Law No. 7524 on the Amendment of Tax Laws, Certain Laws and Decree Law No. 375 ("Law No. 7524"), published in the Official Gazette on August 2, 2024, and made major reforms in tax legislation. This regulation has been prepared with the aim of increasing tax security, fighting against the informal economy and strengthening tax justice; and has resulted in radical changes in Law No. 6183 on the Procedure for Collection of Public Receivables ("LPL"), Law No. 193 Income Tax Law ("ITL"), Law No. 213 Tax Procedure ("TPL"), Law No. 3065 Value Added Tax ("VAT Law"), Law No. 4760 Special Consumption Tax ("SCT") and Law No.5520 Corporate Tax ("CVL"). Among these regulations, the implementation of a minimum corporate tax (Global Minimum Corporate Tax) for multinational companies and local minimum corporate tax regulations stands out to comply with international standards.

Detailed information and explanations are presented below.

1.The Amendments to the Law No. 6183 on the Procedure for Collection of Public

 Including Payments Made upon Court Decisions and Payment Orders within the Scope of Document Verification: According to Article 22/A-f.1, the phrase "in all kinds of payments" has been amended to "in all kinds of payments (including payments made upon court decisions and payment or execution orders of enforcement offices)." This change now requires that payments made upon court decisions and payment orders from enforcement offices be accompanied by a document stating that there is no overdue debt to the collection offices affiliated with the Ministry of Treasury and Finance.

a) Wage Exemption for Share Certificates Granted to Employees of Techno-Initiative Companies: With this amendment, which entered into force on August 2, 2024, Article 17 of the Income Tax Law has been revised. The portion of the fair value of share certificates granted free of charge or at a discount to employees of techno-initiative companies, which does not exceed one year's gross wage, shall be exempt from income tax. 

b) New Procedure for Determining Income Tax Base for Commercial and Professional Earnings: Article 3 of Law No. 7524 introduces a new method for determining daily revenue and income tax base for commercial and professional earnings, with specific provisions for monthly and annual revenue calculations based on audit results.

 c) Tax Deduction on Payments Realized on E-Commerce Platforms: Payments made by intermediary service providers and electronic commerce intermediary service providers will be subject to income tax withholding starting January 1, 2025, as per Article 94 of the Income Tax Law.

a) Conditions for Re-establishing Taxpayer Liability for Forged Document Issuance: The regulation stipulates that taxpayers who have been found liable for issuing forged documents, despite not engaging in any commercial, agricultural, or professional activities, will have their taxpayer status automatically canceled if confirmed by a tax inspection report. However, Article 5 of Law No. 7524 has revised the conditions for re-establishing taxpayer status in such cases. Before the amendment, re-establishing taxpayer status required providing collateral of at least 690,000 TL for 2024 or 10% of the total amount of the forged documents issued. The new requirement is to provide collateral equal to 10% of the total amount of the forged documents issued, with a maximum limit of 10 million TL.

Article 153/A-3 has been revised to specify that individuals such as legal representatives, board members, managers, or shareholders with at least 10% interest, who are involved in issuing forged documents, must provide collateral or resign within sixty days of the tax office’s notification. Failure to do so will result in their personal assets being used to cover the tax debts. If a taxpayer starts legal proceedings to remove these individuals within the sixty-day period and provides proof, they will not be held personally liable for the debts if the status is terminated. If the status is terminated after the sixty days, any collateral will be refunded if there are no other tax debts, without needing to meet additional conditions.

 b) Amendment to the Obligation to Certify Collections and Payments: Article 6 of Law No. 7524 amends Article 257 of the Tax Procedure Law (TPL) to broaden the scope of entities responsible for proving the accuracy of collections and payments. This update extends the responsibility beyond just taxpayers to include other parties involved in transactions. The changes aim to enhance data collection and monitoring of electronic commerce by the Ministry of Treasury and Finance, thus increasing the tax authorities' audit capabilities. Under the revised Article 257/7 of the TPL, new regulations have been introduced to bolster tax security in electronic commerce. These amendments impose information obligations on both individuals and entities engaged in economic and commercial activities through digital platforms, including electronic commerce intermediary service providers, Access providers, Content providers, Hosting providers, social network providers. These regulations expand the tax audit obligations for digital platforms and service providers, requiring them to report their commercial activities to the Ministry of Treasury and Finance.

 c) Market Price of Precious Metals: The phrase "and precious metals" has been added to Article 263, allowing the use of stock market prices as the valuation measure for precious metals traded on exchanges.

 d) Incremental Rate Application in Special Irregularity Penalty: Within the scope of the provision added to Article 344 of TPL with Article 9 of Law No. 7524, it is regulated that the tax loss penalty to be imposed due to unregistered activities shall be applied with a 50% increase.

e) Increase in Irregularity Penalties: Penalties for various irregularities have been increased significantly under Article 352/1 of TPL.

f) Increase in Special Irregularity Penalties: Within the scope of the fight against informality, special irregularity fines imposed according to Article 353 of TPL have been increased.

g) Amendment to Stamp Tax Unpaid Papers Processing: The minimum special irregularity fine for notaries processing papers for which stamp tax has not been paid has increased from TRY 14 to TRY 40.

 h) Special Penalty for Non-Compliance in Electronic Commerce: The addition to Article 355 introduces a special irregularity penalty to enhance tax security in digital media usage, including the internet, for economic and commercial activities such as advertising, sales, leasing, and electronic commerce. This penalty aims to ensure accurate reporting by imposing fines on individuals or entities that fail to meet their information obligations, either by not notifying, or by providing incomplete or misleading information regarding these obligations.

 i) Increased Penalty for Unauthorized Use of POS Devices: special irregularity penalty is imposed on those who use and make others use POS devices belonging to others, those who have money transfers related to the delivery of goods or performance of services to bank accounts belonging to others and those who make others use their accounts.

j) Changes in the Settlement Procedure: Taxpayers may now request reconciliation to reach an agreement on taxes and related penalties determined ex officio or administratively.

k) Overtime Working Fee for Revenue Administration Personnel: Personnel performing certain duties outside normal working hours are now eligible for overtime pay, with specific limits on payment. 

a) Partial Exemption for Services Provided at Ports and Airports: The amendment to Article 13 of the Value Added Tax (VAT) Law clarifies which vehicles are excluded from VAT exemptions for services at ports and airports. Specifically, vehicles used for activities such as sightseeing, entertainment, sports, amateur fishing, as well as private boats and yachts, are not considered sea transport vehicles. Consequently, VAT exemptions do not apply to services for these types of vehicles at ports and airports. Additionally, the amendment to Article 32 of the VAT Law changes the status of services provided at ports and airports for sea and air transport vehicles. These services are no longer fully exempt from VAT; instead, they are subject to partial exemption. This allows taxpayers to treat VAT incurred on such services as an expense or cost in their tax calculations. These changes aim to clarify VAT responsibilities and improve the accuracy of tax liability and deduction processes for certain vehicles and services.

b) Removal of Import-Domestic Delivery Discrepancy: Exemptions for importing goods used by national security institutions have been revised, and the competitive disparity between imports and domestic purchases has been eliminated.

c) VAT Inspection Without Statute of Limitations: An amendment to Article 17/4-c of the Value Added Tax (VAT) Law has been implemented, stipulating that the deductibility of VAT amounts for taxpayers who cease operations, split, or dissolve will now depend on the results of tax inspections, regardless of the statute of limitations defined in the Tax Procedure Law. This regulation became effective on August 2, 2024, the date the Law was published.

d) 5-Year VAT Deduction Period: If VAT amounts cannot be deducted within five years, they may be removed from records and treated as an expense.

 e) Tax Inspection Report Requirement for VAT Refunds: the main procedure in VAT refunds is linked to the tax inspection report in order to ensure that VAT refunds are made correctly and to prevent unfair VAT refunds.

f) VAT Exemption for Earthquake-Related Aid: On February 6, 2023, VAT exemptions were established for certain construction projects within disaster zones affected by recent earthquakes. As of January 1, 2024, VAT will be exempt on deliveries and services related to constructing immovable properties such as residences, workplaces, schools, dormitories, hospitals, places of worship, cultural centers, and libraries. This exemption also applies to donations of these properties by foreign state institutions to public administrations with general budgets. The VAT exemption will be in effect until December 31, 2025. 

Limitation of Exemption to Export Revenues: The exemption from corporate tax for earnings derived from production activities in free zones is now limited to export revenues, with domestic sales becoming taxable.

Removal of Minimum Tax Amount Limitation on Tobacco Products: The President of the Republic is now authorized to levy a lump sum tax up to the minimum lump sum tax amount on certain tobacco products.

New Regulation for “Kizilay” Association and Its Employees: A special regulation has been introduced for the Turkish Kizilay Society and its personnel in relation to international aid responsibilities.

a) Increase in Short-Term Insurance Premium Rates: The rate has been increased from 2% to 2.25% of the insured's premium-based earnings.

b) Increase in Minimum Retirement Pension: The minimum retirement pension has been raised from TRY 10,000 to TRY 12,500.

c) Removal of 5-Point Incentive: The second paragraph of provisional Article 95 of the Social Security and General Health Insurance Law No. 5510, which previously stated that the Treasury would cover the 5-point portion of the SGDP employer's share for retirees under the EYT program who return to work in the private sector, has been abolished. This change will take effect on August 1, 2024. 

a) Tax Exemption for Distribution of Real Estate Gains: Funds and partnerships investing in immovable properties must distribute 50% of gains as dividends to shareholders.

b) Corporate Tax Deduction for E-Commerce Payments: Starting January 1, 2025, payments made by intermediary service providers and electronic commerce intermediary service providers to facilitate contracts or orders for goods or services in electronic commerce marketplaces will be eligible for tax deductions. This applies to payments made to service providers and electronic commerce service providers operating under Law No. 6563, who have a workplace or permanent representative in Turkey.

c) Corporate Tax on Build-Operate-Transfer Earnings: Corporation tax at 30% will be levied on earnings from projects within the public-private partnership model.

d) Domestic Minimum Corporate Tax Application: The amendment to Article 32/C of the Corporate Tax Law requires that corporate tax under Article 32 be at least 10% of a corporation's income before discounts and exemptions. Certain items, like participation gains, emission premium earnings, and various tax exemptions, are excluded from this calculation. Taxes not collected due to reduced rates or certain investment contributions will be deducted from the minimum tax. This regulation applies to temporary tax periods and does not affect new companies for their first three accounting periods. It takes effect from January 1, 2025, for regular and special accounting periods. 

Law No. 7524 introduces a new taxation system to ensure that large multinational enterprises with annual consolidated worldwide revenues exceeding EUR 750 million are subject to a minimum corporate tax rate of 15%. This system aligns with OECD Model Rules and Guidelines, aiming to standardize global tax practices and address discrepancies across different countries.

With the introduction of Additional Article 1 to the LPPD via Article 37 of Law No. 7524, enterprises within a multinational group with worldwide consolidated revenues exceeding the specified threshold will be subject to the new tax regulations. The definitions for consolidated revenue and consolidated financial statements are based on "Acceptable Financial Accounting Standards." Additionally, the article outlines how to determine the consolidated revenue threshold if the accounting period deviates from the standard 12 months. Article 38 of Law No. 7524, along with Additional Article 2 to the Corporate Tax Law, clarifies key terms used in the "Local and Global Minimum Complementary Corporate Tax" framework.

Increase in Departure Fee Amount: The fee has been increased from TRY 50 to TRY 500 and will be adjusted annually based on the revaluation rate.

2. Increase in Monetary Limits: The limits set forth in Additional Article 1 of the Law No. 2577 regarding the increase of the monetary limits shall be increased each year by the revaluation rate determined in accordance with the provisions of the repeated Article 298 of the Tax Procedure Law for the previous year. In addition, the monetary limits to be taken as basis in the cases where a hearing is mandatory and in the applications for appeal or appeal will be accepted as the limits on the date of the final decision. The increases in the monetary limits after the date of the final decision will not be applied in the cases that are re-examined upon the reversal decision of the regional administrative court or the Council of State.

a) Revenues of the Turkish Energy, Nuclear, and Mining Research Organization: Revenues and budget management for the organization have been revised.

b) Wages and Incentives: New regulations have been introduced for wages and incentives, with the President authorized to determine upper limits.