With the Income Tax General Communiqué published in the Official Gazette No. 32695 on October 17, 2024, and came into effect on the same date, an obligation for certification (providing with documentation) has been introduced in lease payments related to residential and workplaces, along with penalties for violations of this obligation.
A. What Regulations Have Been Introduced Under the Communiqué?
Collection and Payment Arrangements Regarding Leases in Residential and Workplaces Have Been Made.
Under the relevant regulation, it has become obligatory for the lessors and lessees of residential and workplaces to certify/document their collections and payments related to the lease with documents issued
by banks or
Posta ve Telgraf Teşkilatı Anonim Şirketi ("PTT").
In this context, as of October 17, 2024, making lease payments in cash, either in return of receipts or not, within the context of lease relations, will be considered a violation of the legislation. The purpose of this regulation is to combat the informal economy, prevent tax losses and monitor financial transactions in a more transparent manner. In this way, lease payments will be documented and auditable and financial transactions between the parties will be legalised.
Short-Term Residential Leases Are Also Included in The Scope of the Obligation to Certify.
Within the scope of the Communiqué, it has been regulated that the collections and payments made for
weekly, daily or similar short-term residential leases are also included within the scope of requirement for certification/documentation. With this regulation, it is aimed to control these types of leases, which are frequently encountered especially in the tourism and short-term accommodation sector, and to strengthen the control mechanisms
(*)
(*): In order to obtain information about the amendments made this year regarding short-term leases, you can access the information note prepared by us titled "The Law Introduced for Short-Term Leases"
here
The Obligation to Certify the Lease of Shared Property Has Been Facilitated.
Under the Communiqué, it is accepted that in the lease of shared properties, if the entire lease is paid to one of the shareholders through a bank or PTT, the certification/documentation obligation will be considered as fulfilled.
This regulation provides a convenience for the practical fulfilment of the obligation of certification in shared ownership. For the lessee, the obligation to pay the lease amount to each shareholder separately is eliminated; it is sufficient to pay the entire lease amount to only one of the shareholders via bank or PTT. However, it should be noted that the lessor shareholder should collect the entire lease amount, not only his share. Otherwise, the obligation of certification will not be deemed to be fully fulfilled.
However, although it can be said that this regulation provides convenience to the lessees, the payment of the entire lease to a single shareholder for the lessee, who is obliged to pay each lessor shareholder in proportion to their shares, may cause some problems regarding the burden of proof for the lessee in a possible dispute between the shareholders.
For this reason, it is recommended that lessees obtain a notification sent via a notary, signed by all shareholders, stating that the entire lease will be paid to one shareholder and specifying which shareholder will receive the payment before paying the full lease amount to a shareholder.
It Has Been Regulated That Lease Payment from the Bank Branch Will Also Be Accepted Under Certain Conditions.
It has also been regulated that the obligation of certification will be deemed to be fulfilled if the lessees make their lease payments (except ATM and internet banking)
by going to bank branches. In this context, lessees can make payments to the account of the lessor by applying to the bank branch, stating their Turkish ID number, tax ID number, name-surname/title information and the phrase "
lease payment" in the description of the transaction. This transaction will be deemed sufficient in terms of certification and thus, the lease payment will be documented.
This regulation aims to ensure that payments made through bank transactions for lease payments are officially documented and financial audit mechanisms function effectively.
In this context, it is also important to write the phrase "lease payment" in the lease payments to be made by the lessee via internet banking in order to fully fulfil the obligation of certification.
B. Penalties within the Scope of the Obligation of Certification
The Communiqué also regulates that special irregularity penalties will be imposed on those who do not comply with these obligations, and the penalties to be applied for each transaction are determined as follows:
- A minimum of 20,000 Turkish liras for first-class merchants and self-employed professionals
- A minimum of 10,000 Turkish liras for second-class merchants, farmers keeping records, and those whose income is determined under the simple procedure
- A minimum of 5,000 Turkish liras for others
A special irregularity penalty of 10% of the amount subject to the transaction will be applied.
The total special irregularity penalty imposed within a calendar year will not exceed 20 million Turkish liras. This limit determines the upper limit of the penalties and ensures that the penalties to which taxpayers may be exposed are limited on an annual basis.
The penalty amounts are differentiated according to the commercial size of the taxpayer in order to provide deterrence. The upper limit of the penalty is intended to protect taxpayers from facing excessive financial liabilities. Thus, a balance is maintained between promoting compliance with tax regulations and protecting taxpayers.
Cerensu Çetin Yenigün, Senior Associate
Cemile Tekdemir, Trainee Lawyer