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Turkey Publishes Omnibus Law Including Various Tax Measures — Orbitax Tax News & Alerts

Turkey has published Omnibus Law No. 7103 of 27 March 2018 in the Official Gazette. The Omnibus Law includes various tax measures, including:

  • A value added tax exemption (VAT) on machinery and equipment acquired between 1 May 2018 and 31 December 2019 for use in manufacturing, research and development, innovation and design activities, regardless of whether an incentive certificate was obtained;
  • Accelerated depreciation on the above machinery and equipment, with the depreciation period reduced by 50% of the standard useful life;
  • A tax exemption on exchange gains arising on foreign capital brought into Turkey before being used for investment in a newly established company under an investment incentive scheme;
  • Amendments to the corporate tax exemption granted on income derived from the sale, transfer, or lease of registered intellectual property rights for companies operating in technology development zones to provide that the exemption can be claimed in the period the income is earned, as long as an application is made to the authorized body for registration and subscription before the due date of the tax return for the period;
  • A VAT exemption on goods and services in connection with water, sewage treatment, natural gas, electricity, communication installation, and road building activities in connection with organized industrial zones and small industrial areas;
  • New loss deduction rules for companies destroying inventory on a regular basis, such as food products and pharmaceuticals with a limited shelf life, that allow companies to enter into an agreement with the Ministry of Finance on the valuation method and destruction rate for deduction purposes without needing to verify losses with an appraising committee, which was previously required;
  • Special consumption tax (SCT) amendments, including that domestic car manufacturers are allowed to claim an SCT refund on certain goods used in production, and that goods delivered for export but not exported within three months are granted an additional three months for the SCT declaration and payment to be made;
  • Tax secrecy rules amendments to provide that exchange of information between government institutions in the course of carrying out their duties will not be considered a breach of the rules;
  • Measures to increase employment, including an extension of the government subsidy for employer social security contributions and an exemption from employment income tax withholding and stamp tax for new employees hired up to 31 December 2020 for the first 12-month period of employment (18 months for employment of youths, women, and disabled workers).

Except where otherwise mentioned above, the measures generally apply from 27 March 2018.