1 - INTRODUCTION
In our daily lives, the prizes won in quiz competitions broadcast on television or the cars, houses, goods and cash given to participants in competition programs adorn the dreams of many people and whet their appetite. In addition, in recent years, the bonuses distributed in games played on football matches, horse races and mutual betting games and the income obtained from such games organized by these institutions have become a big cake. Therefore, it has become important to tax these gratuitous bonuses given by the relevant institutions and organizations organizing the competition.
In this study, the situation of prizes won as a result of lotteries and competitions against inheritance and transfer tax will be explained with case studies.
2 - LEGAL PROVISIONS
2.1. Definitions
Inheritance and transfer tax is a tax levied on the transfer of wealth. Tax; The principles of its subject, taxpayer, base, rate, payment time and other applications are regulated by the Inheritance and Transfer Tax Law No. 7338.
Article 1 of the aforementioned Law, which regulates the subject of the tax, states: "The transfer of goods belonging to persons who are citizens of the Republic of Turkey and goods located in Turkey, through inheritance or in any way, without any consideration, from one person to another, is subject to Inheritance and Transfer Tax.
This tax also applies to goods acquired by Turkish nationals through the same means in foreign countries.
"A foreign person who acquires property outside the borders of Turkey of a person who is a citizen of the Republic of Turkey, through inheritance or otherwise, without any consideration, and who does not have a residence in Turkey, will not be liable for this tax." provisions are included.
The concepts of inheritance and gratuitous transfer mentioned in the article above are defined in Article 2 of the Law. The meanings of inheritance and gratuitous transfers used in Article 1 of the Law are as follows.
The term "inheritance" ; death-related dispositions such as inheritance, will and inheritance contract;
The term “gratuitous transfer” ; gratuitous acquisitions by grant or any other means; (Compensation given for material or moral damage is not considered gratuitous.)
Again, in the section titled exemptions in Article 4 of the Inheritance and Transfer Tax Law, ( General Communiqué on Inheritance and Transfer Tax Law No. 48)
- 4,068 TL of gratuitous transfers (for 2017 ) ,
- 4,068 TL (for 2017) of the jackpots won in competitions and draws held for money and goods and in games of chance defined in the Law No. 5602 on the Regulation of Taxes, Funds and Shares from Games of Chance Revenues are exempt from tax .
The feature that should be noted in this exception provision is that the exception is granted to the bonus or reward won, not to the person. Therefore, it is not correct to apply the exemption limit once to the winner of lotteries and sweepstakes based on the total amount he won. Since each draw is a separate taxable event, the exemption must be applied separately to each bonus won.
2.2. Tax Rate and Payment Time
As of 2017,
- 4,068 TL for gratuitous transfers ,
- 4,068 TL of the bonuses won in competitions and lotteries held for money and goods and in games of chance defined in the Law on the Regulation of Taxes, Funds and Shares from Games of Chance Revenues dated 14/3/2007 and numbered 5602 are exempt from transfer tax .
Accordingly, inheritance and transfer tax will be calculated according to the following tariff for gratuitous transfers as of 1/1/2017 .
Inheritance and transfer tax is paid in a total of six equal installments in May and November every year for three years from the date of its accrual.
-Taxes deducted from the bonuses paid to the winners of games of chance defined in Law No. 5602 and competitions and sweepstakes organized by real and legal persons can be paid to the tax office where the declaration is filed, within the declaration filing period, or to the branches of banks authorized to collect taxes.
2.3. Those who must submit a declaration
In the 7th article of the Inheritance and Transfer Tax titled "Declaration", " Those who acquire property through inheritance or otherwise in a gratuitous manner, the relevant institutions and organizations that organize games of chance within the scope of Law No. 5602, and real and legal entities that organize competitions and raffles, Jackpot winners are obliged to declare the taxes deducted from their bonuses in a declaration.
However, the persons listed in Article 3 of this Law and the individuals listed in subparagraph (I) of the first paragraph of Article 4 shall not submit a declaration for their acquisitions specified in this subparagraph, and those for whom tax withholding has been made on the bonuses they have earned in accordance with the last paragraph of Article 16, shall not submit a declaration for these bonuses.”
In the last paragraph of Article 16 of the Inheritance and Transfer Tax Law, it has been determined that bonuses won in competitions and sweepstakes organized by real and legal persons will be taxed at a rate of 10% and if the bonus is paid in kind, the invoice value will be taken as basis.
If the bonus is given in kind, the withholding tax will be based on the invoice value of that good. Invoice value: If the bonus is paid in kind, the invoice amount for the goods subject to transfer (separate from the price of the goods, value added tax, motor vehicles tax, vehicle purchase tax (special consumption tax), real estate tax, contribution to education, environmental pollution prevention fund, fee , if customs duty and other expenses are covered by those who pay the bonus, these payments are included in the invoice value.)
However, if some expenses and taxes (vehicle purchase tax, inheritance and transfer tax, education contribution, environmental pollution prevention fund, duty, customs duty, etc.) are assumed by those who pay the bonus, apart from the price of the goods or services, these will be added to the invoice amount and the total will be calculated. Tax will be withheld on the value.
Therefore, Jackpots Won from Games of Chance, Competitions and Raffles are Taxed Not According to the Tariff in Article 16, but by a 10% Withholding on the Jackpot Won:
A separate rate has been determined for transfers of this type. This rate is 10% and is applied to the part of the gift or bonus value that exceeds the exemption limit. As can be remembered from Article 7 of the Law, this is also the final tax for the person who wins the jackpot. He is not obliged to make any additional declaration.
2.4. Those Giving Jackpots Through Competitions and Raffles
According to the General Communique of the Inheritance Transfer Tax Law, serial number 28; Organized by real and legal persons;
- sweepstakes,
- Raffles organized especially in written and visual media,
- Competitions based on the display of knowledge, culture, experience or other skills,
- Raffles organized for the purpose of promoting goods and services or increasing sales volume,
It was evaluated within the scope of the competition and raffle.
Real persons or legal entities organizing the raffle or competition are required to withhold, in a sense, by calculating 10% tax on the part of the gift value they give that exceeds the exemption limit, and to submit this tax to the tax office of their location within the first 20 days of the month following the day the winner is determined, with the Communiqué numbered 28. must declare it with the declaration attached and pay it within this period.
3 - SAMPLE APPLICATIONS
Example: 1: A person won a cash bonus of 100,000.-TL in the competition program "Who Wants to Be Rich" organized by ( X) TV channel on 15.01.2017. Explain what needs to be done in accordance with the provisions of the inheritance and transfer tax law during the payment of the bonus in question.
When money is won in the competition, the exemption amount must first be deducted from the total amount won, and tax must be calculated and paid on the remaining amount.
The tax to be withheld during the payment of the bonus in question is calculated by applying the 10% rate after deducting the exemption. Accordingly, the tax to be withheld is 100,000 – 4,068 = 95,932.00 x 0.10 = 9,593.20 TL .
Therefore, the amount withheld by (X) TV channel over the bonus paidThe tax amounting to 9,593.20 TL will be declared to the tax office authorized for assessment by the evening of 20.02.2017, with the inheritance and transfer tax declaration prepared for the taxpayers, and will be paid within the same period.
Example:2: ; Let's assume that person A won 50,000 TL from a quiz called "Who Wants to Be Rich" organized by (Y) TV channel on 15.01.2017.
In the quiz contest in question, Mükellef is the contestant named A who won 50,000 TL. However, the exemption amount must be deducted from the total amount won by the institution organizing the tax competition, and the tax must be calculated and paid on the remaining amount. and the amount on which tax has been paid will be delivered to the person named (A).
Coming to the calculation of the tax, first of all, the exemption amount in 20174.068,00 TL will be deducted from the total winning amount and a withholding will be made on the remaining amount by the institution organizing the competition.
- 50,000- 4,068.00 = 45,932.00 TL
- 45.932,00 X0.10 = 4.593,20 TL is the tax amount to be paid .
- 50.000- 4.593,20 = 45.406,80 TL is the amount to be paid to the person named (A).
In this example , the tax amounting to 4,593.20 TL withheld by (Y) TV channel on the bonus paid will be declared to the tax office authorized for assessment by the evening of 20.02.2017 with the inheritance and transfer tax declaration prepared for the tax responsible and will be paid within the same period.
Example:3: ; Let's assume that the contestant named A won a car in the competition program called "Çarşıfelek" organized by (Z) TV channel on 15.01.2017. The invoice value of the car in question is 100,000.00 TL.
In this example, in the competition program in question, the bonus was given to the contestant in cash, not in cash. If the bonus is given in kind, 10% withholding tax will be based on the invoice value of that good. What the invoice value means is explained in the Inheritance and Transfer Tax General Communiqué serial number 28. In the general communiqué, Invoice value: In case the bonus is paid in kind, the invoice amount for the goods subject to transfer (separate from the price of the goods, value added tax, motor vehicle tax, vehicle purchase tax, property tax, contribution to education, environmental pollution prevention fund, duty, customs If taxes, taxes and other expenses are covered by those who pay the bonus, these payments are included in the invoice value .)
When calculating inheritance and transfer tax, the invoice value of the car will be taken as basis. Likewise, the exemption amount of 4,068.00 TL applied for 2017 is deducted from the invoice value of the car, the tax to be withheld by the institution organizing the competition is calculated on the remaining amount, and the inheritance and transfer tax declaration prepared for the tax officers is submitted to the tax office with assessment authority by the evening of 20.02.2017 . It will be declared and paid within the same period.
- 100,000- 4,068.00 = 95,932.00 TL
- 95.932,00 _
However, since the car won here is in kind, the car can be delivered after 9,593.20 TL is collected from contestant A and paid to the tax office.
In some competitions, contestants are accepted as couples rather than individuals, and the prize is given jointly to two people. In this case, there are two separate taxpayers, and the bonus and tax amount of each taxpayer must be calculated separately and paid to the tax office by the institution organizing the competition.
Example:4; (A) Limited Company gave a car with an invoice value of 120,000.00 TL to one of the people who shopped from its business in the 2016 accounting period, in a draw held on 15.01.2017, bearing the value added tax. The company in question stated in its announcement that taxes and expenses other than value added tax will be borne by the lucky winner. According to this information, the tax to be withheld from the bonus will be calculated as follows.
Invoice value of the car (including VAT): 120.000,00
Exemption Amount: 4.068,00
Basis for Tax Withholding: 115.932,00
Calculated V.I.V. Amount (115.932,00%10): 11.593,20
It has been stated that the invoice value will be taken as basis in the taxation of bonuses given in kind, and if expenses such as value added tax are covered by those who pay the bonus, expenses such as value added tax must be added to the tax base to the invoice value. (A) Limited Company will collect the tax of 11,593.20 TL
, which should be withheld from the invoice value of the car subject to the draw, including value added tax, from the person who wins the prize, and will be authorized for assessment with the inheritance and transfer tax declaration used by those responsible until the evening of 20.02.2017. will declare it to the tax office and must pay it within the same period.
4 - CONCLUSION
The transfer of goods belonging to persons who are citizens of the Republic of Turkey and goods located in Turkey, through inheritance or in any way without consideration (gratuitously) from one person to another, is subject to inheritance and transfer tax.
Payers of Inheritance and Transfer Tax are real and legal persons who transfer property through inheritance or gratuitously. However, the taxes deducted from the bonuses paid to the winners in games of chance defined in Law No. 5602 and in competitions and sweepstakes organized by real and legal persons must be declared by the responsible persons or institutions.
4,068.00 TL (for 2017) of the jackpots won in competitions and draws held for money and goods and in games of chance defined in the Law No. 5602 on the Regulation of Taxes, Funds and Shares from Games of Chance Revenues are exempt from tax . After deducting the exemption amount for the relevant year from the bonuses earned, the amount withheld from the remaining amount (10%) must be declared by the responsible persons or institutions.
In addition, in competitions and sweepstakes organized by real or legal persons and games of chance defined in Law No. 5602, it is awarded until the evening of the 20th day of the month following the day the competition, raffle and competitions are held.
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