REVENUE ADMINISTRATION of TÜRKİYE
Istanbul Tax Office
Income Tax and Corporate Tax Group Directorate
Date: 05.01.2024
Number: E-62030549-120-24726
Subject: Whether the service of repairing old books at your residence falls under the exemption for tradesmen under Article 9 of the Income Tax Law
In the request for a private ruling registered in the relevant document, it is stated that you repair old books at your home and sell them over the internet. Your inquiry concerns whether this activity falls under the tradesmen exemption.
In Article 9 of the Income Tax Law No. 193, titled “Exempt Tradesmen,” it states:
“Those who work in the following forms and manners as commercial and artisan professionals are exempt from income tax.
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- Those who sell goods they manufacture at home without opening a separate workplace and without using machines and tools that can perform industrial-type or mass production via the internet and similar electronic platforms. In order to benefit from the tradesmen exemption under this clause, it is required to obtain a Tradesmen Tax Exemption Certificate, open a commercial account at a bank established in Turkey, and collect all revenues exclusively through this account. Banks are obliged to withhold 4% (2% if one or more employees are employed) income tax on amounts transferred to commercial accounts opened under this clause, and to declare and pay this in accordance with the principles in Articles 98 and 119. To apply the discounted rate linked to employment, at least one employee must be employed for ten days in the relevant month. No withholding will be made on this revenue under Article 94. If the revenue obtained under this clause exceeds 220,000 Turkish Lira (700,000 TL for 2023 according to General Communiqué No. 323), the taxpayer will be subject to real taxation starting from the beginning of the following calendar year and will no longer be able to benefit from this exemption. If it is determined that any of the conditions other than the revenue condition mentioned in this clause have been violated, the exemption cannot be utilized, and unpaid taxes will be collected with delay interest along with a tax evasion penalty. The President is authorized to reduce or increase the rates and amounts stated in the clause by half or up to twice.
Those subject to income tax under real terms due to commercial, agricultural, or professional income, as well as those performing the aforementioned activities in a manner that signifies an obligation to income and corporate tax liabilities, cannot benefit from the tradesmen exemption.
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For those who meet the conditions for the tradesmen exemption, the tax office will issue a Tradesmen Tax Exemption Certificate upon request. The Ministry of Finance is authorized to determine the form and content of this certificate, as well as the procedures for its cancellation and implementation.
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The provisions above are included.
With Law No. 7256, Clause (10) was added to the first paragraph of Article 9 of the Income Tax Law regulating the tradesmen exemption, which includes those who sell goods manufactured at home without opening a separate workplace and without using machines and tools that can perform industrial-type or mass production exclusively over the internet and similar electronic platforms. Detailed explanations on this matter are included in General Communiqué No. 314.
According to these provisions and explanations, in order to benefit from the exemption mentioned in that clause, the product being sold must be one that is manufactured at home. If a product purchased from outside is sold with some modifications made to it, without any significant change in its nature, it cannot be claimed that the product was manufactured at home, and therefore, the exemption cannot be utilized. In this context, due to your activity of repairing old books and selling them over the internet, you will not be able to benefit from the tradesmen exemption under Article 9, Paragraph 1, Clause (10) of the Income Tax Law.
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Source: Revenue Administration of Republic of Türkiye
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