Tax and financial measures associated with COVID-19

26 April 2021

Short time working compensation

Companies/ Individual Tax payers that have partially or wholly interrupted their activities are given the right to apply for a short-time working compensation for their employees salaries in Covid 19 pandemic period.

Short time working compensation will be paid by Social Security Administration Unemployment Fund directly to employees.

Short-term work compensation will expire on 31.03.2021 if it is not postponed.

Ban of cancellation of labour contract and non-paid leave compensation

According to law No. 7244, termination of the employment contract by the employer and taking the employee on unpaid leave is prohibited until 17.05.2021, except for ethical provisions.

Employers have right to give non-paid leave to employees without employees approval. In this time non-paid leave compensation will be paid by Social Security Administration Unemployment Fund directly to employees as 47,70 TL daily.

Credit package

It is announced that for micro and small firms in order to support employment, only once, a Loan Guarantee Fund (KGF) will be provided with a loan of up to 100.000,00 TL without repayment for 6 months, which can be extended to a maturity of 24 months.

VAT rate reductions for certain services

According to the presidential decree (published in the Official Gazette dated 31.07.2020), reduced VAT rates applied on some goods and services from 31.07.2020 to 31.12.2020.

It was extended until 31.05.2021 in accordance with the presidential decree (published in the Official Gazette of 23.12.2020).

VAT rate for some services were decreased to 8% and 1% until 31.05.2021.

VAT rate of workplace rental service was reduced from 18% to 8%. until 31 July 2021.

VAT rate for  education services was decreased from 8% to 1% until 30.06.2021.

VAT rate for restaurants is reduced to 8%; for other small restaurants the previous rate of 8% is reduced to 1%.

The Turkish Ministry of Finance announced the following measures in relation to tax obligations:

* Introduction of accommodation tax was deferred until January 2022.

* The withholding tax rate for rental of business premises and rental of vehicles is also reduced from 20% to 10% till 31 July 2021.

* 1.000,00 TL of aid has started to be provided to families in need by Social Services Ministry.

It is also announced that 750,00 TL rent allowance will be made in places where the workplaces are located in big cities and 500,00 TL will be paid in other cities and these payments will continue for 3 months.

New economic reforms announced for 2021-2021-2023

The package that is announced 16th March 2021 aims to grow the Turkish economy on the basis of investment, production, jobs, and exports. Turkey focused on public finance, inflation, the financial sector, current account deficit, and employment as part of macroeconomic stability.

According to reform package a tax exemption for low-income tradesmen will be introduced. Approximately 850,000 tradespeople who are subject to small business taxation rules, such as hairdressers, plumbers, haberdasheries, carpenters, lathe makers, tea shop operators, tailors, and repairmen will be exempted from income tax.

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