Edition 60: 1 February 2018
Editorial Team:
Orçun Çetinkaya, LL.M., Ezgi Baklacı, LL.M., and Pelin Oğuzer, LL.M.
Turkey Introduces Online System for Taxpayers

From 1 January 2018, certain taxpayers in Turkey can now use an electronic Bookkeeping Declaration System (“System”) to store and submit selected documents online, rather than in paper format. Qualifying taxpayers are also able to make declarations via the online system.

The System allows the following taxpayers to electronically create and store certain documents, as well as edit documents and make tax declarations:

– Taxpayers which keep books based on the operation account method.

– Taxpayers which are subject to single entry bookkeeping.

The System is intended to:

– Reduce bureaucratic transactions and compliance costs.

– Combat the informal economy.

– Increase voluntary compliance levels.

The System will not be available to:

– Corporate taxpayers which are authorized by the Ministry of Finance to keep books based on the operation account method.

– Taxpayers who keep books based on balance sheets.

– Taxpayers whose income consists solely of:

– Wages,

– Immovable capital income,

– Movable capital income, or

– Other income and revenues.

The Ministry of Finance is authorized to determine the System’s procedures and principles, as well as determine the scope of its documents and use of electronic signatures.

Electronic versions of Delivery Note, Manufacture Receipt and Freedom Receipt will have the same legal status as hard copy delivery order, producer receipt and self-employment invoice respectively.

Documents within the scope of the System must comply with procedures and principles stated under the Tax Procedural Law number 213, as well as other related laws and technical guidelines. Penalties under the Tax Procedural Law will apply to taxpayers who violate these requirements.

Please see these links for the full text of the related Communiqués, published in Official Gazette number 30273 on 17 December 2017 (only in Turkish):

Communiqué number 486

Communiqué number 487

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Turkey’s Constitutional Court Dismisses Legal Challenges Seeking to Strike Out Certain Clauses of the Data Protection Law

Turkey’s Constitutional Court recently dismissed an application seeking to suspend and strike out certain clauses in the Data Protection Law number 6698 (“Law”). 124 deputies applied on the basis that the clauses are vague, broad, subjective, open to interpretation and are not proportional. The court considered international legislation, EU legislation and Turkey’s Constitution, ultimately deciding that the clauses were not unconstitutional.

The applicants claimed the following clauses in the Law explicitly contradict the Constitution and could cause irreversible consequences to the state of law:

– Article 4/2(d) states the principle for processing personal data as “Being stored only for the time designated by relevant legislation or necessitated by the purpose for which data are collected”. The applicants objected to the underlined phrase.

– Articles 5/2(c), 5/2(ç), 5/2(e) and 5/2)(f), which are exceptions that allow personal data to be processed without explicit consent from the data subject.

– “sect” and “appearance and clothing” as special categories of personal data under Article 6/1.

– Article 6/3, which states that other than personal data relating to health and sexual life, special categories of personal data can be processed without obtaining the explicit consent of the data subject, if processing is permitted by law.

– The text in Article 8/3 and Article 9/6 which reserve provisions for transferring personal data to third parties and abroad in other laws.

– The exclusion in Article 15 in the context of the documents to be presented to the Board during an investigation, which allows information and documents concerning state secrets to be omitted.

– The text in Article 16/2 which authorizes the Data Protection Board (“Board”) to develop exemptions to the requirement to register with the Data Controllers Registry, based on certain criteria.

– Article 24/3(b) states the Board may publish its decision if deemed necessary. The applicants objected to the underlined phrase.

– Article 28/ç, which states that data processing activities of the public authorities authorized by the relevant laws, for the purposes of national defense, national security, public security, public order and economic safety shall be exempt from the Law.

The full text of the Constitutional Court’s reasoned decision was published in Official Gazette number 30310 on dated 23 January 2018 and can be found at this link (only available in Turkish).

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Turkey’s Data Protection Board Orders Phone Directories to Cease Unlawful Data Processing, Plus Announces Obligations to Maintain Data Security at Service Counters, Box-offices and Desks

Turkey’s Personal Data Protection Board (“Board”), has adopted and published two important rulings. These address protection of personal data in websites/applications that provide phone-book services, as well as protection of personal data at service areas such as counters, box offices and desks. The Board is the decision-making body for the Personal Data Protection Authority, established by Article 19 of the Personal Data Protection Law number 6698 (“Law”).

Under Ruling number 2017/61, the Board declared that websites and applications which offer phone directory services (searchable via phone number or name) and share personal data without any justifiable reason determined under the Law and relevant legislation, must immediately cease their activities, or face either administrative or criminal sanctions. The Ruling underlines that all data processing activities must comply with the conditions under Article 5 and Article 6 of the Law for processing personal data and persons processing personal data must also comply with other requirements under the Law.

Under Ruling number 2017/62, the Board declared that entities providing services at service counters, box-offices and desks must ensure that only authorized persons are in these locations, as well as take necessary measures to prevent people receiving services at these locations from seeing or hearing each other’s personal data. The Board specifically referred to banks and healthcare organizations in this context.

The full text of the Board’s Rulings, published in Official Gazette number 30312 on 25 January 2018, can be found at these links (only available in Turkish):

Decision number 2017/61.

Decision number 2017/62.

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Turkey Overhauls VAT Regime, Introducing VAT Liability for Electronic Services Provided to Recipients Outside Turkey

Turkey has made a series of amendments to its VAT regime, introducing new liabilities, as well as exemptions. Notably, VAT will now apply to services provided to parties outside Turkey in the electronic environment. New exemptions have been introduced for telecommunication roaming services, financial leasing and financing companies, as well as education-related public procurements.

Some notable amendments to tax liabilities under Value Added Tax Law number 3065 include:

– From 1 January 2018, service providers will now be required to declare and pay VAT for services which are rendered in an electronic environment by parties which have no residence, workplace, legal or business center in Turkey and are provided to real persons who are exempt from VAT.

– VAT will no longer apply to roaming services received from abroad in the context of international roaming agreements and the reflection of these services to the customers in Turkey.

– A VAT exemption for transferring and delivering immovables and participating interests to banks by their debtors has now also been extended to financial leasing and financing companies.

– Several exceptions and exemptions have also been introduced for procurement of goods and services within the scope of the Increasing Educational Opportunities and Technological Improvement Action Project.

The Law number 7061 on Amendments on Certain Tax Laws and other Laws was published in Official Gazette number 30261 on 5 December 2017, entering into effect on the same date. Please see this link for the full text of the Law (only in Turkish).

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Turkey Updates Tax Procedures, Introducing Electronic Notification

Turkey has introduced a range of changes to Tax Procedural Law number 213 (“Law”). The amendments relate to requirements for taxpayer addresses, procedures for delivering and rejecting correspondences, as well as conditions when notification by public announcement can occur. The Ministry of Finance (“Ministry”) is now also empowered to undertake online delivery and receipt of certain documents, using secure e-signatures.

Notable changes include:

– The Ministry is now authorized to regulate online delivery and receipt of the following, using secure e-signatures:

– Correspondence (documents, information).

– Declarations.

– Notifications.

– Letters.

– Petitions.

– Minutes.

– Reports.

– Similar documents.

– The Ministry can now use the online delivery system noted above to make notifications.

– The number of “known” taxpayer addresses which the Tax Authority can make notifications to has been reduced (Article 101 of the Law). A taxpayer’s address registered at the Central Civil Registration System (MERSIS) is now deemed to be the taxpayer’s sole “known address”.

– Procedures for accepting correspondence have changed (Article 102 of the Law). If a recipient refuses to receive correspondence, the post officer will now record the refusal and return the documents to the sending Administration.

– Procedures have changed for issuing notifications a second time, where delivery failed the first time.

– Notification by announcement is now possible if the recipient:

– Did not declare a work address or change of address and does not have an address registered on MERSIS, or

– Is abroad,

– Is impossible to notify for any other reason.

– Taxpayers are no longer required to notify changes of residential addresses.

The Law number 7061 on Amendments on Certain Tax Laws and other Laws was published in Official Gazette number 30261 on 5 December 2017, entering into effect on the same date. Please see this link for the full text of the Law (only in Turkish).

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Turkey’s Capital Markets Board Announces Rules for Managing and Auditing Information Systems

Turkey’s Capital Markets Board has announced rules for managing and auditing information systems. Among other entities, the new regime applies to publicly held companies, pension funds, as well as custodians. The rules address security and audit requirements, as well as outline management liabilities and introduce an obligation to develop an information policy, which is approved by the board of directors.

The following entities must now obey the s principles introduced under the Communiqué on Information Systems Management while managing information systems:

– Publicly held companies.

– Pension mutual funds.

– Custodians.

– Capital market institutions.

– BORSA İstanbul A.Ş.

– Stock market, market operators and other markets.

– Istanbul Takas ve Saklama Bankası A.Ş.

– Central Registry Agency.

– Capital Markets Licensing Agency.

– Turkey Capital Markets Association.

– Turkey Valuation Experts Association.

According to the Communiqué, these entities must now:

– Ensure effective and sustainable information systems exist, aligned with business objectives.

– Provide security for information systems.

– Perform a risk analysis at least once per year, as well as undertake a penetration test.

– Provide security for clients’ information obtained or preserved through information systems.

– Control performance and plan capacity within the sustainability plan’s scope and within this scope, establishment of secondary systems and keep the first and secondary system in Turkey.

The noted entities must have an information policy, approved by the board of directors. Senior management will be responsible for implementing information security policies, as well as:

– Assessing critical projects regarding the applicability of new information systems and resource allocation.

– Annually analyzing and approving information security policies.

– Annually assessing information security infringements.

– Identifying risks to information systems and performing risk management activities to reduce risk.

– Establishing a surveillance mechanism for outsourced aspects.

Information systems must be regularly reviewed by an independent auditor. The frequency depends on the institution type:

Institutions which are subject to the Communiqué on Independent Audit of Information Systems but not listed in the table above are not subject to periodic independent auditing requirements.

Please see these links for the full text of the relevant Communiqués, published in Official Gazette number 30292 on 5 January 2018 and entering into force on the same date (only available in Turkish):

Communiqué on Information Systems Management number VII-128.9

Communiqué on Independent Audit of Information Systems number III-62.2

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Turkey Introduces New Fee Waivers and Discounts for Mining Activities

Turkey has introduced new fee waivers and discounts for mining activities, available during the first five or ten years of a mine’s operation. Changes have also been made to criteria for cancelling exploration activities, as well as issuing administrative fines.

Significant changes include:

– Fees will now be waived during the first 10 years for operation permits related to (excludes forestation fees under the Law on Forests number 6831; “Forest Law”):

– Group II. and Group IV. minefields.

– Minefields transferred to Specialized Governmental Institutions and their subsidiaries.

– Minefields to be tendered by the Directorate of Privatization Administration to Specialized Governmental Institutions and their subsidiaries.

– The Council of Ministers will determine whether any fees will apply to minefields holding Group IV. licenses by considering:

– The mine field’s features, reserves, location, and grade.

– National employment and investment needs.

– For minefields not listed above, the permit fee under the Forest Law will be discounted 50% for the first 10 years of operating licenses.

– Exploration licenses will now be cancelled if:

– The following reports are not delivered to the Directorate General of Energy and Natural Resources Mining Works by the general exploration period:

– Preliminary and general exploration activity.

– Investment expenditure.

– Missing documents are not completed within additional time offered, or documents are deemed improper.

– Other institutions reject the licence holder’s applications for necessary permissions, or these cannot be obtained.

– During the first five years of an operation license:

– Administrative fines will now be waived if the total production in the three years with lowest production are less than 30% of the annual production which was declared for the project.

– A 50,000 Turkish Lira administrative fine will now apply to licence holders if their total production over three consecutive years after the first administrative fine is less than 30% of the annual production which was declared for the project.

– If a license holder receives two administrative fines within five years, the licence will be cancelled.

The changes were made to the Mining Law number 3213 by the Amendment Law on Certain Tax Laws and Certain Other Laws, published in Official Gazette number 30261 on 5 December 2017, entering into effect on the same date. Please see this link for full text of the relevant legislation (only available in Turkish).

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Turkey Announces National Energy Efficiency Action Plan for 2017-2023

Turkey has announced its National Energy Efficiency Action Plan for the 2017-2023 period (“Action Plan”). The Action Plan outlines 55 actions involving buildings and services, energy, transport, industry and technology, agriculture and other issues for horizontal sectors. It examines energy and natural resources, aiming to encourage Turkey’s prosperity in the most efficient and environmentally conscious manner possible. The Action Plan aims to save 23.9 Million-Ton Equivalent of Petroleum from Turkey’s primary energy consumption, via a strategy which includes $10.9 billion of planned investment.

Notable actions under the Action Plan include:

– Buildings and Services:

– Promoting use of central and district heating/cooling systems.

– Expanding use of renewable energy and cogeneration systems in buildings.

– Energy: Determining the potential of cogeneration and district heating/cooling systems, as well as preparing a Roadmap.

– Transport:

– Promoting energy efficient vehicles.

– Reducing traffic intensity in cities; reducing car use.

Cogeneration and district heating/cooling systems are planned to become compulsory in new community buildings. To support renewable energy use, related administrative processes will be expedited for existing buildings.

Disincentives will be introduced to limit cars in city centers, including increased parking fees and installing automated parking alarm systems. National and international financial support will be sought to promote use of shared vehicles, as well encourage employees to use public transportation.

The High Planning Council decision number 2017/22 was published in Official Gazette number 30289 on 2 January 2018. Please see this link for the full text (only available in Turkish).

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Turkey Updates License Regime for Petroleum Waste Processing

Turkey’s Energy Market Regulatory Authority (“Authority”) has changed the information required during applications for waste processing licenses in the petroleum market. Accordingly, an application’s facility information file and supporting documentation must now also include the applicant’s agreement with refineries or distributors, the applicant’s agreement for procuring the waste to be used for production activities, as well as device declaration for national marker adding (if applicable).

Waste processing license holders which are active in the petroleum market must now also keep at least four sample vessels for each tank, container etc. in their facilities, just like refineries and distributors.

Please see this link for full text of the Authority’s Decision number 7492, dated 7 December 2017 (only available in Turkish), which amends the:

– Decision Regarding the Obligation of Keeping Sample Vessels in the Facilities Belong to License Owners of Petroleum Market number 836, dated 20 July 2006, and

– Decision Regarding Explanations for License Applications in the Petroleum Market number 3242-2, dated 31 May 2011.

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Turkey Establishes Board to Reduce Import Dependency and Extend Competitive Industrial Power

Turkey has established an Executive Board on Localization (“Board”) to carry out projects which reduce import dependency and extend the country’s competitive industrial power. The Board’s aim is to develop Turkey’s domestic industry, integrated with international markets, as well as to increase the share of medium-high and high-tech products in industry and exports.

The Deputy Prime Minister in charge of the economy will lead the Board. Permanent Board members will be:

– Science, Industry and Technology Minister.

– Economy Minister.

– Customs and Commerce Minister.

– Development and Finance Minister.

Circular number 2018/1 was published in Official Gazette number 30311 on 24 January 2018. Please see this link for the full text (only available in Turkish).

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Turkey Reassigns Regulator Responsibilities for Sugar, Tobacco and Alcohol

Turkey recently closed down its regulatory bodies which focused specifically on sugar, alcohol and tobacco. Accordingly, the duties which were previously held by the Sugar Authority and the Tobacco and Alcohol Market Regulatory Authority have now shifted to the Ministry of Food, Agriculture and Livestock (“Ministry”), as well as to the Ministry of Health.

The Sugar Authority regulated sugar production and quotas, as well as determined export rules for sugar. However, the Sugar Authority’s rights, obligations and duties have now been passed to the Ministry of Food, Agriculture and Livestock.

The Tobacco and Alcohol Market Regulatory Authority (“Tobacco and Alcohol Authority”) previously granted permits for production and sale of tobacco and alcohol, as well as regulated imports and exports. These rights, obligations and duties have now been passed to the Ministry. However, the Ministry of Health becomes responsible for carrying out operations to prevent harm from tobacco and alcohol.

Any legislative reference to the Sugar Authority or the Tobacco and Alcohol Authority will now be taken as a reference to the Ministry or to the Ministry of Health.

Transactions carried out by the Sugar Authority or Tobacco and Alcohol Authority will remain valid until the new Ministry takes a new action.

The Ministry or Ministry of health becomes successor for contracts made by the prior regulatory body, as well as becomes a party to lawsuits and execution proceedings which the prior regulatory body may have been involved in.

The changes were introduced by Articles 72 to 74 and 76 to 82 of Decree number 696, published in Official Gazette number 30280 on 24 December 2017. Please see the relevant legislation at this link (only available in Turkish).

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Turkey Updates Rules and Procedures for Organic Farming

Turkey has updated the rules and procedures for organic farming. Most notably, it is now permitted to renew stocks of organic aquaculture by introducing non-organic aquaculture. Also, wholesalers and taxable farmers must now issue “producer receipts” when buying organic products from tax-exempt farmers.

The Regulation Amending the Regulation on the Principles and Application of Organic Farming (“Amendment Regulation”) was published in Official Gazette number 30297 on 10 January 2018. The Amendment Regulation makes changes to the Regulation on the Principles and Application of Organic Farming (“Regulation”).

Notable changes introduced by the Amendment Regulation include:

– If any of the following causes a considerable number of deaths and there is a shortage of organic aquaculture, stocks can now be renewed or reproduced from non-organic aquaculture, provided the non-organic stock spends at least two thirds of its production cycle in an organic aquaculture farm:

– Natural disasters.

– Harsh weather conditions.

– Aquacultural diseases that the entrepreneur cannot be liable for, such as sudden changes in water quality/quantity or a malfunction in the production facilities.

– Taxable farmers or wholesalers must now issue producer receipts for organic products bought from tax-exempt farmers.

– Producers must now conduct organic farming under an institution or organization which is a legal entity.

– Previously, if a shortage of organically raised animals arises to grow or renew the herd, certain ratios of animals could be brought from conventional farms each year with the Ministry of Food, Agriculture and Livestock’s (“Ministry”) approval. Such animals are now subject to a transition period.

– The 72-day minimum slaughter age for slow-growing genotypes in organic chicken farming has now been removed.

– Product labels must now include:

– The word “organic”.

– A statement that either:

– The product was produced according to the Regulation, or

– The products have been re-certificated according to the Regulation (if imported).

– Procedures regarding Ministry inspections are outlined in detail.

Please see this link for the full text of the Amendment Regulation (only available in Turkish).

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