24.01.2023/21
Exception for Payments Made for Electricity, Natural Gas, and Other Heating Expenses
The procedure and principles regarding the income tax exemption for payments made by employers to employees for electricity, natural gas, and other heating expenses, as regulated by Law No. 7420 dated 03.11.2022 and published in the Official Gazette on 30.12.2022 (Issue 32059, 2nd Repeated), were determined by the General Communiqué on Income Tax No. 322.
Article 1 of Temporary Article 1 of Law No. 7420 states:
“(1) Starting from the date this article comes into force, until 30.06.2023 (inclusive), payments made by employers to employees, as an additional amount to their current wages or earnings subject to premiums, for electricity, natural gas, and other heating expenses, not exceeding 1,000 Turkish Lira per month, shall not be included in the earnings subject to premiums under the Social Insurance and General Health Insurance Law No. 5510 dated 31.05.2006 and no income tax shall be calculated on these amounts in accordance with the Income Tax Law No. 193 dated 31.12.1960.
(2) The Ministry of Treasury and Finance and the Ministry of Labor and Social Security are authorized to determine the procedures and principles for the application of this article.”
The relevant provisions of the Communiqué are summarized below:
a) Article 61 of the Income Tax Law No. 193 defines wages. According to this article, any payments made to employees under various names, such as salary, overtime, bonuses, allowances, or similar terms, are considered wages.
Payments made by employers to employees for electricity, natural gas, and other heating expenses, in addition to their existing wages, are exempt from income tax if they do not exceed 1,000 Turkish Lira per month between 09.11.2022 and 30.06.2023 (inclusive).
b) According to the General Communiqué No. 322, the following conditions must be met for the exemption to apply to payments made by employers for electricity, natural gas, and other heating expenses:
– The payments must be made between 09.11.2022 and 30.06.2023 (inclusive),
– The payments must be made for electricity, natural gas, and other heating expenses,
– The payments must not exceed 1,000 Turkish Lira per month,
– The payments must be made in addition to the employee’s existing wages.
Example: An employee (H) receiving a gross monthly salary of 13,000 TL is paid an additional 1,000 TL per month by the employer (I) for electricity, natural gas, and other heating expenses starting from 09.11.2022. In this case, the payments made by the employer (I) to the employee (H) until 30.06.2023 will be fully exempt from income tax.
Example: An employee (İ) receiving a gross monthly salary of 10,000 TL is paid an additional 700 TL per month by the employer (J) for electricity, natural gas, and other heating expenses starting from 09.11.2022. In this case, the payments made by the employer (J) to the employee (İ) until 30.06.2023 will also be fully exempt from income tax.
c) If the payments for electricity, natural gas, and other heating expenses exceed 1,000 Turkish Lira, the amount above 1,000 TL will be subject to income tax, even if the payments are related to these expenses.
Example: An employee (K) receiving a gross monthly salary of 15,000 TL is paid an additional 1,500 TL per month by the employer (L) for electricity, natural gas, and other heating expenses starting from 09.11.2022. In this case, 1,000 TL of the payments made by the employer (L) to the employee (K) until 30.06.2023 will be exempt from income tax, but the remaining 500 TL will be subject to income tax.
d) The payments for electricity, natural gas, and other heating expenses must be made in addition to the employee’s existing salary. If the current salary, overtime, bonuses, or social benefits are partially shown as expenses for these heating payments, the exemption cannot be applied.
Example: An employee (M) receives a gross monthly salary of 10,000 TL and a social benefit of 1,000 TL, making a total of 11,000 TL. If the employer (N) starts paying an additional 1,000 TL for electricity, natural gas, and other heating expenses, the entire 1,000 TL will be exempt from income tax. However, if no additional payment is made and the previous social benefit is claimed as the payment for heating expenses, this amount cannot be exempt from income tax.
e) Employers will not be required to ask employees for invoices or documents related to the heating expenses in order for the payments to be eligible for exemption.
Example: If an employer (O) has been paying 500 TL for heating expenses in addition to the employee’s 9,000 TL salary in 2022, and these payments are subject to income tax, the payments made between 09.11.2022 and 30.06.2023 will be exempt from income tax.
f) The additional payments for electricity, natural gas, and other heating expenses must be included in the wage slip, and the portion up to 1,000 TL will not be included in the income tax base.
g) There is no exemption from stamp tax for the payments made under this exception.
You can access the relevant communiqué here.
Best regards,
BİLGENER
