Taxation of Meal Service Provided to Personnel Working in R&D and Design Centers
Article 61 of the Income Tax Law No. 193 titled “Definition of wage”;
- Wages are the benefits that can be represented by money and benefits that are provided by money and benefits that can be represented by money, which are given to employees subject to the employer and connected to a specific workplace in return for service,
- The fact that the wage is paid under the names of allowance, compensation, safe indemnity (financial responsibility indemnity), allocation, raise, advance, dues, attendance fee, premium, bonus, expense allowance or other names, or that it is determined as a certain percentage of the earnings, provided that it is not in the nature of a partnership relationship, will not change its nature,
It has been stated. Accordingly, since the catering service provided to the personnel is within the scope of the definition of wage, it will be subject to income tax as a rule.
Paragraph (18) of the first paragraph of Article 23 of the Income Tax Law No. 193 is as follows.
“The wages of the service personnel corresponding to the amount remaining after deducting the employee social security institution premium and unemployment insurance premium from the monthly gross amount of the minimum wage valid in the month in which the payment is made (However, in the taxation of wage income exceeding the exception, the income bracket amounts and rates at which the tax will be calculated are determined by taking into account the amounts within the scope of the exception. The amount of tax to be paid is calculated by deducting the part corresponding to the exemption amount from the tax amount found in this way. The tax that will not be collected due to the exemption cannot exceed the tax that should be calculated over the monthly minimum wage in the relevant month. For those who receive wages from more than one employer, this exemption is applied only to the highest wage).”
Article 23 of the Income Tax Law No. 193 includes wages that are exempt from income tax. The eighth subparagraph of the first paragraph of the said article is related to the catering service subject to the wage exemption and is stipulated as follows:
“Benefits provided to service personnel by employers by providing meals (in cases where employers do not provide meals in the workplace or its outbuildings, the cost of one day’s meal for the days worked shall not exceed TL 170.00.[1]does not exceed the exemption. If the payment exceeds this amount, the excess part and other benefits provided for this purpose are taxed as wages).”
On the other hand, according to the second paragraph of Article 3 of Law No. 5746, the part of the income tax calculated over the wages of R&D, design and support personnel working in R&D, innovation and design activities carried out in R&D and Design Centers, which is specified in the Law, is canceled by deducting it from the tax accrued on the withholding tax return to be submitted.
Accordingly, taking into account the provisions of the Law and the regulations in the relevant Communiqués, the explanations regarding the taxation of the catering services provided differently to the incentivized personnel working in the R&D / Design Center are made in the table below:
[1] 2024 the amount to be applied for the calendar year (Income Tax General Communiqué No. 324 series)
| How the Food Service is Provided | Income Tax Status | Income Tax Withholding Incentive | R&D and Design Discount |
|---|---|---|---|
| Meals provided by employers to employees at the workplace or its annex (without any limit on the amount) | It will be subject to the wage exemption. | Since it is subject to the wage exemption, there will be no tax to be deducted under the income tax withholding incentive. | The cost of meal services (personnel expense) related to the employee’s R&D, innovation, or design activities within the scope of income tax withholding incentive will be taken into account in the R&D and design discount calculation. |
| Meals purchased from contractors providing ready-made meal services and provided to employees at the workplace or its annex (without any limit on the amount) | |||
| When no meals are provided at the workplace or its annex, but the service is provided by businesses that offer meal services, the payments made to these businesses, for each employee, for the daily meal cost corresponding to the days worked, will be exempt up to 170.00 TL per day | |||
| When no meals are provided at the workplace or its annex, and the meal service is provided through meal cards or vouchers, the payments made to these businesses, for each employee, for the daily meal cost corresponding to the days worked, will be exempt up to 170.00 TL per day | |||
| When no meals are provided at the workplace or its annex, and cash payments are made to employees, the payments made, for each employee, for the daily meal cost corresponding to the days worked, will be exempt up to 170.00 TL per day | |||
| When no meals are provided at the workplace or its annex, and the meal service is provided by meal providers/meal card service providers, if the daily meal cost per employee for the days worked exceeds 170.00 TL, the excess amount | Will be taxed as income. | The meal service cost (personnel expense) corresponding to the employee’s work related to R&D, innovation, or design activities within the scope of the incentive will benefit from the income tax withholding incentive. |
[2] The invoice for the meal fee shall be issued on behalf of the employer. However, the name and surname of the service personnel who eat and the number of days they eat shall be added to the invoice as a list. In case of payment of meal expenses for the days that are not actually worked, this payment will be outside the scope of the exemption (General Communiqué on Income Tax Serial No. 186).
[3] Meal payments made in cash must be made in accordance with the payment procedure specified in the Regulation on the Payment of Wages, Premiums, Bonuses and All Kinds of Remuneration of this Nature through Banks published in the Official Gazette dated 18/11/2008 and numbered 27058 (Income Tax General Communiqué serial numbered 322).
[4]In the wage payments made to the service personnel who do not work full-time and the partial wage payments made to the newly hired and resigned service personnel, if the wage amount including the meal service fee (exceeding 170.00 TL) does not exceed the monthly minimum wage amount, the exemption within the scope of subparagraph 18 of the first paragraph of Article 23 of the Income Tax Law No. 193 will be utilized and the amount paid for the meal will be exempt in this context.
In the Income Tax General Communiqué numbered 186, the following explanations have been made regarding the value added tax incurred for the catering services provided to the personnel:
“3. Value Added Tax will not be included in the meal price in the exemption application:
In Section 8 of the Value Added Tax General Communiqué No.9 Serial No.9 published in the Official Gazette dated 31.12.1984 and numbered 18622, it is stated that: “In the application of value added tax, the following benefits provided to the personnel will not be subject to tax.
a) Providing meals to personnel at the workplace or outbuildings,
…………………………………
Since these expenses, which are incurred in order for the enterprise to carry out its economic activity and are an element of the added value created in the enterprise, are part of the cost, they will not be subject to tax during the allocation to the personnel, and the taxes incurred in the acquisition of these goods and services can be deducted according to the general provisions.”
Accordingly, the taxes incurred due to the goods and services purchased by employers for the purpose of providing meals to their employees in their workplaces or outbuildings will not be included in the price of goods and services and will be subject to deduction.
On the other hand, the value added tax is not included in the price of 100 thousand liras per day for the benefits provided by the employers to their personnel by providing meals to their personnel from nearby restaurants or places that provide catering services. As explained above, the 100 thousand liras portion of the meal price will be exempt from tax and the value added tax corresponding to this price will be deducted by the employers.
If the amount of the meal fee exceeds 100 thousand liras, the excess amount (excluding the value added tax corresponding to the exemption amount) will be considered as net wages paid and will be subject to tax.
Example:
According to the agreement made by the employer (D) with one of the nearby restaurants, the amount of the benefit provided by giving food to its employees for one day (including value added tax) is 180 thousand liras.
In the payroll to be prepared for his employee, this employer will show 100.000 liras of the meal fee as tax-exempt wages, transfer the value added tax of this amount (100.000 x 15% =) 15.000 liras to the value added tax deductible account, accept the remaining [180.000 – (100.000 + 15.000) =] 65.000 liras as net wages paid and tax it by calculating the gross of this wage.”
Sincerely,
BİLGENER
