The President of the Republic of Turkey has announced today that the government will activate a TRY 100 bl. (approx. USD 15.6 bl.) additional fund named “Economic Stability Shield”. This fund will spearhead the implementation of new measures for the purpose of mitigating the effects of the COVID – 19 outbreak on the Turkish economy.

The measures which are announced range from increased availability to credit and restructuring, delay of tax payments and social security contributions; and, easing access to tools which will decrease employment related costs. Please find below the measures announced by the President of Turkey, which may be relevant to for and non-profit organizations:

1. Postponing withholding tax payments and value added tax (“VAT”) cutbacks (tevkifat) and social security contributions relating to the months of April, May, and June for a period of 6 months for retail, shopping mall, iron-steel, automotive, logistics-transportation, cinema-theater, accommodation, food-beverage, textile-garment and event-organization industries.
2. Reducing the VAT rate from 18 % to 1 % in domestic air transportation, for 3 months.
3. Postponing the loan principal and interest payments, of companies whose cash flows are affected due to measures taken for COVID-19, to the banks for a minimum of 3 months; and providing additional financing support if necessary.
4. Providing stock financing support to the exporters in order to maintain capacity utilization rates during the period of temporary deceleration in exports.
5. Increasing the credit guarantee fund limit from TRY 25 bl. to TRY 50 bl., providing credit privilege to small and medium sized enterprises and companies, which are negatively affected by current affairs, with liquidity needs and collateral deficits as they are.
6. Encouragement of social credit packages under favorable and advantageous conditions.
7. Ensure that the companies which have lapsed into default in April, May and June will have a “force majeure” grade indicated in their credit registry.
8. Postpone declarations for withholding tax for 3 months.
9. Continue minimum salary support.
10. Ensure that flexible and remote working models the legislation are made more effective.
11. Roll out the Short-Time Working Fund (kısa çalışma ödeneği), ensure that the processes required to benefit from it will be simplified and expedited; thus providing temporary income support to the employees in the workplaces that suspend their activities, and reduce costs of the employers.
12. Increase the 2 months compensation work period (telafi çalışma süresi) to 4 months.

Our labour law team will be sharing more information regarding the short time working fund and the increase in compensation work period in the coming days.