It was set to be submitted to Parliament: Erdoğan's 'tax package' veto: Here are those articles

The new tax package prepared by the Ministry of Treasury and Finance will be submitted to the Grand National Assembly of Turkey (TBMM) this week.

According to the report by Ekonomim, changes were made to the package, which included many items ranging from rental income to the increase of administrative fines and the removal of VAT exemptions on feed and fertilizer.

It has been learned that AKP Chairman and President Recep Tayyip Erdoğan vetoed many articles in the draft in question.

According to Ekonomim, the articles that were changed and 'vetoed' by Erdoğan are as follows:

WEALTH TAX

The Revenue Administration requested that taxpayers with a discrepancy of over 20 percent between their declared income and their expenditures be required to submit a special expense declaration, and that a wealth tax be levied on the unexplained difference amounts. This article was removed from the draft.

CAPITAL GAINS TAX ON STOCKS

According to the article prepared to tax gains from the sale of stocks traded on Borsa Istanbul (BIST) held for less than 3 years; the tax to be deducted from stock market gains was planned to be 10 percent for up to 3 months, 7.5 percent for up to 6 months, 5 percent for up to 1 year, 2.5 percent for up to 3 years, and 0 percent for over 3 years, depending on the holding period of the stocks. However, this article in the draft was withdrawn.

10% VAT ON FEED AND 20% ON FERTILIZER

The Revenue Administration proposed that, as previously applied in Turkey, a 10 percent VAT be levied on feed sales and 20 percent on fertilizer sales. Currently, 1 percent VAT is applied to both products. It was proposed that if the VAT is increased, direct support payments be made to farmers from the Ministry of Agriculture and Forestry budget. In this context, based on 2023 sales, an annual revenue impact of 15 billion liras from feed and approximately 19 billion liras from fertilizer was expected. It was also requested that the VAT exemption applied to those engaged in R&D, innovation, and design activities not covered by an investment incentive certificate be removed. This critical article was also removed from the draft.

SALE AT ACTUAL VALUE IN TITLE DEED

One of the articles added to the draft was that property taxes and title deed fees be collected based on the regional market value of real estate rather than the value used for property tax purposes (municipal valuation). While work was underway to collect title deed fees and property tax payments based on regional market prices determined through appraisals, it was decided to remove the article in question from the draft.

20% WITHHOLDING TAX ON RENT AND TAX ON MULTIPLE HOMES

According to the article proposed by the Revenue Administration; the tenant would deposit their rent into the bank every month. The bank would deduct 20 percent of the rent money falling into the account as tax and send it to the Treasury, leaving the remainder in the landlord's account. With the implementation of withholding tax on rent, it was calculated that the state would collect 40 billion liras in rental tax from landlords. Additionally, it was requested that extra tax be levied on those who own more than 1 home. However, both articles were removed from the draft. On the other hand, although there was a consensus on making rental contracts via e-Devlet, no steps were taken on this matter in the draft.

REMOVAL OF TAX EXEMPTION ON BOOKS

Pursuant to Law No. 3065, the delivery of printed books and periodicals is exempt from VAT. It was proposed that this exemption be abolished on the grounds that it was determined that the exemption was also applied to publications and stationery products not covered by the exemption, and that taxpayers were able to reclaim general expenses and VAT on fixed assets due to the exemption. A total revenue of 2.3 billion TL was targeted with the removal of this exemption. This article was also not accepted.

REMOVAL OF TAX EXEMPTION FOR SIMPLE-PROCEDURE TRADESPEOPLE

One of the most critical articles requested by the Revenue Administration was the abolition of the simple-procedure tax exemption, which concerns approximately 850 thousand tradespeople, in metropolitan cities, and the transition to actual taxation for these tradespeople. The article, which would directly affect those engaged in businesses such as taxi driving, barbering, carpentry, plumbing, haberdashery, and tailoring, was not added to the draft.

DEPARTURE FEE REMAINS AT 1500 TL IN THE DRAFT

The 150 TL international departure fee, which caused public reaction, was included in the draft to be increased to 1500 TL, with the increase rate set at 10 times. The critical detail of the article is that the international departure fee will be increased every year by the revaluation rate. This means that the fee will increase exponentially over the years.

CASH SUPPORT INSTEAD OF SCT EXEMPTION FOR THE DISABLED

The Ministry of Family and Social Services proposed that the Special Consumption Tax (SCT) exemptions applied to the disabled be removed and replaced with cash support. However, this proposal did not enter the draft. While the SCT exemption for vehicles will continue for the disabled, it is envisaged that the current period of benefiting from it once every five years will be increased to 10 years. The article was included in the draft in this form.

DELAY PENALTY ON ADMINISTRATIVE FINES

It was requested that a regulation be made in the Misdemeanors Law to apply a delay penalty to all administrative fines, covering administrative fines followed up according to the Enforcement and Bankruptcy Law. However, the article in question was not added to the draft.

EQUALIZATION OF BAĞ-KUR AND SSK PREMIUM DAYS

Following the EYT (Retirement Age) regulation, no article regarding the equalization of the premium day count of small tradespeople registered with Bağ-Kur with those of SSK employees was included in the tax package. The government, which is struggling to bear the financial burden brought by the EYT, does not look favorably on the regulation that would pave the way for approximately 1 million Bağ-Kur members to retire 5 years earlier.