Legal News

Tax and SSI Premium Debts to be Restructured

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Many of the public receivables, accrued before 31 March 2018, related to taxes and social security premiums, and subsidiary receivables associated with them will be restructured.

After Turkish PM Yıldırım has announced his government's economic package that contains social reforms and restructuring of some public receivables including SSI premiums and tax debts on Monday this week, the “Draft Law on Restructuring Some Receivables,” has been accepted in Plan and Budget commission and expected to get through Parliament well before the elections that will held on June 24, 2018.

SCOPE OF THE LAW

The law will be applicable to following receivables provided that they accrued before 31 March 2018;

* All types of taxes and tax penalties,

* Administrative monetary fines

* Insurance premium, group insurance premium, pension deduction and institution's contribution, unemployment insurance premium, social security support premiums and subsidiary receivables associated with principles receivables (penalties, default interests and late,)

* Customs duties,

* Estate tax,

* The motor vehicle tax and their tax penalties, default interests and late fees.

RESTRUCTURED PREMIUM DEBTS

Only the "Domestic PPI" applied amount of principle receivable will be collected, and delay penalty and default interests will be waived.

In the collection of receivables; Monthly Change Ratio of Domestic Producer Price Index (Domestic PPI / Yİ-ÜFE) will be applied to principal amount of;

"Insurance premium, pension deduction, unemployment insurance premium, social security support premium, irredeemable voluntary insurance premium and group insurance premium, general health insurance premium, and SSI related stamp tax, special transaction tax, and contribution to education" receivables accrued before 31 March 2018

However, the delay penalty and default interests (subsidiary receivables) applied to these principle amounts will not be collected, provided that PPI applied amount of principle receivable is paid.

In short, the amount to be collected = principle amount of receivable*PPI.

The same will be applied to social security support premium receivables, accrued on or before 31 March 2018, related to retired persons who continue to work independently.

Debts may be paid bimonthly in 6-9-12-18 equal installments. First installment and advanced payments should be paid until 31 August 2018.

ADMINISTRATIVE FINES

Half of the principle amount of receivables related to unpaid administrative fines imposed for the acts conducted before 31 March 2018 will be deleted. In other words, "Domestic PPI" will be applied only to half of the principal amount of administrative fine.

TAX DEBTS

Similar principles, such as Domestic PPI will be applied to tax receivables. We will inform you in details when the application circulars are issued.

Combined SSI and Tax Declaration Starts on July

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We would like to remind you that, starting from 1st of July 2018, withholding tax returns and SSI e-declarations will be combined in a single form under the name of "Withholding Tax and Monthly Premium Service Document” and submitted only to the tax offices until the 23rd of the following month.

Pilot application of Withholding Tax and Monthly Premium Service Document has already started as of 1st of January in some of the regions. Now this combined declaration will take start all over Turkey as of 1st of July.

WHAT IS WITH HOLDING TAX RETURN?

As far as the employees of a workplace concerned, withholding tax is income tax withheld from employees' salaries and paid directly to the tax office by the employer.

In Turkey, filing of withholding tax returns is a job only for the Certified Accountants as per their special law. For this reason payroll companies generally calculate the withholding taxes related to employees but don't make tax filing.

WHAT IS SSI E-DECLARATION?

Employee and employer share of SSI contributions are notified online to authorities by "Monthly Premium and Service Document by the 23rd of following the month document belongs to, and premiums should be paid at the end of following month.

Also there are different time limits for notification of new starters and leavers.

PROBLEMS THAT CAN BE FACED

In current application the social security premium declarations and tax returns are dealt with by different departments of a company. It is important to put these units in a good cooperation.

There is also problem of wage confidentiality principle.

Datassist experts are working to find solutions for such problems that can be faced in the application.

We will further inform you in the coming days.

No Missing Day Document Submitted to SSI

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In missing day declarations employer’s statement will be taken as basis. Starting from March declaration period there will be no obligation of submitting (EK: 10) form and documents.

As is known, the workplaces with less than ten employees were under the obligation of submitting (EK: 10) form together with the documents showing the reason of missing days. Workplaces employing ten or more personnel were only declaring the missing days without obligation of submitting documents of proofs regarding missing day reason (sickness reports, unpaid leave etc.)

Now with the article 67 of Law number 7103 issued in Official Gazette duplicate number 30373, dated 27 March 2018, this obligation has been removed. All establishments regardless of their number of personnel will only declare the missing days in their monthly premium and service document, but don’t submitted documents related to reason of missing day.

However, these documents will be kept in the workplace and be presented within 30 days when required by the SSI.

WHAT IS MISSING DAY DECLARATION?

In Turkey’s legislation, number of working days within a month is considered 30 regardless of the actual number of days in the month. In other words, workdays of January (31 days), February (28 or 29 days) or March (30 days) is the same. Thus, fully worked employees’ insurance days must be declared as 30 days.

An employee may be absence from work for various reasons (sickness, unpaid leave, disciplinary penalty). Normally these days are deducted from 30, however in February unworked days should be deducted from 28 (or 29 in every four years period).

Minimum Wage of Foreign Employees

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Minimum wage to be paid to Foreigners employed with work permit is determined by Labor and Social Security Ministry according to their positions and competence.

As is known minimum wage for Turkish citizens are determined by a special committee. However the salary of a foreign employee cannot be less than the following.

* 6.5 times the minimum wage amount, for senior executives and pilots as well as engineers and architects requesting preliminary permit

* 4 times the minimum wage amount, for unit or branch manager as well as engineers and architects

* 3 times the minimum wage amount, for persons to be employed for jobs requiring expertise and proficiency as well as teachers

* 1.5 times the minimum wage amount, for persons to be employed for home services and other occupations.

2 times the minimum wage amount, for masseurs, masseuses and SPA therapists, occupations requiring expertise and proficiency, by tourism establishments

Is There Any Premium Support for Cultural Investments and Initiatives?

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Yes, the Law on the Encouragement of Cultural Investments and Initiatives No. 5225 provides SSI premium support for Establishments that have “Culture Investment License” and “Culture Initiatives License”

As per the article 5 of above said law,

* 50% of the employer’s SSI premium share calculated over the earnings of employed workers at the workplace that have Culture Investment License for 3 years,

* 25% employer’s SSI premium share calculated over the earnings of employed workers at the workplace that have Culture Initiatives License, for 7 years.

will be met by the budget of The Ministry of Culture and Tourism.

BENEFITING CONDITION

* E declarations must be submitted to SSI within the legal period.

* Establishment must be a corporate tax payer.

* Must obtain “Culture Investment License” or “Culture Initiatives License” from The Ministry of Culture and Tourism.

* There shouldn’t be any overdue premium debts.

 

Tax Exemption For Crèche And Day Care Center Services

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Crèche and day care center services provided for working mothers’ preschoolers will be exempt from income tax. In other words these benefits, up to a point, will not be considered part of the wage and no withholding tax applied.

In case this service is not provided in the workplace, payment to the outside institutions for such service will be exempt from income tax up to 15% of monthly gross minimum wage.

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