The Ministry of Treasury and Finance’s decision regarding the income of businesses has been published in the Official Gazette. The Ministry explained in detail how revenue determinations will be made with specific examples. The decision will cover many businesses such as restaurants, hairdressers, dentists, and auto repair shops. Businesses with a 20% discrepancy between their declaration and revenue will be asked to provide an explanation.

The Ministry of Treasury and Finance will call upon taxpayers who have a 20% discrepancy between their declared income and revenue to provide an explanation. The Income Tax General Communique prepared by the Revenue Administration Presidency under the Ministry was published in the Official Gazette. Accordingly, an exemption will be provided to service professionals under certain conditions. As part of the contracts made, service professionals may be granted the right to purchase shares of the employer or group companies free of charge or at a discounted price, subject to certain conditions such as working for a specified period under the employer, achieving designated performance, and similar criteria. Another regulation stipulates that a portion not exceeding the gross annual salary of the service professional in the year when the shares deemed as salary were granted by employers having the nature of a technology startup employer, in accordance with the criteria established by the Ministry of Industry and Technology, is exempt from income tax. In order to encourage the service professionals to hold onto the shares they receive, a provision was made for different rates of application of the exemption based on the period the acquired shares are held.

CONDITIONS FOR BENEFITTING FROM EXEMPTIONS
In order to benefit from these exemptions, the company providing shares to its employees must have the nature of a “technology startup company” in accordance with the criteria determined by the Ministry of Industry and Technology. The portion of the benefit provided through the shares that will be subject to the exemption will not exceed the gross annual salary of the employee in that year. The application of the exemption will be based on the period in which the shares were granted to the service professional. These shares will need to be held for a certain period of time. If the shares acquired by the service professional are sold within 3 full years from the acquisition date, the entire exempted tax will be collected from the employer, along with delayed interest, without the imposition of a tax loss penalty in case the disposal occurs in 4-6 years, 75% of it in case of 7-10 years. The Communiqué provides detailed examples of the exemption application.
Closely Monitoring High Discrepancies

With the Communiqué, a taxation security mechanism was established to determine the actual revenue of taxpayers engaged in commercial or liberal professions. In this context, the daily revenue amounts of these taxpayers can be determined through audits made with a minimum of 3 days in a month and 12 days in a calendar year. This regulation, which will come into effect on January 1, 2025, will also apply to corporate taxpayers. In order to obtain results close to the actual situation in the determination of the annual revenue amount based on the determination of the daily revenue amount, the “daily average revenue” amount will be determined by dividing the total daily revenue amounts determined on the days of the audit in the relevant month by the number of audit days. This revenue will be multiplied by the number of days worked in the month where the determination was made to create the revenue amount of that month. The total monthly amounts for the audited months will be divided by the number of months audited to calculate the “monthly average revenue.” The monthly average revenue will be multiplied by the number of months in the relevant calendar year in which the taxpayer operated to determine the revenue amounts of taxpayers for the relevant calendar year. The determined revenue amounts will be compared with what the taxpayers have declared. Taxpayers will be called upon if the discrepancy is more than 20%.

RISK ANALYSIS WILL BE CONDUCTED
Risk analyses will be carried out to identify taxpayers to be audited. The results obtained will be determined based on criteria such as inconsistencies between system records, declared income, and expenses. In determining the annual revenue amount based on the determination of the daily revenue amount, considerations such as the nature of the activity, whether it is seasonal, the actual days and months of engagement, weekends and weekdays worked, public holidays, etc., will be taken into account in order to obtain results close to the actual situation for taxpayers subject to audits. The Communique included detailed explanations of how the revenue determinations will be made for various taxpayers engaged in different services, including restaurant operators, jewelers, beauty salon operators, plastic, reconstructive, and aesthetic surgeons, hairdressers, those engaged in tourism-related water sports activities, beach operators, dentists, and those performing periodic maintenance of motor vehicles.