GENÇ GİRİŞİMCİLERE VERGİ VE SİGORTA PRİM TEŞVİKİ

TAX AND INSURANCE PREMIUM INCENTIVE TO YOUNG ENTREPRENEURS

1. Tax Incentive for Young Entrepreneurs

With the repetitive article 20 of the Income Tax Law No. 193, young entrepreneurs, for whom income tax liability has been established for the first time due to their commercial, agricultural or professional activities as of 10/2/2016, is subject to the income tax tariff of their earnings during the three taxation periods starting from the calendar year they started their activities. The portion up to the amount in the second tranche is exempted from income tax.

With the amendment made with the Law No. 7440 to be applied to the earnings obtained as of 1/1/2023, the young entrepreneur earning exemption (75,000 Turkish liras) has been changed as the amount in the second tranche of the income tax tariff. The exemption amount to be applied for the year 2023 is 150.000 TL and this amount will be updated every year.

Who Can Benefit From Tax Incentive?

Who Can Benefit From Tax Incentive?

• For the first time, due to their commercial, agricultural or professional activities, income tax liability has been established,
• Full taxpayer real persons who have not completed the age of 29 as of the commencement date of liability can benefit.



What are the Conditions for Benefiting from Tax Incentive?

In order for full taxpayer real persons to benefit from tax incentives;

• Notification of starting work within the legal period,
• Actively working in his own business or being managed and managed by himself,
• If the activity is carried out within the body of an ordinary partnership or a sole proprietorship, all of the partners must meet all the conditions as of the date of employment,
• The fact that a business or professional activity whose activities are stopped or continues to operate (except when the activity is taken over by the spouse and children due to death) has not been taken over from the spouse or third degree (including this degree) blood or in-laws,
• Not being a partner in an existing business or professional activity afterwards,

must meet the conditions.




KIn case the taxpayers benefiting from the income exemption have another income (rent, income from securities, wages, other earnings and revenues) subject to declaration; These taxpayers will only be able to benefit from the incentive application due to their commercial, agricultural and professional earnings.

Example 1: Taxpayer (A) has earned 160,000 TL self-employment income and 80,000 TL rental income in 2023, within the scope of the exemption in the repetitive article 20 of the Income Tax Law. Taxpayer (A) will be able to benefit from this exemption for only 150,000 TL of his self-employment earnings of 160,000 TL in the annual income tax return he has submitted due to these incomes. It will not be possible to benefit from the exception due to the rental income of 80.000 TL.

If the taxpayers within the scope of the incentive earn income from one or more of their commercial, agricultural or professional activities in a taxation period, the incentive is applied to the total of these declared incomes.

Example 2: Taxpayer (B), who has all the conditions for the exemption within the scope of the repetitive article 20 of the Income Tax Law, started architecture as of 20/2/2023 and construction activities as of 21/7/2023. Taxpayer (B)'s commercial income from construction activities in the 2023 calendar year is 500,000 TL, while his self-employment earnings from architectural activities are 200,000 TL.

Taxpayer (B) will be able to benefit from the exemption for the portion of his total income of 700,000 TL up to the amount in the second slice of the tariff written in Article 103 (150,000 TL for the year 2023) and will not be able to benefit from the exception for the remaining amount (550,000 TL).

The tax incentive is limited to the taxation period, and starting a new activity while continuing its previous activity will not extend the incentive period.

After deducting the incentive amount from the income obtained that year, the remaining amount will be written as income in the income statement table of the annual income tax return to be submitted by the beneficiaries of the incentive.

An annual income tax return will be submitted even if no profit is gained from the activities within the scope of the incentive or if the income is below the incentive amount.

In case of earning below the incentive amount in a taxation period, the unused amount of the incentive cannot be carried over to the next year.




What are the Special Situations in Tax Incentive Application?

• Conducting the activity as a partnership

Taxpayers operating by establishing an ordinary partnership or a sole proprietorship can benefit from tax incentives separately, provided that all partners meet the exemption conditions separately. If any of the partners does not meet the exemption conditions, the other partners will not be able to benefit from the tax incentive.

Example 3: Taxpayer (C), Taxpayer (D) and Taxpayer (E) started restaurant business as an ordinary partnership on 17/2/2023 and Taxpayer (C) 27, Taxpayer (D) 29, Taxpayer (E) ) is 32 years old. According to this; Since the taxpayer (E) violates the condition that he should not have completed the age of 29 as of the commencement date of the obligation, none of the partners will be able to benefit from the exception.

• Takeover of the business

In the event that a business or professional activity is taken over, in order to benefit from the incentive, the person to whom the business or professional activity is taken over must not be a spouse or blood relative up to the third degree (including this degree).

In case the business or professional activity is taken over by the spouse and children due to death, regardless of whether the deceased taxpayer benefits from the incentive or not, the transferee spouse or children will be able to benefit from the incentive for three taxation periods, provided that they meet all the conditions for the exception.

Example 4: Taxpayer (F), who has been operating a buffet since 3/5/2017, died on 28/7/2023 and his 22-year-old son took over the business. Taxpayer (F)'s son (G), who bears the other conditions of the tax incentive, will be able to fully benefit from the said incentive for the years 2023, 2024 and 2025.

• Not being a later partner in an existing business or professional activity

If taxpayers become partners in an existing business, professional activity or partnership, they will not be able to benefit from tax incentives even if they meet all the other conditions.

The tax incentive has no effect on the tax to be paid by withholding in accordance with Article 94 of the Income Tax Law.




How Will Tax Incentive Application Be In Cases of Leaving or Job Change?

In the event that taxpayers who benefit from tax incentives later abandon the activity for any reason, the incentive will be utilized due to the earnings obtained until the date of abandonment. If the said activities within the scope of the incentive are started again after the activity is abandoned, this incentive cannot be benefited from, since the condition of establishing income tax liability for the first time on their behalf will be deemed to be violated.

In case the beneficiaries of the incentive change their activities to commercial, agricultural or professional activities or make changes in the activity during the benefit period, it is possible to benefit from the said incentive for the period not utilized.

Example 5: Taxpayer (H) started his architectural activities on 21/5/2021 and has all the incentive conditions. Taxpayer (H) abandoned this activity on 3/3/2022 and resumed the same activity on 2/2/2023.

Accordingly, the Taxpayer (H) will benefit from the incentive due to his earnings in 2021 and 2022, but will not be able to benefit from the said incentive for 2023 and the following years, since he violates the condition of starting work for the first time for his activity that he started to work again on 2/2/2023.

In case of starting or leaving the job within the calendar year; The short period from the start of work to the end of the year and the short period from the beginning of the calendar year to the date of termination of the business will be considered a taxation period and the incentive will be fully utilized for these periods.

In the event that taxpayers whose earnings are determined by the simple method, switch to the real method within the calendar year, these taxpayers cannot benefit from the incentive in question, even if they meet the other conditions of the young entrepreneur exemption, as they will have violated the condition of establishing an obligation on their behalf for the first time.

2. Insurance Premium Incentive Provided to Young Entrepreneurs

With the provision added to Article 81 of the Social Insurance and General Health Insurance Law no.

In this context, as of 1/6/2018, the premiums of real persons who are deemed to be insured as taxpayers for the first time within the scope of Article 4/1-b of the Law No. 5510, for a period of one year from the date of registration, are the lower limit of earnings subject to premium determined in accordance with Article 82 of the Law No. 5510. will be borne by the Treasury.

What are the Conditions to Benefit from Insurance Premium Incentive?

The conditions for benefiting from the Insurance Premium Incentive are as follows:

• To benefit from the income exemption for young entrepreneurs within the scope of repetitive article 20 of the Income Tax Law No. 193.
• Be over 18 years old and under 29 years old as of the commencement date of liability.
• Being one of the real persons who are considered as insured within the scope of article 4/1-b of Law no. 5510 as a taxpayer for the first time as of 1/6/2018.
• Actual working in own business or being managed by the business itself.
• Except in the event that the business is taken over by the spouse and children due to death, the fact that a business that has ceased or continues its activities or professional activity has not been taken over from the spouse or third degree (including this degree) blood or in-laws.
• Not being a later partner in an existing business or professional activity.



In case the activity is carried out within the body of an ordinary partnership or a sole proprietorship, the youngest among the partners will be able to benefit from the insurance premium incentive. In order to benefit from the premium incentive, all partners must meet the terms of the incentive separately.

If any of the partners does not meet the incentive conditions, the other partners will not be able to benefit from the insurance premium incentive.

How and Where to Apply for Insurance Premium Incentive?

The registration procedures of the insured who want to benefit from the insurance premium incentive will be carried out by the social security provincial/central directorates to which they are affiliated, with the "Earning Exemption for Young Entrepreneurs" document, which they will obtain from the tax office to which they are affiliated, within the scope of repetitive Article 20 of the Income Tax Law No. 193.

You can find detailed information on the subject in the Income Tax General Communiqué Serial No. 292 and the SGK Circular on the 2018/28 number1l Geneç Entrepreneur Incentive Practice.

Can those whose earnings are determined in a simple procedure benefit from the insurance premium incentive?

The earnings of taxpayers whose earnings are determined in the simple method are exempt from income tax.

In this context, the taxpayers whose earnings are determined in a simple procedure are not submitted an annual income tax return for the said earnings, and other exemptions and deductions stipulated in the Law are not deducted from their earnings.

The fact that the income exemption foreseen for young entrepreneurs cannot be deducted does not prevent these taxpayers from accepting that they have the conditions of young entrepreneurs.

Accordingly, as with other taxpayers, it is possible to give a letter to the taxpayers who benefit from the said exemption upon request by the tax offices to which they are affiliated, in order to ensure that they benefit from the insurance premium incentive.

Take Advantage of Ifasturk's Company Establishment Advantages!

As Ifasturk, we help young entrepreneurs to establish a company and support them in a comprehensive way for their future success. Starting a company is often one of the biggest hurdles entrepreneurs face, and it can be quite challenging for young entrepreneurs who don't have enough knowledge about it. As Ifasturk, we offer our clients an expert team of consultants to provide detailed information on all legal, financial and administrative procedures during the company establishment process. We also help young entrepreneurs lead their companies to success by providing customized support tailored to the needs of our customers.

Download Related Document