What Is the Small Tradesman (Artisan) Tax Exemption? Who Can Benefit From It?

 

Who Falls Within the Scope of the Small Tradesman Exemption?

 

The most important condition for benefiting from the small tradesman exemption is carrying out commercial activities without opening a workplace. According to the Income Tax Law, individuals performing the following activities are considered within the scope of this exemption:

 

1. Individuals engaged in retail trade without opening a shop or by selling goods as mobile vendors, provided that they do not use motor vehicles.
2. Small craftsmen who work without a fixed workplace and directly provide services to consumers, such as cotton carders, tinsmiths, solderers, plumbers, locksmiths, shoe repairers, shoeshiners, barbers, farriers, photographers, wood and coal splitters, laundry workers, and porters.
3. People who carry out various handicraft activities while traveling in villages, as well as those who perform the same work by opening a small workplace in these areas.
4. Individuals operating non-motorized transportation vehicles up to 50 gross tons on rivers, lakes, seas, or crossings, and those who provide transportation using animals or a single animal-drawn cart.
5. Farmers who occasionally transport goods or passengers for a fee using animals, tractors, boats, or other vehicles used in agricultural activities, provided that transportation is not their regular occupation.
6. Individuals who produce goods in their homes without using mechanical power or hiring external workers (except for simple household tools such as sewing machines, irons, or kitchen appliances) and sell products like towels, sheets, socks, carpets, rugs, lace, embroidery, handicrafts, baskets, brooms, mats, artificial flowers, beadwork, crochet items, ropes, tarhana, noodles, or dumplings without opening a workplace.
7. Individuals who collect scrap materials by going door to door and sell them to traders or recycling businesses, provided they do not regularly purchase waste from commercial enterprises.
8. People engaged in traditional handicrafts with cultural and artistic value, such as hand weaving, copper craftsmanship, tile and pottery making, mother-of-pearl inlay, wood carving, spoon making, cane making, saddle making, block printing, quilt making, felt making, meerschaum and Oltu stone craftsmanship, traditional footwear making, lacework, and similar professions, provided they sell only the products they produce themselves.
9. Individuals involved in trade or crafts similar to the activities listed above and accepted as such by the Ministry of Finance.
10. Those who sell national lottery tickets as mobile vendors without opening a workplace, or individuals who sell goods on behalf of real or legal persons by visiting consumers door to door without being bound by an employment contract, may also benefit from the income tax exemption under certain conditions.

 

Who Cannot Benefit From the Small Tradesman Exemption?

 

Certain individuals are not eligible for this exemption:

• Those who are subject to income tax under the real taxation method due to commercial, agricultural, or professional income.
• Individuals performing the above-mentioned activities in a way that creates dependency on income or corporate taxpayers.

Individuals benefiting from the exemption may sell their products at fairs, charity sales, or festivals, provided that these events are not organized by income or corporate taxpayers.

Sales can also be made at events organized by associations, foundations, unions, or professional chambers. Similarly, selling goods in temporary areas designated by public institutions does not prevent benefiting from the exemption. However, those who sell continuously in such places or regularly follow markets to sell their products cannot benefit from this exemption.

In general, selling products via the internet also prevents benefiting from the small tradesman exemption. However, there is a limited exception.
According to a regulation published on January 30, 2019, if the income obtained from online sales does not exceed the amount of 12 annual gross minimum wages, the individual may still benefit from the exemption.

 

How to Obtain a Small Tradesman Tax Exemption Certificate

 

Individuals who meet the conditions for the exemption can obtain the Small Tradesman Tax Exemption Certificate by submitting a petition to the tax office in the area where they reside.

• Obtaining this certificate is optional.
• No fee is required during the application process.
• The certificate is valid for three years and can be renewed after the expiration period.

If individuals lose the required conditions during this period, stop their activities, or voluntarily wish to leave the exemption system, they must apply to the tax office to cancel their exemption certificate.

Those benefiting from the exemption must keep the documents they receive from income or corporate taxpayers regarding their purchases and sales. If they fail to present these documents during inspections (by tax officers or municipal authorities), their exemption certificate may be revoked.

 

Documentation and Withholding Tax in the Small Tradesman Exemption System

 

Individuals benefiting from the exemption cannot issue invoices. When goods or services are purchased from tax-exempt tradesmen, the buyer must prepare an expense receipt (gider pusulası).

According to Article 234 of the Tax Procedure Law, the expense receipt is considered a substitute for an invoice.

The expense receipt must include the following information:

• The nature of the work performed
• The type, quantity, and price of the goods
• The service fee
• Names and surnames of the buyer and seller (or company titles for legal entities)
• Address information
• The date of the transaction

The document is issued in two copies, and one copy is given to the person providing the service or selling the goods.

Based on the amount written in the expense receipt, withholding tax must be calculated according to Article 94 of the Income Tax Law, and this tax must be declared and paid to the state by the buyer.

 

Withholding Tax Rates for Small Tradesman Exemption

 

• 2% on goods listed in paragraphs (6) and (8) of Article 9 of the Income Tax Law or on service payments related to the production of those goods
• 2% on purchases of scrap materials
• 5% on other goods purchases
• 10% on other service purchases