“Economic Stability Shield Programme” announced to protect economy from COVID-19 impact

Turkey

On 18 March 2020, the Meeting to Coordinate the Fight Against COVID-19 was held in Ankara and passed the Economic Stability Shield Programme (Ekonomik İstikrar Kalkanı), a TRY 100 billion (EUR 14.1 billion) economic relief package to decrease the effects of the COVID-19 pandemic on Turkish individuals and businesses.

Chaired by President Recep Erdogan, the Meeting that passed the Economic Stability Shield included relevant ministers and representatives of labour and business unions. The main items in this relief package include:

  • VAT payments, withholding tax returns and social security premium returns for April, May and June will be postponed for six months for certain sectors including retail, mall management, iron-steel, automotive, logistics-transportation, cinema, theatre, accommodation, food and beverages, textile and event organisation.
  • Accommodation taxes will not be applied until November.
  • Usufruct rights payment (irtifak hakkı) and revenue share payments for hotel rents for April, May and June will be postponed for six months.
  • VAT on domestic airline flights will be lowered to 1% from 18% for a period of three months.
  • Credit and interest payments to banks by borrowers facing cash-flow disruptions due to the pandemic will be postponed for three months; the government will provide additional support to those companies when needed.
  • Stock financing will be provided to exporters.
  • Credit and interest payments to state-owned Halkbank for April, May and June pertaining to loans granted to craftsmen and artisans whose businesses have been negatively affected will be delayed for three months without interest.
  • The credit guarantee fund's limit of TRY 25 billion (EUR 3.53 billion) will be doubled to TRY 50 billion (EUR 7.06 billion). Priority will be granted to firms facing cash-flow disruptions, firms unable to provide collateral for loans, and small and medium-sized enterprises.
  • The government will encourage credit packages for social purposes that are appropriate and advantageous to citizens.
  • The minimum advance payment amount for purchasing houses valued below TRY 500,000 will be reduced to 10% from 20% and mortgages will be made available for up to 90% of home buyers.
  • Force majeure will be indicated in the credit records of firms that have defaulted in their financial obligations (temerrüde düşenler) during April, May and June to avoid poor credit records.
  • Minimum wage support will be continued.
  • Flexible and remote working models, already provided for in the legislation, will be made more efficient.
  • The procedures related to short-time working allowance will be eased and expedited. As a result, employees in workplaces where work is suspended will be paid temporary income support, which will also reduce costs to employers.
  • The lowest retirement pension will be increased to TRY 1,500 (EUR 212).
  • Bonuses customarily paid to pensioners on national holidays (bayram ikramiyesi) will be paid at the beginning of April.
  • A TRY 2 billion (EUR 288.48 million) fund will be reserved for providing cash benefits to families needing financial support in accordance with criteria determined by the Ministry of Family and Social Policies.
  • The duration of reparation work (telafi çalışma süresi) has been increased from two to four months to maintain employment continuity.
  • A periodic follow-up programme that includes social services and home healthcare services will be provided to citizens more than 80 years of age.

In addition, the deadline for submitting the declaration of annual income tax and the corresponding payment periods have been extended, and annual income tax declarations for 2019 have been extended to 30 April 2020, according to Revenue Administration Tax Circular no. 2020/54 of 17 March 2020,

For more information on this economic relief package and how it could affect your business in Turkey, contact your regular CMS advisor or local CMS experts Döne Yalçin or Sinan Abra.