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Covid-19

Description and volume of the aid packages made available to employees, small businesses, large corporations

In Turkey, the governmental authorities have announced certain packages to mitigate the negative financial impact of the protective measures against COVID-19 on public, businesses and economy in general. We tried to summarize those packages as follows.

First of all, the President chaired a meeting with ministers, directors of public institutions and non-governmental organizations on 18 March 2020. As a result of this meeting a package called “The Economic Stability Shield” was unveiled. The details of this package regarding employees, small businesses and large corporations are listed below:

  • The principal debts of the credits and interest payments thereof owed to banks by the firms -whose cash flow have been disturbed due to the measures taken against the COVID-19 outbreak- shall be extended for a minimum of 3 months and additional financing support shall be provided to such firms when necessary.
  • The limit of the Credit Guarantee Fund shall be increased from 25 billion Turkish Liras to 50 billion Turkish Liras. The companies and small and medium sized enterprises (SMEs) -which need liquidity and have collateral shortages due to the recent developments- shall be prioritized in the provision of commercial credits.
  • Credit registry of the firms -which would default in paying their debts in April, May and June 2020 due to the protective measures taken against the spread of COVID-19- shall indicate “force majeure” note for the payments in arrears.
  • Short-time working allowance shall be implemented for employees. The processes needed to be followed to benefit from this allowance shall be facilitated and accelerated.
  • The 2-month compensatory work period shall be increased to 4 months.
  • Minimum wage support shall continue.
  • April, May and June 2020 payments of withholding tax returns, VAT withholding payments and social security premiums were postponed for 6 months for several sectors.

In addition to the foregoing, to provide convenience for payment of taxes, the Ministry of Treasury and Finance extended the deadline for the issuance and payment of annual income tax returns (which should have been issued by 31 March) to 30 April 2020 and also stated that they are preparing a communiqué for taxpayers who would benefit from force majeure provisions in tax processes.

The Ministry of Treasury and Finance further announced the implementation of “credit support for continuation of work” by state banks in order to meet the working capital needs of all companies, especially SMEs affected negatively by the outbreak. The only condition to benefit from this support is that businesses do not reduce the number of employees.

Many banks announced packages postponing the debts of their individual and commercial customers, providing additional limits and protecting employment while the Banking Regulation and Supervision Agency brought flexibility in terms of loan repayments for relieving especially the financing conditions of the craftsman by deciding that the delayed loans shall be waited for 180 days instead of 90 days before transfer of the same to follow-up accounts. The decision of the Banking Regulation and Supervision Agency covers all types of commercial loans as well as vehicle, residential and consumer loans. The decision will apply by 31 December 2020.

The Ministry of Industry and Technology announced a support package of TRY 6 million to be given by the Small and Medium Enterprises Development Organization (KOSGEB) to the manufacturers who locally produce products such as disinfectant, mask and gloves. It was also declared by the Ministry of Industry and Technology that the repayment date of the loans taken out from KOSGEB with a due date until 30 June 2020 was postponed for 3 months.

Apart from the above, there are many sector spesific economic support packages introduced by different ministries; therefore, the above explanations do not reflect all of the current aid packages in Turkey.