2 August 2016
Global Tax Alert
Turkey releases
draft comprehensive
tax amnesty plan
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Executive summary
On 27 July 2016, a Draft Law on the Restructuring of Certain Receivables
(the Draft Law) was approved by the related commission of the Grand National
Assembly of Turkey.
The Draft Law covers restructuring of tax and social security premium
receivables, tax and tax base increases of previous fiscal years, additional
declarations of inventory and fixed assets and cash repatriation.
Turkish taxpayers are familiar with tax amnesties which occur every five to six
years. Although this regulation is not regarded as a tax amnesty but simply as a
restructuring of public receivables by the Government, it is expected to be one
of the most significant overhauls in the history of the Turkish Republic.
This Alert summarizes the key provisions of the Draft Law.
Detailed discussion
Inventory and fixed asset declarations
Under the new Draft Law, income and corporate taxpayers can record assets
(i.e., inventory, machinery and equipment/fixtures) that are physically present
in the enterprise but not in the accounting records. Taxpayers should declare
a list to the tax office by the end of the third month following the promulgation
date of the law detailing the assets and their fair market values.
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Global Tax Alert
Value added tax (VAT) at the rate of 10% should be declared and paid over the declared value of the assets (10% can be
reduced if the assets are subject to reduced VAT rates).
Furthermore, income and corporate taxpayers can transfer their inventories that are not present in the enterprise despite
being present in the records, to their records and declarations by issuing an invoice and fulfilling all tax liabilities (i.e.,
corporation tax, VAT, etc.) by the end of the third month following the promulgation date of this Law.
Additionally, corporate taxpayers can correct their records related to the cash balance and receivables that are not present in the
enterprise but shown in their balance sheets as of 31 December 2015 to the tax offices by the end of the third month following the
promulgation date of the Draft Law. An additional tax at the rate of 3% should be paid over the declared amounts.
Tax base and tax increases
Income and corporate tax base increases
With the new Law, income and corporate taxpayers can increase their tax bases in the annual tax returns they submitted from
2011 to 2015 at the rates specified in the Draft Law. Tax inspection and assessment will not be conducted against these
taxpayers in relation to the taxation periods of the years for which they increase their tax bases in the due form.
Tax base increase rates and minimum tax base increases for corporate taxpayers are as follows:
Year
Tax base increase
rate
Minimum tax
base increase in
corporation tax
Regular tax rate
Reduced tax rate
2011
35%
28.000
20%
15%
2012
30%
29.650
20%
15%
2013
25%
31.490
20%
15%
2014
20%
33.470
20%
15%
2015
15%
37.940
20%
15%
For income taxpayers, the minimum tax base amount to be taken as basis in taxation may vary.
VAT base increases
Under the provisions of the Draft Law, if taxpayers increase VAT bases, tax rates to be used in the increase as per the years
covered by the Draft Law are as follows:
Year
Tax rate to be increased on
the VAT amount calculated
annually
2011
3.5%
2012
3%
2013
2.5%
2014
2%
2015
1.5%
Tax inspection and assessment will not be conducted against these taxpayers related to the taxation periods of the years for
which they increase their VAT bases in the due form.
Furthermore, VAT paid cannot be considered as an expense or cost item in the determination of the tax base of income and
corporation taxes; VAT amounts that must be paid cannot be deducted or refunded in any way.
Global Tax Alert
Payment methods of tax base increases
Within the scope of this Law, the payable amounts can be
paid at once or in a maximum of 18 equal installments (6, 9,
12, 18); as per two-month periods with the first installment
starting as from the third month following the promulgation
date of this Law.
The amount to be determined as payments made in
installments will be multiplied by a certain coefficient as
specified below and the amount found is divided by the
number of installments and the installment amount to be
paid as per two-month periods is calculated:
Number of
installments
Period of
payment
Coefficient to
apply
6
12
1,08
9
18
1,12
12
24
1,16
18
36
1,24
If the payable is paid at once within the payment term of the
first installment, no interest will be applied over this amount
within the period from the promulgation date of the Law
until the payment date.
Receivables at the inspection and tax
assessment phase
Tax inspections, assessments and accrual procedures that
have started before the publication date of the Law but
have not been completed by the promulgation date will be
continued and the related receivables will be under the scope
of this Law.
With this regulation, cases under the assessment procedure
will be resolved without following law suits.
After the completion of the tax assessment procedures, if
the following are paid:
•50% of the imposed tax
•The amount to be determined based on DPPI monthly
change rates until the promulgation date of this Law,
instead of the related delay interest amount
The entire amount of penalties related to the principal tax
amount and delayed interest applied over taxes by the
promulgation date of this Law will be waived.
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Receivables not accrued yet or still in the stage
of litigation (disputed receivables)
With respect to continuing tax assessments and accruals
related to taxes and customs duties if:
•50% of taxes/customs taxes
•Amount to be calculated on the basis of D-PPI monthly
change rates until the date when the Law is published,
instead of interest, delay interest and delay charges related
to them; are paid completely and within the term and in the
manner specified in this Law
Then 50% of taxes/customs taxes and the entire amount of
interest, delayed interest charged related to them and the
tax penalties/administrative fines imposed in relation to
principal tax amounts, as well as the entire amount of delay
charges related with these penalties, shall be waived.
Cash repatriation
Under the prospective cash repatriation regulation,
currency, gold, foreign exchange, securities and other
capital market instruments can be transferred to Turkey by
Turkish individuals and corporations by 31 December 2016.
Furthermore, these assets can be used freely by Turkish
individuals and legal persons (the assets can be recorded in
legal books of companies without any restrictions).
The future profit or loss arising from the sale of these assets
should not be regarded as taxable or deductible profit/loss.
Also, as a consequence of transferring the given assets to
Turkey or recording to the same in the legal books of Turkish
taxpayers, tax audits, tax assessment, investigation and
prosecution should not be conducted.
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Global Tax Alert
For additional information with respect to this Alert, please contact the following:
Kuzey Yeminli Mali Müşavirlik A.Ş., Istanbul
• Ateş Konca • Akif Tunc
+90 212 408 52 58 +90 212 408 57 04
ates.konca@tr.ey.com
akif.tunc@tr.ey.com
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