Turkey: The Impacts of the Covid-19 Pandemic

Since March 2020, the President and the Parliament in Turkey have taken some measures, some through Bills, some through Presidential Decrees.

Under the Law No. 7226 dated 25 March 2020, various measures were taken, and the President was authorized to take measures. The probably most important measure is ordering the shutdown of the justice system, including enforcement measures.

The suspension of the running of deadlines was initially ordered until 30 April 2020, but was then subsequently extended to 15 June 3030 by the Presidential Decree No. 2840. All oral hearings were cancelled and normally moved to dates starting in September 2020.

Other measures by the government (i.e. the President) involve tax relief for the hotel industry until November 2020, which also serves to promote tourism in summer. Furthermore, government guarantees promoted the grant of loans to small businesses.

Under the Law No. 7244, promulgated on 17 April 2020, the Turkish Parliament adopted a statute in which many items were regulated at the same time.

Overall, this law is an attempt to provide relief in many areas in the economy.

Corporations have been prohibited from distributing more than 25% of the profit generated in 2019. The restriction applies initially until 30 September 2020. The President of the Republic can shorten or extend this time period by up to three months. The Ministry of Economics can grant exemptions.

Under a Decree dated 17 May 2020, the Ministry of Trade added precision and corrected the directives on limiting the distribution of dividends. The restriction that applies until 30 September 2020, under which dividends can only be distributed up to an amount of 25% of the actually realized profit for 2019, does not apply for dividends up to an amount of 120,000 TL (currently approximately 16,000 Euro) if the relevant company cannot claim government subsidies due to the corona virus (including benefits for reduced working hours). Dividends of which at least one half serves the purpose of fulfilling obligations to provide capital to other companies are exempt from the restriction. This also applies if the benefited shareholders must satisfy obligations under loans or project financing agreements which become due by 30 September 2020. Allocations of profit which remain in the company with the effect of increasing capital or fulfilling obligations to provide capital are also not covered.

Parties which are users or lessees or tenants of property held by governmental agencies can apply to extensions of time to make payment, and in some situations extensions of three months are granted without having to file an application. Some ancillary taxes (e.g. advertising tax) are not collected for the time period in which the businesses must remain closed. Regular membership meetings of associations and chambers have been suspended or delayed or combined with membership meetings in 2021.

Workers with reduced hours are granted benefits in an amount of 39.24 TL per day. Anyone employing workers with reduced working hours above the permitted level commit a misdemeanor.

Regular notice of termination of employment relationships is not possible until 17 July 2020. However, employees can be put on unpaid leave. The employer cannot place employees on unpaid leave without their consent. The President can extend these time periods by up to six months. Violations of the restriction on notices of termination result in such notices being invalid and can lead to assessment of fines up to the amount of one month's gross salary.

Collective bargaining agreements are extended by three months.

Dr Gökce Uzar Schüller
Frankfurt a.M. and Istanbul