Edition 43: 24 April 2017
Editorial Team:
Orçun Çetinkaya, LL.M., Ezgi Baklacı, LL.M., and Pelin Oğuzer, LL.M.
Turkey Clarifies Tax Obligations for Electronic Money and Payment Agencies

Turkey has announced clarifications of taxation arrangements for payment services provided by e-money and e-payment agencies. Legislation deems these e-currency transactions to be banking transactions and services. Accordingly, it is clarified that the Banking and Insurance Transaction Tax will apply to commissions, payments and other amounts which e-money and e-payment agencies collect.

General Communiqué on Expenditure Taxes No. 91 (“Communiqué”) was published in Official Gazette number 3004 on 11 March 2017, entering into effect on 1 April 2017.

Notable provisions introduced by the Communiqué include:

– e-money and e-payment agencies offering banking transactions and services (as defined under Article 28 of the Expenditure Tax number 6802) must pay Banking and Insurance Transaction Tax (“Transaction Tax”).

– Transaction Tax applies to commissions, payments and other amounts which e-money and e-payment agencies collect for services.

– Service Tax (Banking Transaction Tax) Returns for transactions by an e-money or e-payment agency’s branches must be submitted to the registered tax office of the company’s headquarters.

– e-money and e-payment agencies have until 1 April 2017 to close tax obligation records for payment services which were opened before 1 April 2017.

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

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Turkey Tweaks Government Financial Support Scheme for Technological Products

Turkey has amended the scope and procedure of a government investment support scheme for technological products (“Scheme”). Notably, support for loan interest has been removed from the Scheme, but micro-enterprises have become eligible to apply for support. The Scheme now also includes technological products resulting from R&D projects in technology development areas, as well as produced by public research organizations.

The Regulation Amending The Regulation of The Investment Support Program For Technological Products (“Amendment Regulation”) was published in Official Gazette number 30032 on 8 April 2017, entering into effect on the same date.

Significant changes introduced by the Amendment Regulation include:

– Loan interest support will no longer be provided in the Scheme.

– Micro-enterprises can now apply for investment support.

– The Scheme now includes technological products:

– Resulting from R&D projects conducted by enterprises in technology development areas.

– Produced by public research organizations.

– Products developed using equity capital were previously only eligible to be included in the Scheme if they are patented. The Scientific and Technological Research Council of Turkey (TÜBİTAK) can now also approve specific products to be included in the Scheme.

– The upper limits of investment support and rates has increased.

– Micro-enterprises: Upper limit is 60% of the investment project amount. The total amount cannot exceed eight million Turkish Lira.

– Small scale enterprises: Upper limit is 50% of the investment project amount. The total amount cannot exceed seven million Turkish Lira.

– Medium sized enterprises: The upper limit is 40% of the investment project amount. The total amount cannot exceed six million Turkish Lira.

– Large enterprises: The upper limit is 10% of the investment project amount. The total amount cannot exceed three million Turkish Lira.

– The upper limits above will increase 20% if machines and devices purchased for a project have a domestic goods certificate.

– The total support amount of each investment project is now capped at ten million Turkish Lira.

– Feasibility reports no longer listed among the required application documents.

– If rights derived from products produced by public research organizations are assigned, the Examination Commission will assess the support amount by considering the business scale of the larger party.

– Applications can now be submitted at any time, rather than only at specific application points.

– The examination term for applications decreases to 45 working days.

– Enterprises can only receive advance payments for machine and equipment if they deposit 25% of the upper limit. Machines and equipment purchased via leasing companies do not qualify.

– Enterprises are prohibited from selling, pledging and assigning of machines and equipment purchased within the Scheme’s scope, for a certain period. The term has been reduced from five years to three years.

– Enterprises must provide an annual progress report within a certain period of the Ministry’s Completion Document being issued. The period has been reduced from five years to three years.

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

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Turkey’s Capital Markets Board Updates Regime for Issuing Debt Instruments

Turkey’s Capital Markets Board has announced a range of changes regarding debt instruments. Among other changes, an entity’s board of directors can now make decisions about issuing debt instruments. Also, the requirement to ratify issuing documents for foreign debt instruments has also been removed. 

The Communiqué (II-31.1a) Amending the Communiqué on Debt Instruments II-31.1 (“Amendment Communiqué”) was published in Official Gazette number 29983 on 18 February 2017, entering into effect on the same date.

Changes introduced by the Amendment Communiqué include:

– The “competent authority” for making decisions about issuing debt instruments has been extended to now also include an entity’s board of directors (in addition to its general assembly).

– Foreign issues of a debt instrument must be registered with the Central Registry Agency (“Agency”). The Capital Markets Board’s (“Board”) discretion to grant exemptions to this requirement has been removed.

– The regulation regarding ratification of issuing documents for foreign debt instruments is abolished. Information about sale of such instruments must now be transmitted to the Board, including electronic signature, before each placement.

– The issue limit for debt instruments will now be calculated based on the date an application is made to the Board for approval of the prospectus or issue document.

– Board fees for debt instruments with a term longer than 730 days are reduced from 0.2% to 0.15%.

– The Agency’s obligation to notify the Board about payment of Board fees is abolished.

– A minimum nominal value of 100,000 Turkish Lira is introduced for private placements.

– Issued bonds may now be returned by the issuers. Returned bonds can be sold, kept or cancelled up until the due date.

– If the bond issuing company is a public company, the shareholders’ profit share cannot be decreased due to profits paid to bondholders.

– All issuers can now return an issued debt instruments to the secondhand market. Previously, only banks could do this.

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

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Turkey Updates Rules and Procurement Processes for Petroleum Products

Turkey’s Energy Markets Regulatory Authority (“Authority”) has amended procurement principles for petroleum products from domestic and international sources, excluding fuel oil (“Petrol Products”). New conditions now apply to the letter of conformity which is required for Petrol Product imports to enter free circulation in Turkey. The Authority must now also approve delivery of such products.

The Amendment Communiqué on Procedures and Principles of Procuring Petrol Products Except Fuel Oil from Domestic and International Sources (“Amendment Communiqué”) was published in Official Gazette number 30003 on 10 March 2017, entering into effect on the same date.

The new conditions and rules which are introduced through the Amendment Communiqué are as follows:

– The Authority’s permission is now required in order to deliver Petrol Products to third parties which have been procured by industrialists for production purposes, and by importers on industrialists’ behalf. Products cannot be received by third persons without that permission.

– Conformity letter are required from the Authority in order for Petrol Product imports to enter free circulation in Turkey. When considering applications for such letters, the Department of Petrol Market will cancel disused parts of effective conformity letters for companies which have expired or cancelled mineral oil licenses.

– The Authority must notify the Department of Audit and/or competent authorities about any legislative breaches or suspicions arise that a breach has occurred during assessment of conformity letter applications.

– Issuing a conformity letter can be suspended if the Authority initiates a preliminary inquisition and/or investigation.

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

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Turkey Waives Stamp Tax on Certain Construction Sector Agreements, Plus Reduces Title Deed Fees and Government Deductions on Turkish Lira loans, Obtained from Abroad

Turkey has made a range of changes to taxes and fees. Stamp waiver is now waived for certain construction-related agreements and title deed fees are reduced until September 2017. Repayment rates for the Resource Utilization Support Fund have been reduced for Turkish Lira loans, obtained from abroad by Turkish residents.

Decision number 2017/9973 dated 13 March 2017 (“Decision”) was published in Official Gazette number 30008 on 15 March 2017.

Stamp Tax Waiver for Certain Agreements 

From 15 March 2017, the following agreements are exempt from stamp tax in Turkey:

– Construction agreements (in the statutory form) which outline flat or revenue sharing arrangements either generally, or between contractors and subcontractors.

– Consultancy agreements regarding construction projects, in return for flat or revenue sharing.

– Service agreements for building inspections. 

Title Deed Fees Reduced Until September 2017 

Until 30 September 2017, the title deed fee collected on the transactions at the rate of estate tax are reduced from 2% to 1.5% for residences and workplaces. Eligible transactions are specified in Tariff Number 4, Article 20(a), Annexed to the Act of Fees Number 492.

Payment Rates to the Resource Utilization Support Fund Reduced

The Resource Utilization Support Fund (“Support Fund”) is a deduction which applies to Turkish Lira loans, obtained from abroad by Turkish persons.

Repayment rates to the Support Fund have been amended for Turkish Lira loans provided to Turkish residents from abroad depending on the term of the loan. The changes do not include fiduciary transactions, nor loans by banks or finance companies.

The revised repayment terms are:

– Loans up to one year: Reduced from 3% to 1%.

– Loans between one and two years:

– First year: Reduced from 1% to 0%.

– Second year: Reduced from 0.5% to 0%.

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

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Turkey Updates Discount Methods for Undeclared VAT

Turkey’s Ministry of Finance has announced changes to the Value Added Tax (“VAT”) regime. Changes apply to discount methods for undeclared VAT. Undeclared VAT on invoices can now be discounted within the year when the case is completed.

The Communiqué on Amending the Communiqué on Value Added Tax General Practices (Serial Number 11) (“Communiqué”) was published in Official Gazette number 29980 on 15 February 2017, entering into effect on the same date.

Changes introduced by the Communiqué include:

– VAT returns over 5,000 Turkish Lira for services to which a deduction applies must now be claimed according to tax audit reports or certified public accountant report.

– A guarantee will not be sought for VAT returns made according to tax audit reports.

– VAT will no longer be calculated on invoices issued by exporters for exchange differences to the detriment of producers. The VAT amount will be revised for return claims.

– A deduction can be made in the calendar year in which the payment was made if a VAT declarations is made late or incompletely, but rectified at a later date.

– VAT will not apply when transporting products from Turkey into free zones, or vice versa.

– For house sales, the VAT rate on the invoice date will take priority if this date is different to the VAT rate which applies on the delivery date.

– VAT deduction no longer applies to services provided by doctors.

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

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Requirements Clarified for Power of Attorneys Used During Land Registry Transactions, Issued Outside Turkey

Turkey’s General Directorate of Land Registers Department of Foreign Affairs recently clarified form and process requirements for power of attorneys used during land registry transactions in Turkey, which are issued in another country.

A letter was circulated on 20 March 2017, stating that a circular number 1767 (2015/5), dated 11 August 2015, should be taken as the basis for requirements sought by land registries during the land registry transactions in Turkey, to approve duly authorization of the proxy holder if the power of attorney is issued abroad.

Accordingly, power of attorneys must meet the following criteria if it is not issued by the Turkish Consulate in the relevant country:

– Be prepared by the notary public in the statutory form.

– Be in the language of the issuing country, and bear the photograph of the proxy giver.

– Carry an apostille if the issuing country is a party to The Hague Convention Abolishing the Requirement of Legalisation For Foreign Public Documents. Otherwise, the issuing notary’s signature must be approved by the affiliated authority, then certified by the Turkish Consulate in the issuing country.

– Include authorization to carry out the specific transaction before the land registry.

– Be translated and notarized in Turkey.

The proxy giver’s photograph must bear the seal and/or embossed seal of the issuing authority, or officer. If the issuing authority or officer is not entitled to use a seal, the photograph must be certified with the stamp or the signature.

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

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Commercial Registries to Take Over Incorporation and Capital Increase Fee Collection from Competition Authority in Turkey

The 0.04% fees paid during company incorporation and capital increases for joint stock or limited companies will now be paid to commercial registries, rather than to the Turkish Competition Authority. The change will apply once a protocol is established between the Competition Authority and the relevant commercial registries.

The Communiqué on Payments to be Made by Joint Stock and Limited Companies as per Law numbered 4054 (“Communiqué”) was published in Official Gazette number 30024 on 31 March 2017, enter into force on the same date.

The Competition Authority’s fee for joint stock or limited companies is 0.04% of:

– Share capital during incorporation.

– The increased amount during capital increases.

The follow procedures apply to obtain a refund where incorporation or capital increase is cancelled, or the amount is overpaid:

– Cancellation: An application must be made to the Competition Authority, with a notarized renouncement resolution and the Commercial Registry’s letter confirming that the registration has not been processed.

– Overpayment: An application must first be made to the relevant Commercial Registry to identify the overpaid amount. Then, an application must be made to the Competition Authority, including the Commercial Registry’s letter and a copy of the receipt.

Until a protocol is established between the Competition Authority and the relevant commercial registries, provisions under these laws will continue to apply:

– Principles on Payments to be Made by Joint Stock and Limited Companies as per Law numbered 4054, published in Official Gazette number 25600 on 1 October 2004.

– The Communiqué on Payments to be Made by Joint Stock and Limited Companies as per Law numbered 4054, published in Official Gazette number 27720 on 5 October 2010.

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

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Turkey Introduces New Definitions and Measurement Specifications for Food Additives, in line with European Union

Turkey has introduced new definitions and measurement specifications for food additives, in line with the European Union’s approach. These changes follow a series of other legislative related developments, regarding added vitamins, as well as food labelling.

The Turkish Food Codex Regulation on Specifications of Food Additives (“Regulation”) was published in Official Gazette number 30027 on 3 April 2017.

Significant definitions introduced by the Regulation include:

– CAS Number: Referring to the Chemical Abstracts Service registration number.

– EINECS Number: Referring to the European Inventory of Existing Commercial Chemical Substances Number.

– International Unit: Referring to measurement unit for active ingredients.

– Molar Absorption Coefficient: Referring to the absorption coefficient for 1% concentrate, 1-cm-long solution.

– Molecular Weight (g/mol): A relative number defining total atomic weight in a molecule.

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

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