Tax incentive and social security premium incentive for young people who establish new businesses are being provided in Turkey inline with the Income Tax Code No. 193 and the Social Insurance and General Health Insurance Act No. 5510. The incentive is being provided in order to exclude from tax a portion of their earnings earned during three taxation periods starting from the calendar year in which they start their operations. In addition, social insurance premium incentive is also being given for one year. This incentive aims to support the orientation of our young people to entrepreneurship and to facilitate their entry into the business world.
Income tax on the earnings earned by young entrepreneurs for whom income tax liability has been established for the first time due to their commercial, agricultural or professional activities after 12.02.2016, according to the 20th Article of the Income Tax Law No. 193, for three taxation periods starting from the calendar year in which they started their activities. In this regard, the part up to the amount in the second bracket of the tariff is exempt from income tax.
Taxpayers who meet the following conditions can benefit from the income exemption for young entrepreneurs:
- Income tax liability has been established for the first time due to their commercial, agricultural or professional activities,
- Those who are under 29 years of age (not older than 30) as of the liability start date,
- Real persons who are full taxpayers.
The young entrepreneur earnings exemption amount (75,000 Turkish Liras) has been changed to the amount in the second bracket of the income tax tariff, following the amendment made by Law No. 7440, to be applied to earnings earned as of January 1, 2023. The exemption amount to be applied for the calendar year of 2024 is 230,000 Turkish Liras (the exemption amount applied in the year 2023 is 150,000 Turkish Liras) and this amount is subjected to be updated every year.
In addition to the tax exemption, social insurance premium incentive is also being applied to these young entreprenurs. Young entrepreneurs, who are the supportive power of economic growth and development and one of the most important sources of innovation and creativity, are provided with insurance premium incentives due to the relevant provision of the Article 81 of the Social Insurance and General Health Insurance Code No. 5510.
In this context, as of June 1, 2018, social insurance premiums of real persons who are considered insured as taxpayers for the first time within the scope of insurance status 4/1-(b) of Law No. 5510, are exempt from the social insurance premium to pay for one year from the date of registration, up to the limit of the monthly lower limit of earnings based on premium. The amount are being covered by the Turkish Treasury and paid to the Social Security Institution on the insured’s behalf.
