How to utilize Legal Interest for Retroactive Incentives in Turkey ? Under Article 17 of Law No. 5510, employers in Turkey are granted the opportunity to access retroactive incentives or make adjustments to existing incentives. Within this framework, it has been stipulated that any differential premium amounts resulting from the utilization of retroactive incentives or changes to incentives for the month of March 2018 or earlier must be settled with legal interest in Turkey, as outlined in the third paragraph of the mentioned article.
The Social Security Institution (SGK) has provided specific guidance on this matter through its General Letter numbered 82296733, dated 13.10.2023:
When calculating legal interest on the differential premium amounts that have been offset against the employer’s liabilities or have been paid to the employer due to incentive modification requests for March 2018 or earlier, the following principles apply:
- The legal interest start date is determined as follows:
- If the request was made before 1.4.2018, the starting date is 1.5.2018.
- If the request was made between 1.4.2018 and 1.6.2018 (inclusive), it commences from the beginning of the month following the request date.
- The legal interest expiration date corresponds to the date of payment or offset.
Calculation should be performed in accordance with these guidelines.
For the manual calculation of legal interest on the differential premium amounts offset against the employer’s liabilities or paid to the employer as a result of processing incentive change requests for March 2018 and earlier, follow these steps within the MOSİP system:
- Navigate to “Other Transactions” > “MOSİP Information Retrieval” > “Interest Calculation Module” options, which are accessible to all users. Click the “+” button on the screen.
- Enter the information in the following sequence in the columns provided: “Debt Amount,” “Interest Type,” “Interest Starting Period,” and “Interest Ending Period.”
- Calculate the interest amount by clicking the “Calculate” button located at the top right.
After manually calculating the interest, proceed with the following steps within the MOSİP system while using the “Expenditure Unit User” role:
- Access the “Budget Arrangement” section by selecting “Plan Budget and Analysis Module” >> “Payment Transactions” >> “Other Expenditures” >> “Other Expenditure List.”
- Choose “Duty Expenses” and provide an explanation in the “Definition” section.
- Activate the “Request Type” section using the “Green +” button.
- Select the “830.03.04.02.90 Other Legal Expenses” option and add the relevant explanation in the “Expense Description” section.
- Enter the manually calculated interest amount in the “Approximate Expense” section.
- Complete the transactions by clicking the “Save” button.
San Global is well-equipped to assist you with your Employer of Record (EOR) and payroll requirements (also known as the Umbrella Company) in Turkey. We are capable of handling your HR (Recruitment) needs, even in the absence of a legal entity in Turkey.