1. Brochure on Tax Incentive and Insurance Premium Incentive for Young Entrepreneurs has been Published

Brochure on Tax Incentive and Insurance Premium Incentive, which includes details regarding the tax incentive and insurance premium incentive granted to full taxpayer real persons who have been registered as income taxpayers for the first time due to their commercial, agricultural or professional activities and who have not completed the age of 29 as of the registration of the taxpayer, was published by the Revenue Administration on 02.08.2023.

2. Developments in the Remote Identification Regulations

With the amendments introduced by the Regulation on Measures regarding the Prevention of Laundering Proceeds of Crime and Financing of Terrorism on 05.04.2023, remote identification of legal entities was made feasible. The General Communiqué No. 19, published by Financial Crimes Investigation Board (“MASAK”) in the Official Gazette dated 11.08.2023 and numbered 32276, regulates the rules which will apply in the implementation of this amendment.

Pursuant to the Communiqué, remote identification shall be completed before the establishment of a continuous business relationship. The Communiqué also regulates the technical requirements and principles regarding how the remote identification process shall be carried out and the standards of the remote identification process during the procurement of the outsourced services. In addition, remote identification can be performed by artificial intelligence if it meets the standards detailed in the amendment.

3. Developments in the Payment Services Regulations

The Regulation Amending the Regulation on Payment Services and Electronic Money Issuance and Payment Service Providers and the Communiqué Amending the Communiqué on Information Systems of Payment and Electronic Money Institutions and Data Sharing Services of Payment Service Providers in the Field of Payment Services have been published in the Official Gazette dated 07.10.2023 and numbered 31676 and introduced significant amendments to the payment services regulations.

With the aforementioned regulation amendments, digital wallets were defined, and the authorisations required to provide digital wallet services has been regulated. In addition, the scope of the obligation for the payment service providers to offer its infrastructure services to other institutions who request to use them has been expanded. The fields of activity of payment institutions and electronic money institutions have been expanded. Finally, the provisions regarding the establishment of contracts and identification of institutions through remote communication tools have been harmonised with the MASAK regulations. Further details regarding the aforementioned regulation amendments can be found here.

4. Developments in the Tax Regulations

Law No. 7456, published in the Official Gazette dated 15.07.2023 and numbered 32249, regulated various changes in the tax regulations. Firstly, the general corporate tax rate was increased from 20% to 25%. For banks, financial leasing, factoring, financing and savings finance companies, electronic payment and money institutions, authorised foreign exchange institutions, asset management companies, capital market institutions, insurance and reinsurance companies and pension companies, the corporate tax rate was increased from 25% to 30%. The corporate tax deduction applied exclusively to the export earnings of exporting corporations has been increased from 1 point to 5 points. This amendment shall be applied to the income of the corporations generated in 2023 and onwards, and to the tax returns to be submitted as of 01.10.2023.

Dividends received from participation shares of the venture capital funds and investment funds, income generated from the refund of these funds’ participation shares and value increase gains of the participation shares of these funds’ have been exempted from the corporate tax. With the Law No. 7456, abovementioned income and gains related to investment fund participation shares except for those related to venture capital funds are excluded from this exemption.

5. Access Blocking Penalty against Digital Service Providers has been Annulled

Digital service tax, which was introduced by the Law No. 7194 entered into force on 01.03.2020, has held liable the digital service providers over the income generated from all kinds of advertising services provided through digital media, sales made in digital media, provision and operation of digital media and intermediation services regarding the abovementioned services. The Law No. 7194 also regulates that in case of failing to fulfil their obligations to submit tax returns and to make tax payments regarding taxes within the scope of the Tax Procedural Law No. 213, the relevant digital service provider or its authorized representative in Türkiye shall be notified, this situation shall be announced on the website of the Revenue Administration, and if these obligations are not fulfilled within thirty days from the date of the announcement, access to the services provided by the digital service provider shall be blocked until they fulfil its obligations.

The Constitutional Court has decided to annul the provision on the access blocking penalty on the grounds that the access blocking penalty restrain the freedom of enterprise, that the access blocking penalty imposes an excessive burden on the digital service provider and is disproportionate, while lighter restrictions such as gradual reduction of bandwidth can initially be applied. The annulment provision will enter into force on 12.06.2024.

6. Developments in the Electronic Commerce Regulations

As detailed in the 2022 Turkish Startup Ecosystem Investment Report, the Law Amending the Law on the Regulation of Electronic Commerce has been published in the Official Gazette dated 07.07.2022 and numbered 31889, and introduced significant changes to the electronic commerce. In addition, the Regulation on Electronic Commerce Intermediary Service Providers and Electronic Commerce Service Providers (“E-Commerce Regulation”) published in the Official Gazette dated 29.12.2022 and numbered 32058 stipulates the regulations in line with the provisions of the aforementioned Law.

Application numbered 2022/109 E. was submitted to the Constitutional Court for the annulment of various provisions of the Law No. 6563. The Constitutional Court rejected the application for annulment with its decision dated 13.07.2023 and numbered 2023/125 K. In the meantime, stay of execution and annulment of the provisions of the E-Commerce Regulation were claimed before the Council of State. The 10th Chamber of the Council of State has issued a stay of execution decision. The request for the annulment of the provisions of the E-Commerce Regulation is currently being examined by the General Assembly of Administrative Case Chambers of the Council of State, which is expected to reject this annulment request in the light of the Constitutional Court decision.

7. Obligation to Register with the Data Controllers’ Registry

Pursuant to the Law No. 6698 on the Protection of Personal Data, the obligation of real and legal persons who process personal data to register with the Data Controllers’ Registry before starting data processing and exceptions to this obligation are regulated. With the decision of the Personal Data Protection Board dated 06.07.2023 and numbered 2023/1154 published in the Official Gazette dated 25.07.2023 and numbered 32259, real and legal person data controllers whose main activity is not processing sensitive personal data and who have less than 50 employees in a year or an annual balance sheet under TRY 100 million are exempted from the registration obligation.

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