Torba bill, measures total TL 27.6 billion
The government has drafted a new bag law to reach the targets set down in its Medium-Term Program (OVP) for 2018-20. The 130-item draft bag law explains the measures for a total of TL 27.578 billion including additional tax and spending savings, detailing the regulations on a number of issues such as mining, investment incentives, income and corporate taxation.
With Prime Minister Binali Yildirim’s signature, the bill was submitted to Parliament on Sept. 28, and has a number of detailed regulations in areas such as mining, investment incentives, income and corporate tax etc.
According to the draft regulations, they will allow manufacturing industry investments to benefit from high rates of corporate tax incentives, whch will also apply to investments in 2018. Within the scope of moving industrial sites that are left in city centers to outside the city, eligible Treasury and public lands can be transferred free-of-charge to industrial site building cooperatives in accordance with the incentive law.
Some of the other items attracting public attention from the schemes introduced are as follows:
• Motor vehicle tax on private cars (MTV) will go up by 40% on Jan. 1, 2018. The cars’ tax-free value will also be taken into consideration by the MTV. Gradual taxation will be applied according to the tax-free price of vehicles.
• There will be a change in the scale of Revenue Tax applied for all income earners. The amendment will be effective from Jan. 1, 2018 for wage incomes and from 2017 earnings for other earnings. The 27% rate applied for income in the third tier of the Income Tax tariff will be increased to 30%.
• If real estate held by companies for more than two years is sold, the profit exemption currently applied at 75% will be reduced to 50%.
• The exception rate on rental income will be reduced from 25% to 15%. The upper limit on the rate of increase in the real estate tax will be 50%.
• The 10% inheritance and transfer tax applied to the bonuses earned during games of chance and competition contests organized by real and legal persons will be increased to 20%.
• In the last months of the year, minimum wage earners’ earnings will be prevented from falling.
• In accordance with the law on the regulation of public financing and debt management, funds such as asset funds that are invested abroad can be transferred. The net borrowing limit has increased by TL 37 billion.
• Cigarette paper is included in the excise duty (special consumption tax). Fruit-based soda and energy drinks are included in the excise duty.
• A total of 6% of income and corporate tax collection, 25% of inheritance and transfer tax collection, 18% of MTV, and 2.8% of Social Assistance and Solidarity Incentive Fund incomes will be transferred to the Defense Industry Support Fund.