Law and regulation of Covid-19 tax relief in Turkey

Value Added Tax

  • Within the scope of the coronavirus support package, reduced VAT rates apply from 31 July 2020 through 31 December 2020, as follows:

The VAT rate is reduced from 18% to 8% for:

  • Rentals of business premises
  • Entrance fee for meetings, conferences, concerts, and fairs
  • Weddings and cocktail parties
  • Barbers and beauty salons
  • Tailoring and repair services for garments
  • Shoe repairs
  • Dry cleaning and laundry services
  • Carpet cleaning services
  • Repair of bikes and motorbikes and some services related to motor vehicles
  • Repair of home appliances, electronic devices, furniture and musical instruments
  • Locksmith services
  • Painting and maintenance of houses
  • Food services and restaurants
  • Passenger transportation services
  • Flower deliveries

The VAT rate is reduced from 8% to 1% for:

  • Cinema, opera, ballet, and museum admissions
  • Coffee shops, cafe, patisseries and certain other restaurants
  • Hotels, motels, and other accommodation services

Withholding Tax

  • The withholding tax rate for rental of business premises is also reduced from 20% to 10%, through 31 December 2020.

Social Security Contributions or Payroll Tax

  • Employers in certain sectors can postpone payment of their social security contributions related to the months of April, May and June by 6 months. No penalty will be applied. (same sectors covered under the VAT deferral measure.)

Additional comments

  • Payments in April, May and June related to withholding tax returns, VAT returns and Social Security Premiums and service documents has been postponed for six months for companies operating in certain industries (e.g. retail, iron steel, automotive, logistics and transportation, cinema and theatre, accommodation, food and beverages, textile and garment and event organization).
  • Revenues sharing payments and usufruct fees with respect to hotel leases has been postponed for 6 months for April, May and June.
  • The implementation of the minimum wage support will continue also in 2020.
  • Minimum pay-outs for pensioners will be increased to 1,500 Turkish Lira from 1.000 Turkish Lira the government will make an early annual bonus payment to pensioners.
  • Limitations for distribution of 2019’s profit was extended until 31.12.2020.
  • Introduction of accommodation tax was deferred until January 2021.
Portrait of Döne Yalçın
Döne Yalçın
Managing Partner Turkey
Istanbul