Income Tax General Communiqué No. 328 on the documentation of rent payments was published in Official Gazette No. 32695 of 17 October 2024.
Income Tax General Communiqué No. 328 on the documentation of rent payments has been published.
Income Tax General Communiqué No. 328 on the documentation of rent payments was published in Official Gazette No. 32695 of 17 October 2024.
The Communiqué sets out explanations on the evidencing, with documents issued by banks or the Post and Telegraph Organisation, of collections and payments made in business premises and residential leasing transactions carried out by personal and corporate income taxpayers and by persons who are not registered taxpayers, and on the penalties applicable where that obligation is not met.
1) Scope of the documentation obligation
As is known, the general rule for residential and business premises leases is that rent collections and payments must be evidenced through a bank or the postal service.
The Communiqué additionally clarifies the following points:
- Short-term residential lettings, such as weekly or daily, are also within the scope of the documentation obligation.
- Where property is held in shares, paying the rent to any one of the co-owners through a bank or the postal service is sufficient to meet the documentation obligation.
- Collections made through the courts, through enforcement proceedings or in kind are excluded from the documentation obligation.
- Receipts and account statements issued for instruments such as cash deposits, transfers, electronic funds transfers, cheques and credit cards are accepted as evidencing documents. For rent payments, transactions carried out by attending a bank branch with the relevant identification and explanations also satisfy the obligation.
2) Penalties
Under the Tax Procedure Law, a special irregularity penalty will be imposed per transaction on those who fail to meet the documentation obligation. Those penalties are 10% of the transaction amount, and not less than:
- TRY 20,000 for first class traders and self-employed persons,
- TRY 10,000 for second class traders, farmers keeping books and those whose income is determined on a simplified basis,
- TRY 5,000 for persons other than those listed above.
The total special irregularity penalty that may be imposed in a year may not exceed TRY 20 million.
No penalty will be imposed where those who fail to comply with the documentation rules report the position of their own accord within 5 business days following the payment.
The penalty amounts will be increased each year at the revaluation rate determined under the Tax Procedure Law.
3) Examples
The Communiqué contains 7 examples on the subject, covering in brief the following situations.
Example 1: The penalty applicable where a residential rent is paid in cash.
Example 2: Application of the penalty where residential rent is paid partly through a bank and partly in cash.
Example 3: The penalty to be imposed where a tenant with self-employment income pays in cash the rent of a dwelling leased for non-professional use.
Example 4: The penalty applicable to each co-owner and to the tenant where jointly owned property is let as business premises and the rent is paid in cash.
Example 5: The special irregularity penalty where part of the rent for business premises is paid through a bank and part in cash (where the landlord is registered for income tax in respect of income from immovable property).
Example 6: The penalty where part of the rent for business premises is paid through a bank and the remainder in cash (a commercial income taxpayer keeping books on the balance sheet basis, with the property recorded in the commercial enterprise).
Example 7: The special irregularity penalty to be imposed on a taxpayer letting residential property on a short-term daily, weekly or monthly basis and collecting those rents in cash, and on the tenants.