-Archive).

General Communiqué No. 475 on Tax Procedure Law (“Amendment Communique”) was published in Official Gazette number 29919 on 15 December 2016, entering into effect the same date. The Amendment Communique makes changes to General Communiqué No. 454 on Tax Procedure Law Regarding e-Invoice Application Within the Scope of Exportation of Goods and Properties to be Carried in the Personal Luggage of Non-Residents, which was published in Official Gazette number 29392 on 10 June 2015.

Please see this link for full text of Communiqué (only available in Turkish).

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Transition Period for Electricity Generation Facilities Extended in Turkey

Turkey’s Ministry of Energy and Natural Resources has extended the transition period for acceptance procedures applicable to electricity generation facilities, from 6 November 2016 to now be 31 March 2017. Acceptance procedures under the Acceptance Regulation (dated 7 April 1995) will continue to apply until the transition period expires.

The Regulation Amending the Regulation on Acceptance of Electricity Generation Facilities was published in Official Gazette number 29524 on 6 November 2015, stating the transition period expiry as 6 November 2016. The date was extended by the Regulation Amending the Regulation on Acceptance of Electricity Generation Facilities (“Amendment Regulation”) published in Official Gazette number 29907 on 3 December 2016.

Please see the link for full text of the Amendment Regulation (only available in Turkish).

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Turkey Amends Certain Tariff Calculation For Liquefied Natural Gas Storage Companies

Turkey’s Energy Market Regulatory Authority (“Authority”) has amended tariff-calculations for Liquefied Natural Gas storage companies. Amendments apply particularly to the Authority’s consideration of operating expenditures changes, as well as determining the tariff which will apply if a license or activity period expires.

Accordingly, changes in operating expenditures which are taken as the basis for tariffs to calculate the Annual Revenue Requirement, which the Authority deems as outside its own control, will be considered during revenue cap calculations. The Authority will determine the parameters which will be considered when considering the changes in operating expenditures.

If a license or activity period expires for Liquefied Natural Gas storage companies, the Authority will determine the application method for the Investment Difference Correction Compound and/or Revenue Difference Correction Difference which will be applied to relevant tariff.

The Authority’s decision dated 1 December 2016 was published in Official Gazette number 29907 on 3 December 2016. Please see this link for full text of the Decision (only available in Turkish).

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Turkey Amends How Certain Petroleum License Holders Must Prove they Meet Minimum Asset Thresholds

Turkey’s Energy Markets Regulatory Authority (“Authority”) has amended how distribution and bunker fuel delivery license holders in the petroleum market must prove they meet the minimum asset thresholds. From 2018, such license holders will be able to submit the same balance-sheets which were prepared for the previous year’s Corporate Tax Declaration.

The Authority issued Decree number 6665 (“Amendment Decree”), dated 15 December 2016, published in Official Gazette number 29926 on 22 December 2016, entering into effect on the same date. The Amendment Decree makes changes to Decree numbered 5352, dated 15 December 2014.

Under the Amendment Decree, license holders will be able to prove they meet the minimum asset thresholds by submitting the same balance-sheets which were prepared for the previous year’s Corporate Tax Declaration. The Authority will use these balance sheets to assess a license holder’s technical and economic potential.

Preciously, license holders were required to submit specially prepared balance sheets under the Regulation on Notifications in the Energy Markets to the Authority showing they met the thresholds.

The minimum asset thresholds are:

– Distribution license: TRY 37,500,000

– Bunker fuel delivery license: TRY 11,250,000

The new approach will begin from 2018, using balance sheets prepared for the 2017 Corporate Tax Declaration.

Bunker fuel delivery license holders which only have mineral oil activity in their licenses will continue to be subject to Decree numbered 5352 in this respect.

Please see this link for full text of the Amendment Decree (only available in Turkish).

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Turkey Increases Administrative Fines Under Energy Legislation 3.83% for 2017

Turkey has increased administrative fines relating to electricity, natural gas, petroleum and liquefied petroleum gas by 3.83% for 2017. The revised rates will apply for administrative fines issued between 1 January 2017 and 31 December 2017.

The increases are introduced by Communiqués published in Official Gazette number 29912 on 8 December 2016. These were issued in line with the Ministry of Finance’s 2016 tax revaluation rate, published in the General Communiqué for Tax Procedural Law, published in Official Gazette number 29885 on 11 November 2016 (more).

Please see the following links for the full text of the relevant Communiqué (only available in Turkish).

– Electricity Market

– Natural Gases Market

– Petroleum Market

– Liquefied Petroleum Gases Market

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Turkey Updates Support Scheme for Trademark and Promotion Activities of Foreign Entities of Turkish Companies

Turkey has updated the financial support scheme which is available to the foreign entities of Turkish companies. The scheme offers support packages for rental of stores, warehouses, offices, showrooms, product display/exhibition areas, as well as promotion activities undertaken by Turkish companies.

Communique number 2016/3 (“Communique”) was published in Official Gazette number 29906 on 2 December 2016, entering into effect on the same day.

Significant changes under the Communique include:

– The support percentage has been reduced from 50% to 40% for foreign legal entities established by industrial and commercial companies, as well as companies with an organic link operating abroad.

– 60% of formation expenses for Turkish Trade Centers will now be supported, up to US $300,000 per center.

– No time extension will be granted to an assignee if a trademark is assigned which is subject to foreign promotion support for home-grown products.

– A four-year time limit per country applies for rental support. The start date for this period will now be taken as the first payment date of the first company in a country.

– Applicants must now provide outstanding documents within three months of being notified, or their application will be deemed as having not been filed.

– Detailed wording about advertisement, promotion and marketing activities has been generalized, referring now to the Implementation Circular Letter of the Communique.

– Updated rental support provisions in the communique will apply to rental expenses arising after 1 January 2017.

– Promotion/advertisement support percentages will increase 10% for expenses arising during 2017.

Please see this link for the full text of the Communique (only available in Turkish).

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Turkey Amends Zoning Scheme for Protected Areas

Turkey has updated processes for zoning changes regarding protected areas. Changes also remove the requirement to prepare wide-scope zoning plans including transition stages, for buildings and facilities to be built on coastal areas.

The Regulation Regarding Amendment of the Regulation on Preparation of Zoning Plans for Protected Areas (“Amendment Regulation”) was published in Official Gazette number 29910 on 6 December 2016, entering into effect on the same date. The Amendment Regulation makes changes to the Regulation on Preparation of Zoning Plans for Protected Areas dated 23 March 2012 (“Regulation”).

Under the Regulation, implementation of all zoning plans must cease if an area is declared to be a natural protected area. The Amendment Regulation introduces an exemption, allowing protective zoning plans to be implemented if a natural protected area changes status.

If the status changes in these ways, the applicable protective zoning plans will continue to be implemented (to the extent not violating principle resolutions stipulated for the new statues) until a new zoning plan is prepared:

– Status changes from First Degree natural protected areas to either:

– Qualified Natural Protected Area.

– Sustainable Protection and Restricted Use Area.

– Status changes from Second and Third Degree natural protected areas to Sustainable Protection and Restricted Use Areas.

Authorities are required to prepare protective master and implementation development plans for protected areas. The Amendment Regulation extends the permitted time period from 18 months to three years.

Protective zoning plans must include the entirety of the natural protected area within its scope, and have transition stages. The Amendment Regulation excludes buildings and facilities to be constructed on coastal areas from this requirement.

Please see this link for the full text of the Amendment Regulation (only available in Turkish).

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Turkey Introduces Pricing Method for First Year of Easement and Usufruct Rights over Treasury-owned Property

A pricing method has been introduced in Turkey for the first year of easement and usufruct rights over Treasury-owned real property. The method applies to investors in the defense and aerospace industry which require domestic development and advanced technology. Accordingly, the first year’s price for such rights will be 0.1% of the total minimum unit value per square meter, as is used for calculating the property’s real estate tax base. Investors can ask to adjust the pricing method for existing easement and usufruct agreements concluded before 12 November 2016, in accordance with the new first year pricing method.

The Regulation on the Management of Real Property Owned by the Treasury was published in Official Gazette number 29886 on 12 November 2016, entering into effect on the same date.

Please see this link for the full text of the Regulation (only available in Turkish).

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