The government’s announced rent support for tradespeople has raised questions about whether taxpayers subject to the simplified tax regime (basit usul) will be eligible. If eligibility is limited to those taxed under the simplified system, only those taxpayers would qualify for the rental assistance.
What Is the Simplified Tax Regime?
It has been suggested that the rent assistance offered by the government for small business owners will apply only to those subject to the simplified tax regime. As a result, many wonder what simplified taxation means. In essence, simplified taxation applies to the positive difference between income and costs, including the purchase costs of goods sold, within a fiscal year. While taxpayers under the regular (real) regime are liable for income tax, withholding tax and VAT, those under the simplified regime pay tax only on their simplified commercial profits. The amount of tax due is determined based on the profit earned.
Under the Value Added Tax law, those subject to simplified taxation do not charge VAT on the sale of goods or services. Taxpayers using the simplified regime do not calculate VAT when delivering goods or services, and the recipients of those goods or services cannot claim VAT deductions. When purchases are made from taxpayers under the regular regime, VAT paid is recorded as an expense and cost.
What Are the Conditions for Inclusion in the Simplified Tax Regime?
The conditions for simplified taxation are defined to determine who falls under this regime. Inclusion is not optional; taxpayers must meet the required criteria. General conditions for qualifying for simplified taxation include:
- Being actively engaged in the business personally. Occasional absence due to travel, illness, old age, military service or detention does not disqualify the taxpayer; using auxiliary workers is permitted without breaking the status,
- If the workplace is owner-occupied, the imputed rental value, or if rented, the paid rent, must not have exceeded 11,000 TRY in 2020 within metropolitan municipality boundaries, or 7,000 TRY in other provinces,
- Not being subject to real-regime income tax because of commercial, professional or agricultural activities.
In addition, there are specific quantitative limits for simplified taxation:
- For those who sell purchased goods either as-is or after processing: annual purchase amounts must not exceed 140,000 TRY and annual sales must not exceed 220,000 TRY,
- Gross business revenue must not exceed 70,000 TRY,
- For products with low profit margins—such as fuel, sugar and similar goods—purchase and sales thresholds set by the Ministry of Finance apply.
When these conditions are met, a taxpayer may be subject to simplified taxation.
Who Cannot Benefit from Simplified Taxation?
Those who qualify for the simplified regime are the taxpayers who meet the specified criteria. Entities and activities that cannot benefit from simplified taxation include partners in collective companies, money-lending businesses, jewelers, construction and repair services, insurance companies, real estate agents, brokers, mining enterprises, firms conducting intercity freight and passenger transport, and those whose annual income exceeds the specified limits.
The determination of simplified profit is made by adding the value of inventory at the end of the accounting period to the revenue. Fixed assets in use are not treated as deductible expenses in this calculation. Also, taxpayers under the simplified regime are not required to keep formal accounting books in the same way as those under the real regime.