Tax Amendments Proposed Under the Omnibus Bill

What tax amendments are proposed in the bill amending the Tax Laws, Certain Other Laws and Decree-Law No. 631 — otherwise known as the “omnibus bill”?

• Narrowing of the Residential Rental Income Exemption

Article 1 of the draft Law proposes to replace the phrase “Buildings” in Article 21 of the Personal Income Tax Law with “Buildings owned within the borders of Türkiye by persons receiving a retirement, disability, widow’s or orphan’s pension from social security institutions established by law”. The amendment substantially narrows the exemption applied to residential rental income. The exemption will apply only to rental income derived from residential properties owned within the borders of Türkiye by persons receiving a retirement, disability, widow’s or orphan’s pension from social security institutions.

• Abolition Of The Deduction From Gross Revenue Of Interest On Debts Incurred For And Spent On Residential Properties Let Out

Article 2 of the draft Law proposes to replace the phrase “Assets and rights let out” in subparagraph (4) of the first paragraph of Article 74 of Personal Income Tax Law No. 193 with “Assets and rights let out, excluding residential properties”. The amendment is intended to abolish the deduction from gross revenue of interest on debts incurred for, and spent on, immovable properties let out as residences.

• Reintroduction of the Fourth Advance Tax Period

Article 3 of the draft Law proposes to remove the phrase “determined for the first nine months” from the first paragraph of repeated Article 120 of Personal Income Tax Law No. 193. The amendment brings the fourth advance tax period back into the system. Accordingly, the earnings of taxpayers subject to advance tax will be determined on a quarterly basis (3, 6, 9 and 12 months) and an advance tax return will be filed for the final quarter of the year.

The provision is planned to enter into force on its date of publication, to apply to income and earnings for 2025.

• Narrowing of the Income Tax Exemption on Income Derived from Fund Participation Units

Article 4 of the draft Law also amends Article 67 of Personal Income Tax Law No. 193. As is known, gains derived from the disposal of participation units held for more than one year in investment funds whose portfolios continuously consist of at least 51% of shares traded on Borsa İstanbul fall within the scope of the income tax exemption. Under the planned amendment, the withholding tax exemption tied to the one-year holding period will not apply to those funds whose portfolios continuously consist of at least 51% of shares traded on Borsa İstanbul but whose participation units may be sold only to qualified investors, which are not traded on the Turkish Electronic Fund Trading Platform (TEFAS) and which are not subject to any proportional restriction on the assets and transactions to be included in the fund portfolio.

• Extension of the Application Period for Certain Earnings Not Deemed to Constitute a Commercial Enterprise

Under Provisional Article 2 of the Corporate Income Tax Law, rental income taxed by way of withholding and securities and interest income derived by associations or foundations, together with the income of revolving fund enterprises attached to workshop and practice units in schools affiliated with the Ministry of National Education and to practice units in apprenticeship and public education centres, are not deemed to constitute a commercial enterprise until 31.12.2025. It is intended to extend the period of this provision until 31/12/2035.

• Motor Vehicle Tax Exemption For Vehicles Registered In The Name Of Investment Monitoring And Coordination Departments

The amendment proposed in Article 5 of the draft Law exempts from motor vehicle tax the vehicles registered in the name of the investment monitoring and coordination departments established in place of special provincial administrations in metropolitan provinces, as is the case for special provincial administrations.

• Title Deed Fee Exemption on Acquisitions and Sales of Immovable Property by Investment Monitoring and Coordination Departments

The amendment proposed in Article 6 of the draft Law exempts investment monitoring and coordination departments from title deed fees on their acquisitions and sales of immovable property, as is the case for special provincial administrations.

• Proportional Fee on Vehicle Transfers

The amendment proposed in Article 8 of the draft Law is intended to levy a proportional notary fee, calculated on the sale and transfer price and not less than the specified minimum fixed fee, on first registration transactions for brand-new vehicles carried out before a notary under Highway Traffic Law No. 2918 and on transactions relating to the sale and transfer of registered vehicles (second-hand vehicles). Accordingly, a fee of 0.2% (2 per thousand) of the sale and transfer price, and not less than TRY 1,000, is planned to be levied on first registration transactions for vehicles and on sales and transfers of registered vehicles under Highway Traffic Law No. 2918.

• VAT Exemption For Transfers And Deliveries Effected Through The Sale Of Immovable Property Owned By Investment Monitoring And Coordination Departments

The amendment proposed in Article 13 of the draft Law is intended to exempt from VAT the transfers and deliveries effected through the sale of immovable property owned by investment monitoring and coordination departments.

• Abolition Of The Fee Exemption For Sale And Transfer Transactions Of Registered Second-Hand Vehicles

The amendment proposed in Article 12 of the draft Law is intended to abolish the fee exemption applicable to the sale and transfer transactions of registered vehicles (second-hand vehicles) carried out by notaries.

• Increase in the Tax Loss Penalty for Under-Declaration at the Land Registry

Article 7 of the draft Law proposes to replace the phrase “at a rate of 25%” in the fourth paragraph of Article 63 of the Fees Law with “one times”. On transfers and acquisitions of immovable property, the title deed fee is calculated on the purchase and sale price declared by taxpayers, which may not be lower than the property tax value. Where the declared purchase and sale price is found not to reflect the actual position, the title deed fee on the difference was previously collected together with a tax loss penalty at a rate of 25%; this penalty is now planned to be collected at one times the amount.

VAT exemption relating to UEFA events

Article 14 of the draft Law proposes to add a provisional article to VAT Law No. 3065.

Under the newly added Provisional Article 46, in relation to the 2026 UEFA Europa League Final and the 2027 UEFA Conference League Final matches and the 2032 UEFA European Football Championship, deliveries of goods and supplies of services made to UEFA, to participating teams and to legal entities involved in the event that do not have a place of business, legal seat or place of effective management in Türkiye, on account of these matches and this event, together with the deliveries of goods and supplies of services these parties make on account of these matches and this event, will be exempt from value added tax.

Income and corporate income tax exemption relating to UEFA events

Article 27 of the draft Law proposes to add a provisional article to Corporate Income Tax Law No. 5520.

Under the newly added Provisional Article 18, the Union of European Football Associations (UEFA), together with participating teams and legal entities involved in the event that do not have a place of business, legal seat or place of effective management in Türkiye, will be exempt from income tax and corporate income tax on the earnings and revenues they derive in Türkiye in connection with the 2026 UEFA Europa League Final and the 2027 UEFA Conference League Final being played in Türkiye and the 2032 UEFA European Football Championship being held in Türkiye.

Extension of the Provision Rendering Early Presentation of Cheques Invalid

Article 28 of the draft Law plans to extend the period of application of the provision in Provisional Article 3 of the Cheque Law — under which presenting a cheque to the drawee bank for payment before the issue date written on it is deemed invalid — from 31/12/2025 to 31/12/2028.