Turkey: How Will The Earthquake Allowance Exemption Be Applied?

General Communique No: 2 has been published on the Official Gazette (dated March 25, 2023 and numbered 32143) for the procedures and principles regarding the allowances provided to the earthquake victim employees.

1. What are the conditions for this exemption?

To be able to benefit from the exemption, this allowance;

• Should be made from February 6, 2023, to July 31, 2023 (including these dates),
• Should be made for the employees whose her/himself, spouse, child, or parents were affected by the earthquake.
• If it is cash, should not exceed 50,000 TRY in total.
• Should be made in addition to the current salary, premium, bonus, etc.

2. What will happen for the amount exceeds the exemption amount?

In the in-kind allowances, there is no limitation on the nature and amount. However, if the cash allowances exceed 50,000 TRY, the portion exceeding this amount will be subject to tax.

3. Is it necessary to have the residence address of the employee in the earthquake zone?

For the in-kind and/or cash allowance to be made to the employee to be considered within the scope of the exemption, it is sufficient for the employee, his/her spouse, child, and parents to be affected by the earthquake. There is no condition that a residential address is in the earthquake zone.

4. Should earthquake allowances be shown on the payroll?

Payments regarding in-kind and cash allowances made in addition to the current salary, premium, bonus, etc. to the employee will be shown on the payroll, however, the part of these payments that are within the scope of the exemption will not be included in the tax base.

5. The earthquake allowances should be made in addition to the current salary.

In-kind and/or cash allowances made to the employees should be made in addition to the current salary and it is not possible to benefit from this exemption without an addition/increase in the current salary.

6. The allowances made to the employees' relatives except for the first-degree relatives are not considered within the scope of exemptions.

The allowances made for the employees her/himself, spouse, child, or parents are within the scope of the exemption, and it is not possible to consider the benefit in-kind and cash allowances provided to other persons who are affected by the earthquake within the scope of this exemption.

7. In the case the employee passed away because of the earthquake, the allowances made for the employee's first-degree relatives are not considered as a wage.

The allowances provided by employers to the spouse, children, and parents of the employees who died in earthquakes or later due to injuries in these earthquakes are not considered as wages and are not subject to income tax and stamp tax.

8. It is sufficient earthquake allowances to show on the payroll, and there will be no need for another document.

It will be sufficient to show on the payroll the in-kind benefits and cash allowances provided for the employees, spouse, children, or parents, who have a place of residence in places where force majeure has been declared as of 6th March 2023, and additional documents will not be required.

9. If the employees or their first-degree relatives do not have a residence address in the earthquake zones, some documents will be needed to show that affected by the earthquake.

In cases where the place of residence of the employee, spouse, child, or parents is not in the places where force majeure has been declared, they are affected by the earthquake; it is required that the determinations that the employee is temporarily in these places for any reason, transportation records, hospital records, damage assessment reports and similar documents and these documents should be kept as an attachment to the payroll.

Exemption applications are explained with the below examples:

Example 1: The employer (A) in Kahramanmaras provided 20,000 TRY in cash on 20th February 2023, in addition to the current wages, to each of the employees who were affected by the earthquake working at the workplace in this province. All the 20,000 TRY cash allowances provided to each of the employees will be exempt from income tax and stamp tax.

Örnek 2: The employer (B) in Istanbul, provided 30,000 TRY in cash on 10th March 2023, in addition to the current wages, to each of the employees working in its branches in places where force majeure was declared. All the 30,000 TRY cash allowances provided by Employer (B) to each of the employees working in its branches will be exempted from income tax and stamp tax.

Example 3: The spouse and child of employee (C) were injured in the earthquake that occurred in Kahramanmaras. The 50.000 TRY in cash was provided to the employee (C) by his/her employer on 15th February 2023, in addition to the employee's wage. All the 50,000 TRY cash allowance in addition to the employee's wage will be exempted from income tax and stamp tax.

Example 4: To employee (Ç) who works in Adiyaman and whose mother died in the earthquake that occurred on 6th February 2023, 10,000 TRY cash allowance is provided by the employer every month as of 15th February 2023, until 15th July 2023, in addition to the employee's current wage. 50,000 TRY of the total 60,000 TRY will be considered within the scope of the exemption as of the related months, and the 10,000 TRY portion of the cash allowance on 15th July 2023 will be subjected to taxation.

Example 5: The mother and father of employee (E) working for employer (D) in Istanbul, residing in Malatya, were affected by the earthquake. The employer (D) provided 45,000 TRY in cash allowance to the employee (E) whose mother and father were affected by the earthquake, and 100,000 TL worth of household goods were purchased and delivered to the employee (E)'s mother and father who moved to Istanbul. The 45,000 TRY in cash allowance provided to the employee in addition to the employee's wage and all 100,000 TRY in-kind benefits will be exempted from income tax and stamp tax.

Example 6: The spouse and child residing in Hatay of employee (G) working for employer (F) in Ankara were affected by the earthquake. The employer (F) covered the carriage fee of 35,000 TRY to move to Ankara of the employee (G)'s spouse and child, who were affected by the earthquake. All carriage fee, which is covered by employer (F) and does not exceed 50,000 TRY, will be exempted from income tax and stamp tax.

Example 7: The house where the mother and father live in Osmaniye of the employee (I) who works for the employer (H) in Konya became unusable in the earthquake. The employer (H) bought a house in Konya for the residence of the employee (I)'s mother and father who were affected by the earthquake and delivered it to them. All costs of the house bought by the employer (H) for the use of the mother and father of the employee (I) affected by the earthquake will be exempted from income tax and stamp tax.

Example 8: The employer (I) in Adana pays the monthly house rent of 8,000 TRY for the house they rented for the employee (J) whose house was destroyed in the earthquake. The total amount of rent paid by the employer (I) until 31st July 2023 should be exempted from income tax and stamp tax, if it does not exceed 50,000 TRY. The excess amount and the rent paid after 31st July 2023 will be subjected to tax.

Example 9: The employer (K) provided 100,000 TRY allowance in cash to the spouse and children of the employee (L) who died in the earthquake in Hatay. The allowance provided by the employer (K) will not be subject to income tax and stamp tax since it is not considered a wage.

You can reach the related Communique via the link. (In Turkish)