Advantages of Fleet Leasing

Intercity makes sure that your company has access to as many cars as it needs in a secure, consistent, and hassle-free manner. When you rent your cars from Intercity, the only thing you need to do is enjoy the ride. With Intercity, you will have the comfort and dynamism of your car, not the trouble or cost of it.

Tax Advantage

In 2020, the General Communiqué on Income Tax (Serial No. 311) has defined a cap for car rental payments according to which it is possible to recognise rental payments up to TRY5,500 as an expense. This amount is increased each year by the Ministry of Treasury and Finance of Turkey considering the increase in brand-new cars. The Communiqué also allows the corporations to recognise the cars purchased by them as an expense up to TRY140,000 including the VAT and special consumption tax. The limit for depreciation remains capped at a ceiling of TRY160,000 (of the acquisition price). Furthermore, regardless of the method of acquisition (e.g., purchase or lease), up to 70% of overheads may be recognised as an expense.

If a company wishes to purchase a car instead of renting it, it will face different expense recognition restrictions due to this new legislation. Restrictions such as prohibition for the recognition of VAT and special consumption tax as an expense, exclusion of motor vehicles tax, and recognition of expenses such as car insurance, traffic, maintenance, repair, etc. up to 70% thereof, pose a disadvantage for the corporate tax. Pursuant to Article 30(b) of the VAT Law, corporations are not allowed to write off VATs of passenger cars purchased by them.

Based on foregoing, all expenses that the company will face for three years after the initial purchase of a vehicle will in any event be included in the rental price when a vehicle is rented. Therefore, without subject to any expense limitation, a corporation will have significant tax advantages both for corporate tax and VAT as an expense item.

Cash Flow

You pay a pre-defined rent each month; and you manage your budget and plans accordingly. You don’t face bad surprises or unexpected costs; and you don’t pay for accidents, repairs and insurance. You don’t make a lump-sum payment; you make your payments by instalment. Amount of rent remains the same for the duration of the lease in Turkish Lira. When your vehicles wear out, you can renew your agreement, and continue to make your payments by instalment while using your brand-new vehicles.

Capital

With fleet leasing, you can invest the money you would otherwise spend on a vehicle for your business and you can improve your business. The equity and credit facilities not used for a vehicle can be used to foster your business. You will also avoid capital outflows that you may encounter if you apply for a car loan. Moreover, the risk associated with second-hand value is assumed by Intercity.

Operation

If you decide to work with Intercity, the vehicles you choose will be delivered to you fast and hassle-free. You can take delivery of your vehicles from the Intercity’s head office or its branches or even from its authorised dealers in the city where you locate and save time. It’s up to you. You can save time and personnel. You also don’t have to hire extra personnel for the management of your fleet. You don’t have to assume many cost items such as wages, insurance, bonuses and benefits.

Why Operational Leasing?

• You don’t use your capital or resources

• You don’t pay motor vehicles tax

• You save on taxes

• You don’t keep track of roadworthiness tests

• You don’t worry about the insurance of your leased vehicles

• You don’t have to deal with toll stickers

• You don’t pay for the cost of periodic repair and maintenance

• You don’t keep track of your traffic tickets or toll fines

• You don’t deal with tire issues

• You don’t have to worry about second-hand value of your cars

The General Communiqué on Income Tax (Serial No. 311) promulgated on 27 May 2020 by the Ministry of Treasury and Finance of Turkey has introduced new taxation rules for vehicles purchased and leased by corporations. In 2020, the General Communiqué on Income Tax (Serial No. 311) has defined a cap for car rental payments according to which it is possible to recognise rental payments up to TRY5,500 as an expense. This amount is increased each year by the Ministry of Treasury and Finance of Turkey considering the increase in brand-new cars. The Communiqué also allows the corporations to recognise the cars purchased by them as an expense up to TRY140,000 including the VAT and special consumption tax. The limit for depreciation remains capped at a ceiling of TRY160,000 (of the acquisition price). Furthermore, regardless of the method of acquisition (e.g., purchase or lease), up to 70% of overheads may be recognised as an expense. If a company wishes to purchase a car instead of renting it, it will face different expense recognition restrictions due to this new legislation. Restrictions such as prohibition for the recognition of VAT and special consumption tax as an expense, exclusion of motor vehicles tax, and recognition of expenses such as car insurance, traffic, maintenance, repair, etc. up to 70% thereof, pose a disadvantage for the corporate tax. Pursuant to Article 30(b) of the VAT Law, corporations are not allowed to write off VATs of passenger cars purchased by them. Based on foregoing, all expenses that the company will face for three years after the initial purchase of a vehicle will in any event be included in the rental price when a vehicle is rented. Therefore, without subject to any expense limitation, a corporation will have significant tax advantages both for corporate tax and VAT as an expense item.