Edition 65: 3 May 2018
Editorial Team:
Orçun Çetinkaya, LL.M., Ezgi Baklacı, LL.M., and Pelin Oğuzer, LL.M.
Turkey’s Data Protection Authority Announces Criteria for Assessing “Legitimate Interest”

Turkey’s Data Protection Authority (“Authority”) has updated the Implementation Guideline for the Data Protection Law (“Guideline”). The Guideline now outlines the criteria for assessing “legitimate interest”, which is an exception enabling personal data to be processed without explicit consent. The Authority also announced that applications and social media platforms providing phonebook services without obtaining explicit consent violate the Law on Protection of Personal Data number 6698.

Accordingly, the Guideline now explains that to qualify as a legitimate interest, the data controller’s benefit must meet all of the following criteria:

– Legitimate.

– Definite.

– Related to an existing interest.

– Related to current activities carried out by the data controller.

– Obtainable in the near future.

– Balanced with the data subject’s right and freedoms.

The Authority also announced that applications and social media platforms which provide phonebook services without obtaining explicit consent violate the Law on Protection of Personal Data number 6698. The Authority announced that it had launched an investigation into these activities. The Data Protection Board has previously ruled that websites and applications which offer phone directory services must immediately cease their activities (Ruling 2017/61; more).

Please see this link for the full text of the Authority’s announcement and this link for the full text of the Guideline (only available in Turkish). All of the Authority’s guidelines can be found at this link.

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Turkey’s Data Protection Board Publishes Summarised Rulings

Turkey’s Data Protection Authority has published a number of recent decisions by the Data Protection Board (“Board”). The summarized and anonymized decisions help to clarify legislation and practices in this developing area, giving some insight on how the Board will treat certain aspects of data processing, transfers, and security breaches.

Notable points from the decisions include:

– The Board ruled that notifying data subjects about a breach of personal data security 17 months after the breach exceeds the reasonable period, constituting a breach of data security.

– Obtaining explicit consent from data subjects in circumstances where explicit consent is not required (circumstances outlined under Article 5(2) of the Law) constitutes an abuse of rights by the data controller.

– The Board ruled that transferring personal data to courts which exceeds the requested amount violates the principle of data minimisation.

– The Board warned data controllers which do not respond to data subjects who wish to exercise their rights within 30 days about the administrative fines which apply under Article 18 of the Law.

– The Board warned a company for processing personal data for purposes other than its legal obligations where the company kept personal data for ten years on the basis of its legal obligations.

– The Board sanctioned a data controller which sent a customer’s personal data to another customer with the same name on the basis that the error indicates a lack of technical and administrative measures.

– The Board noted that requesting an unnecessary document which contains personal data violates the principles of compliance with the law and good faith.

– The Board ruled that adding an employee’s residential address to sample contracts which were sent to third parties without any legal basis is a violation.

Please see this link for the full text of the Board’s decisions (only available in Turkish).

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Turkey Introduces a Range of Changes to Tax Regime

Turkey has introduced a range of changes to its tax regime, applying to the Income Tax Law and Tax Procedure Law. Changes apply to a wide range of topics, including severance payments, the minimum wage, valuing foreign currencies brought from abroad, tax penalties, VAT and electric vehicles.

The Law on Amendments to Tax Laws and Certain Laws and Decree Laws (“Amendment Law“) was published in Official Gazette number 30373 on 27 March 2018.

Income Tax Law 

Notable amendments to the Income Tax Law include:

– The scope of payments excluded from severance payment calculations has increased. Accordingly, the following are now also excluded:

– Payments and benefits under reciprocal termination contracts.

– Compensation under mutual rescission.

– Indemnity regarding job loss.

– Termination compensation.

– The minimum wage is now excluded from changes to tax brackets during the year.

– Income tax will not apply to electricity generated at production facilities up to 10 kW installed power, located on the roofs and facades of houses which they own or rent for the purpose of producing electricity from renewable energy resources, within the scope of unlicensed activities, who sell the surplus energy to the last resource electricity supply companies.

– If an employer’s nursery and day care services are not provided at the workplace, support payments will be exempt from tax, up to a value equivalent to 15% of the monthly gross minimum wage.

Tax Procedure Law 

Notable amendments to the Tax Procedure Law:

– If goods must be destroyed due to going bad, decay, or expiring, taxpayers can now assess their value themselves (without a decision from a valuation commission).

– New rules have been introduced for valuing foreign currencies brought from abroad by stock companies for investments within the scope of investment incentive certificates.

– The discount rate for tax penalties, irregularities and special irregularity penalties has been increased from 1/3 to 1/2.

– Tax penalties for electronically edited documents have been clarified.

– Calculating the amortization rate for machinery and equipment purchased for certain purposes may now be calculated based on half their lifetime. This includes assets to be used in:

– R&D.

– Innovation.

– Design.

– Machinery and equipment purchased in the areas noted above are now exempt from VAT.

Other important provisions include:

– Minibuses and buses are redefined in terms of the number of seats in the Motor Vehicle Tax Law.

– Electric motor vehicles are now included in the Motor Vehicle Tax Law.

– Fees are outlined for decisions and writs regarding disputes settled through mediation.

– In 2018, the minimum wage support will continue to be provided to employers in the private sector.

– The Council of Ministers has been authorized to increase the rescission period from two months up to six months for people subject to compulsory personal retirement insurance.

Please see this link for full text of the Amendment Law.

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Turkey Amends Tax Rules for Payments to Employees in Mutual Termination Agreements

Turkey has amended tax rules for payments to employees in the context of mutual termination agreements. Accordingly, certain payments are now deemed to be wages and are exempt from income tax. These payments include compensation, job loss indemnity, termination pay, and employment security payments.

The Law on Amendment of Income Taxation Laws and Certain Statutory Decrees (“Amendment Law”) was published in Official Gazette number 30373 on 27 March 2018. The Amendment Law makes changes to the Law on Income Tax number 193 (“Law”), among other laws.

Accordingly, depending on the legislation which applies to a particular employee, certain payments made after terminating the employee’s service agreement within the scope of a mutual termination agreement will now be exempt from income tax. These will now be regarded as wages under the Law.

These payments include:

– Compensation.

– Job loss compensation.

– Termination pay.

– Employment security payment.

The full text of the Amendment Law can be found at this link (only available in Turkish).

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Turkey Launches Income Tax Incentives to Encourage New Jobs for Women, Disabled, or Young Employees

Turkey has introduced several incentives to encourage job creation. New tax incentives are available for employers which create jobs for women, disabled, or young employees. Further incentives are available for employers which create these jobs in the production and informatics sectors.

The Law Amending Tax Laws and Certain Laws numbered 7103 (“Omnibus Law”) was published in Official Gazette number 30373 on 27 March 2018.

Notable changes under the Omnibus Law include:

– Employers which create jobs for certain categories of employees will receive support with social security premiums for 12 months. The period extends to 18 months for the following employee categories:

– The social security support mentioned above will increase for workplaces operating in the production and informatics sectors.

– For employees within the scope of the support scheme mentioned above, income tax (after deduction of minimum living allowance) will be refunded on submission of a tax statement.

– Universities established by foundations and parent-teacher associations will now also benefit from social security premium incentives, support schemes and deductions.

– Those who have not benefitted from security premium incentives, supports and deductions, although they have met the necessary conditions, can now retrospectively benefit from these for up to six months.

– Benefits offered to female employees for kindergarten and day-care will now be exempt from income tax.

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

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Turkey Amends Rules for Value Added Tax, Introducing New Exemptions

Turkey has announced a range of amendments to the tax regime, as well as new VAT exemptions. A new tax base calculation is introduced for sale of secondhand vehicles and immovable property. Time limits are also introduced where sellers must repay buyers for excessive and unfairly calculated tax inputs.

The Law Concerning Certain Changes to the Value Added Tax Law and Certain Laws and Statutory Decree number 178 (“Law”) was published in Official Gazette number 30383 on 6 April 2018.

The Law introduced the following amendments:

– The VAT system has changed for construction done in return for land shares, so that now:

– The landowner will be deemed to have delivered the land share to the contractor in return for the residential house or workplace. Similarly, the contractor will be deemed to have delivered the residential house or workplace to the landowner in return for the land share.

– The price of a residential house or workplace will be determined in accordance with the imputed cost, regulated under Tax Procedural Law.

– Sellers must repay buyers for excessive and unfairly calculated inputs, with related tax returns will be amended accordingly. Within this scope, analysing the tax returns must now be examined within three months, extendable by two months maximum.

– A special tax base calculation is introduced for sale of secondhand vehicles and immovable property. The tax base will now be determined as the amount remaining after deducting the purchase price.

– From 1 January 2019, the right to VAT deductions will be extended to the end of the following calendar year and the current principle of deduction within the same year will be abandoned.

New tax exemptions

A range of new tax exemptions have been announced, entering into force at different times:

– 1 June 2018:

– Deliveries to duty free shops will be exempt from VAT and Special Consumption Tax.

– Deliveries and services related to donations for construction of schools, health facilities, dormitories, and retirement homes will be exempt from VAT.

– Certain health services provided to foreigners will be exempt from VAT.

– Purchases of machinery and equipment by companies operating in R&D centres and technology development zones will be exempt from VAT.

– Converting an entity from an ordinary partnership into an equity company will be exempt from VAT.

– 1 January 2019, delivery of software for games produced in technology development zones will be exempt from VAT.

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

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EU Accession Progress Report: Turkey has Made Progress in Intellectual Property Law, Although Further Work Necessary

The European Commission has published Turkey’s Progress Report in connection with the 2018 Communication on EU Enlargement Policy. The Progress Report evaluates Turkey’s overall compliance with EU norms, through the lens of the harmonization process. The Progress Report includes consideration of intellectual property law, stating that Turkey has a “good level of preparation” in this area, but also noting specific areas which should be improved.

The Progress Report states that Turkey has shown “good progress” regarding intellectual property in respect to:

– Adopting and putting into force the new Industrial Property Law (“IP Law”), which is aligned with the EU acquis, according to the recommendations made in an earlier Progress Report.

– Establishing an Intellectual Property Rights Academy and the Regulation on the Code of Conduct and Disciplinary Measures for Trademark and Patent Agents, to address a legal gap regarding liability of agents who are registered with the Turkish Patent and Trademark Office.

– A 35% increase in customs seizures of counterfeit goods in 2016, by enforcing the Industrial Property Law which aims to ensure a higher level of legal alignment with the European Union Enforcement of Intellectual Property Rights Directive.

However, the Progress Report states that further progress should be made regarding:

– Adopting the Draft Copyright Law, which is consistent with EU law.

– Solving issues regarding collective rights management through the Draft Copyright Law, particularly in relation to foreign producers, public performance rights and reproduction rights.

– A lack of specific provisions for biotechnological inventions in the IP Law.

– Enhancing measures and enforcement to combat intellectual property infringements.

– Strengthening enforcement of the IP Law, since the actual numbers of intellectual property infringements, counterfeiting and piracy levels are still very high.

– Implementing an accelerated destruction procedure and improving the functioning of Intellectual Property Rights criminal courts.

– Increasing awareness of the benefits of a strong Intellectual Property Right protection system for economic growth by sustaining a constructive dialogue with intellectual property right owners on developments.

Please see this link for the full text of the Progress Report, published on 17 April 2018.

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Turkish Constitutional Court Considers Constitutionality of Provisions for Trademark Infringement and Related Sanctions

The Turkish Constitutional Court recently considered and rejected a claim that Articles 29 and 30 of the Industrial Property Law (“Law”) are unconstitutional. These provisions outline acts which constitute trademark infringement and related sanctions.

The Criminal Court of First Instance claimed that Articles 29 and 30 of the Law should be struck out. It argued that criminalization of acts which could be prevented by legal sanctions is not fair and the sanctions are disproportionate. It also claimed that deeming acts to be a crime leads to subjective evaluations and determining the necessary intent element causes uncertainty. Thus, it sought to strike out the provisions because they breach constitutional principles regarding:

– The State of law.

– Clarity and definiteness.

– Legality.

The Constitutional Court rejected the lower court’s claim on the grounds that:

– The state has a constitutional duty to protect property rights and prevent interferences from third parties.

– Intellectual property rights are property rights.

– Legislators are authorized to determine the method and procedure for protecting trademark rights.

– The legislators’ decision to designate an act as constituting either unfair competition or a crime does not breach the constitution.

– Articles 28 and 29 of the Law clearly state the legal and punitive sanctions for trademark infringement. Therefore, there is no vagueness, nor violation of the legality principle.

– The Law’s preamble defines similarity as the “likelihood of confusion” in a certain and predictable manner.

– A trademark infringement complaint is prosecuted as a criminal charge, depending on repentance provisions. Therefore, the sanctions are appropriate for the intended purpose and a reasonable relationship exists between the purpose and the means.

Please see this link for the full text of the Constitutional Court’s decision, number 2017/172 E., 2018/32 K., dated 28 March 2018 and published on the Official Gazette number 30397 on 20 April 2018 (only available in Turkish).

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