Pehlivan & Güven Law FirmPublished:
The General Communiqué on Income Tax (Serial No: 328) issued by the Ministry of Treasury and Finance (Revenue Administration) was published in the Official Gazette on 17 October 2024, Issue No: 32695.
Under this regulation, paying rent for residential and commercial premises through banks or PTT (the Turkish postal service) has become mandatory. A special irregularity penalty is imposed on both landlords and tenants who fail to comply with this communiqué.
The special irregularity penalty for landlords and tenants will be 10 per cent of the rent amount for each month. However, if the calculated penalty falls below 5.000-TL, a special irregularity penalty of 5.000-TL will be applied.
- For first-class merchants and self-employed professionals, not less than 20.000 Turkish lira,
- For second-class merchants, farmers who keep books and those whose income is determined under the simplified method, not less than 10.000 Turkish lira,
- For everyone not listed above, not less than 5.000 Turkish lira; a special irregularity penalty equal to 10% of the transaction amount will be imposed.
The fourth paragraph of the third article of the General Communiqué on Income Tax (Serial No: 328) issued by the Ministry of Treasury and Finance (Revenue Administration), published in the Official Gazette on 17 October 2024, Issue No: 32695, provides that no special irregularity penalty is imposed on the payer if a person who paid rent in cash voluntarily reports the payment within five business days following the payment.
The communiqué also states that tenants who pay in cash contrary to this communiqué will not receive a special irregularity penalty if they voluntarily report the payment to the tax administration within five business days following the payment.
The second paragraph of the second article of the General Communiqué on Income Tax (Serial No: 328) issued by the Ministry of Treasury and Finance (Revenue Administration), published in the Official Gazette on 17 October 2024, Issue No: 32695, prohibits cash payments for short-term residential rentals.
Under the current regulation, payment through banks or PTT has become mandatory for short-term residential rentals such as daily or weekly lets.
The third paragraph of the second article of the General Communiqué on Income Tax (Serial No: 328) issued by the Ministry of Treasury and Finance (Revenue Administration), published in the Official Gazette on 17 October 2024, Issue No: 32695, sets out the exceptions.
Under the current regulation, payments made through courts and enforcement offices and payments in kind are not covered by the documentation requirement.
The fourth paragraph of the second article of the General Communiqué on Income Tax (Serial No: 328) issued by the Ministry of Treasury and Finance (Revenue Administration), published in the Official Gazette on 17 October 2024, Issue No: 32695, prohibits cash payments for short-term residential rentals.
Under this communiqué, for rent payments on jointly owned (shared) property, it is considered sufficient to pay the full rent to one of the landlords through a bank or PTT.
The General Communiqué on Income Tax (Serial No: 328) issued by the Ministry of Treasury and Finance (Revenue Administration), published in the Official Gazette on 17 October 2024, Issue No: 32695, also includes examples of how the penalty is applied.
Example 1: (A), who is liable for income tax on income from immovable property, let a property they own as a residence in 2024 to (B), who has no tax liability; the monthly rent of the residence is 20.000 TL. The inquiries established that the rent for November 2024 was paid in cash.
In this case, because the cash rent payment did not comply with the documentation requirement, a special irregularity penalty will be imposed on the landlord (A), who is liable for tax on income from immovable property, and on the tenant (B), who has no tax liability, under sub-paragraph (3) of the first paragraph of repeated Article 355 of Law No. 213.
Payment Details: For the rent of 20.000 TL collected and paid in cash, the penalty calculated at 10% of this amount (20.000 TLx0,10=) 2.000 TL falls below 5.000 TL, the minimum penalty set for 2024. Therefore, a special irregularity penalty of (1x5.000=) 5.000 TL will be imposed on (A) and (B) separately for the month of November.
However, if the tenant (B) voluntarily reports to the tax administration, within five business days following the payment, that the payment was made without complying with the documentation requirement, no special irregularity penalty will be imposed on the tenant (B).
