On 8^th March 2017 Law No. 6824 on the restructuring of certain public claims and the amendment of certain laws and cabinet regulations was published in the official gazette. The Law changes both the Income Tax and VAT Laws, introducing a new income tax reduction for qualified taxpayers and a VAT exemption for certain real property sales under certain conditions.

Tax relief is available for eligible individual and corporate income taxpayers if they are in compliance with the requirements for income tax returns and payments. The relief is available to individuals engaged in commercial, agricultural or self-employment activities and to companies apart from those in finance and insurance. This new relief allows taxpayers to take advantage of a 5% income tax reduction on their annual income or corporate income tax returns. The highest deduction amount is TRY 1 million. If the computed deduction amount is more than the taxable amount, the remaining amount can be offset from the taxpayers’ accrued declared taxes within a year following the annual income tax return or corporate tax return submission date. Taxpayers cannot obtain the 5% tax relief if they are engaged in tax fraud in the declaration year and in the four previous years. This new relief will be applicable for tax returns submitted after January 2018.

The VAT exemption is intended to encourage the flow of foreign currency into Turkey as well as helping the construction sector. The exemption applies to the sale of commercial or residential real estate to certain nonresident individuals or companies. The exemption will be applicable only upon the first delivery of domestic or business real estate properties and only applies if the real estate properties are paid for in foreign currency.