2018 EMPLOYMENT INCENTIVES IN EFFECT – BAG LAW 7103 ISSUED

Omniums bill (colloquially known bag law) No. 7103, issued in Official Gazette No. 30373, dated 27th March 2018, brings about new arrangements regarding employment incentives and supports, some of which are briefly explained below.

TAX EXEMPTION FOR NURSERY SERVICES

Crèche and day care center services provided to working mothers for their preschoolers will be exempt from tax. 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.

Payment must be made directly to the institutions for such services. Cash payments to the employees are not exempt from tax.

MINIMUM WAGE SUPPORT / MINIMUM LIVING ALLOWANCE SUPPORT

  • Government’s minimum wage support for employers, which is being applied since 2016 will continue during the 2018. The amount of support is expected to be determined within the next week.
  • Minimum living allowance support for employees will be permanent. Minimum wage will not be affected from the shift on taxable income brackets and will not get lower than the net amount determined for single employee.

ADDITIONAL EMPLOYMENT INCENTIVES

Social security premium and tax support for private sector employers, who employ persons amongst the registered unemployed of İŞKUR as an addition to the number personnel in the workplace, is arranged in the appended provisional articles (19 and 21) of the Law No 4447.

  1. SOCIAL SECURITY PREMIUM SUPPORT
  • Valid between 1 January 2018 and 31 December 2020.
  • Employed persons should not be notified to SSI as insured more than 10 days within three months period preceding the month he started working.
  • Person should be employed as an addition to the average number of insured personnel declared in the previous year.
  • Support amount:

ü  In manufacturing and information sector: daily gross minimum wage*premium paid days of employee

ü  In other sectors total premium contribution of both employer and employee, calculated by taking the monthly gross minimum wage as a base.

ü  Support amount will be set-off from employer’s premium debts to SSI.

  • Support period, not exceeding December 20202, are as follows;

ü  For women over 18 years of age, men over 18, younger than 25 years of age and for disabled persons registered in İŞKUR: 18 months as of start of work

ü  For others: 12 months as of start of work.

  • Benefiting conditions: Employers who;

ü  do not submit their Monthly Premium and Service Documents and do not pay the premiums in time,

ü  in the investigations and inspections, are found to be not notified the employed personnel as insured or the notified insured is not working virtually,

ü  did not pay the premium, administrative fine and delay penalty debts to Institution (SSI), cannot be benefiting from the above incentives.

ü  However, Employers whose administrative fine and delay penalty debts to Institution are suspended and deferred in line with Law on Collection Procedure of Assets No. 6183, will continue to benefit from the incentives.

  • Beneficiary employers of this supports will not benefit from the other premium incentives, supports or deductions of similar nature for the same employees within the same period.
  1. INCOME TAX SUPPORT

Also, for the above described employees, the withholding tax applied on minimum wage is set-off from the withholding tax return after the minimum living allowance is applied. Valid between 1 January 2018 and 31 December 2020

  • Employed persons should not be notified to SSI as insured more than 10 days within three months period preceding the month he started working.
  • Person should be employed as an addition to the average number of insured personnel declared in the previous year.
  • Support amount: employees' withholding tax corresponding to the premium covered days calculated on the basis of 2017 monthly minimum wage will be set-off from the withholding tax return after the minimum living allowance is applied. Besides, stamp tax deducted from minimum wage are not declared and not paid.
    • Beneficiary employers of this supports will not benefit from the other premium incentives of similar nature for the same employees within the same period.
  • Workplaces registered between 1 January2018 and 31 December 2020 may start benefiting from this support after 3 months as of registering.

RETROSPECTIVE BENEFITING FROM INCENTIVES

Employers will be benefiting from incentives retrospectively, provided that they apply until 31st May 2018.

Employers who don’t apply until 31st of May will also be benefited from the missed incentives; however their benefiting will be limited to 6 months back.

The Law also gives the opportunity to change the type of incentives received in the past.

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