Executive Summary: Regulations for “Tax Amnesty/Restructuring” that entered into force with Law No. 7440
Introduction
The Law on the
Restructuring of Certain Receivables, also known as “Tax Amnesty” or “Tax Restructuring”
entered into force with its publication in Official Gazette No. 32130 on March 12,
2023. Tax Amnesty/Restructuring regulations (restructuring of receivables,
voluntary tax base and tax increase and correction of company accounts) will be
the subject of this Bulletin.
Which receivables are within the scope of the Law?
-
Public receivables which are accrued but not yet paid
-
Receivables not accrued yet or receivables at court stage
-
Transactions at tax inspection or assessment stage
The tax amnesty regulations
cover the following topics:
-
Restructuring of receivables
-
Voluntary tax base and tax increase
-
Correction of company accounts
A- RESTRUCTURING
of RECEIVABLES
1.
Which
receivables will be subject to restructuring?
Receivables that will be subject
to restructuring are identified as follows:
o Taxes (taxes, duties and
taxes within the scope of Tax Procedure Law) and tax penalties,
o Customs taxes and administrative
fines,
o Insurance premiums,
o Community insurance premiums,
o Pension deductions,
o Unemployment insurance
premium,
o Social security support
premium,
o Various administrative
fines,
o Interest, delay charges
and similar payments related to the above-mentioned receivables
2.
Accrued but
unpaid receivables
The public receivables
which have accrued but not paid yet, or the receivables whose deadline not
expired as of 12.03.2023 will be divided as the amount to be paid and the
amount to be waived. The table below summarizes the related amounts to be paid
and waived:
Receivable |
To be Paid |
To be Waived |
Principal Tax |
whole amount of tax |
whole amount of the penalty based on principal tax,
administrative penalties |
Penalties non related with the principal tax |
50% |
50% |
Tax penalties regarding participation |
50% |
50% |
Late payment charges |
late payment charges will be calculated according to
the "domestic producer price index" (D-PPI) |
whole amount of the delay interest, delay penalty
calculated with the fixed rate |
3. Uncertain and Disputed Receivables
a. Receivables for which litigation
has been initiated or the deadline for litigation process has not expired
If 50 % of the
principal tax amount is paid with the additional delayed payment charge
calculated with the D-PPI (up until 12.03.2023) according to the payment terms
of this Law, 50% of the tax and the delay interest/penalties will be waived.
b. Receivables for which a Tax Court
Decision is present:
Depending on the status of the latest decision before the publication of
the law, the opportunities for restructuring are as follows:
Latest
decision |
Amount
to be paid |
Amount
to be waived |
In case
the tax court cancels the assessment |
- 10% of
the tax principal -Amount
to be calculated according to D-PPI |
-90% of
the tax principal - late
payment interest and similar charges, as well as entire amount of penalty
related to tax principal |
In case
the tax court entirely or partially approves the tax assessment |
-Entire
amount of approved taxes - 10% of
abandoned taxes - Amount
to be calculated according to D-PPI |
-The
remaining 90% of abandoned taxes - late
payment interest and similar charges, as well as entire amount of penalty
related to tax principal |
In case
the latest decision is an annulment decision |
-50% of
taxes -Amount
to be calculated according to D-PPI |
-The
remaining 50% of taxes - late
payment interest and similar charges, as well as entire amount of penalty
related to tax principal |
In case the
latest decision is partially approval, partially annulment (for the part that
is approved) |
-All of
the approved taxes - 10% of
abandoned taxes - Amount
to be calculated according to D-PPI |
- The
remaining 90% of abandoned taxes - late
payment interest and similar charges, as well as entire amount of penalty
related to tax principle |
In case
the latest decision is partially approval partially annulment decision (for
the part that is annulled) |
· 50% of
taxes · Amount
to be calculated according to D-PPI |
Remaining
50% of taxes - late
payment interest and similar charges, as well as entire amount of penalty
related to tax principal |
c.
Lawsuits
filed only regarding tax penalties
If a lawsuit has been
filed only regarding tax penalties as of the date of publication of the Law;
the collection of all penalties and related late fees will be waived, provided
that the taxes are paid before the date of 12.03.2023 when this Law is
published or paid in the time and manner specified in this Law.
The table below shows
the restructuring of such disputed penalties:
Phase |
Amount to be paid |
Amount
to be waived |
Those
who have been sued before the court of first instance or those whose
litigation period has not passed yet |
25% of the penalty |
75%
of the penalty |
In
case of a decision regarding the abandonment of those who are at the stage of
objection or appeal |
10% of the penalty |
90%
of the penalty |
In
case of a decision regarding the approval or amended approval for those who
are at the stage of objection / appeal |
The 50% of the penalty
approved, the 10% of the abandoned penalty |
The
remaining 50% of the- penalty, The remaining 90% of the abandoned penalty |
In case the latest decision
is an annulment decision |
25%
of the penalty |
75%
of the penalty |
In case the latest decision
is partially approval, partially annulment (for the part that is approved) |
50% of the penalty approved |
The remaining 50% of the
penalty |
In case the latest decision
is partially approval partially annulment decision (for the part that is
annulled) |
25% of the penalty |
75% of the penalty |
d. As of the date of publication of the Law; claims for
which an application has been made to benefit from the provisions of
settlement, the settlement date has not been given, or the settlement date has
not arrived, or the settlement date has not been reached, but the deadline for
filing a law suit has not passed, may also benefit from the provision of this
article.
e. The debtors who want to benefit from the provision of
this article must not file a lawsuit, abandon the lawsuits and not resort to
legal remedies in addition to the conditions specified.
4. Regulations regarding the Inspection/Assessment
Stage
Regarding the periods covered by the Law, tax inspections
started before the date of publication of the Law, shall continue without
prejudice to the provisions of this Law regarding tax increase. Following the completion
of these procedures, the following will be applied in the subsequent
assessments.
Payment |
Amount to be Paid |
Amount to be waived |
Taxes that are Levied Related to Tax Principal |
50% of the tax principal |
Remaining 50% of the tax
principal |
The amount that will be
calculated according to the D-PPI until the date of the publication of the
law |
All penalties related to the
tax principal |
|
All late payment interest
that will be calculated until due date of term of litigation determined upon
notification of tax assessment after publication of the Law |
The late fees applied until
the publication date of the Law |
|
Penalties Unrelated to the
Tax Principal |
25% of the penalty |
75% of the penalty |
Tax-Loss Penalties to be
Charged Due to the Participation |
25% of the penalty |
75% of the penalty |
Debtors who want to
benefit from the provision of this article must not file a lawsuit, in addition
to the conditions specified.
As of the date of
publication of the Law, the provision of this article will also be applied for
the receivables at pre-assessment stage.
It is not possible for
the beneficiaries of the announced regulation provision to benefit from the
provisions of settlement, pre-assessment settlement and reduction in tax
penalties.
B- VOLUNTARY TAX BASE AND TAX INCREASE
With the 5th article and temporary
article 1 of the Law, it is stated
that if the tax bases or taxes for 2018 and the following years related to some
taxes are increased at certain rates and paid according to the terms of the Law,
no tax inspection or tax assessment shall be made for the mentioned periods.
1.
Income and
Corporate Tax
Income tax payers and corporate tax payers
can increase their tax bases regarding 2018, 2019, 2020, 2021, 2022 with
certain rates. Summarized table is below:
Minimum Tax Base Increase
(TRY) |
|||||
Year |
Tax Base İncrease rate (%) |
Income Tax Payers
(revenue-expense model) |
Income Tax Payers (balance
sheet model) |
Corporate Tax Payers |
Tax rate that will be
applied to the increased tax base (*) |
2018 |
35 |
63.800 |
94.000 |
200.000 |
20% |
2019 |
30 |
66.400 |
99.600 |
215.000 |
20% |
2020 |
25 |
70.500 |
105.800 |
230.000 |
20% |
2021 |
20 |
75.000 |
112.400 |
260.000 |
20% |
2022 (**) |
25 |
105.000 |
200.000 |
500.000 |
20% |
(*) The
increased corporate tax bases will be subject to corporate tax at a rate of
20%. However, corporate tax rate of 15% will be applicable if certain criteria
are met. If the taxpayers have submitted the annual
corporate tax return and made related payments on time, and if they do not have
any definite or disputed debts for these tax types
(**) Tax payers who want to increase their
tax base for fiscal year 2022 should submit their income or corporate tax
returns. The tax base in these returns should be compared against some
thresholds:
a-The tax base of 2021 will be accelerated
with %122,93 and
b- 3rd. provisional tax base of 2022 will
be accelerated with %40.
The tax base for 2022 will not be smaller
than the higher one of a- or b- amount.
Half of the losses from previous years regarding the
fiscal years for which tax bases have been increased can be offset against the
profit of 2022 and the following years. i.e. the remaining half of the losses
cannot be carried forward.
Tax to be paid over increased base will be considered
as non-deductible expense.
The taxes previously paid
as withholding taxes can’t be deducted from the taxes calculated over the increased
tax bases.
Taxpayers can increase the tax base for a specified
fiscal year as they prefer, or some or all of the years.
2.
Witholding
Taxes
In accordance with the
law, if taxpayers increase their tax base for the following payments subject to
withholding, by certain rates, no tax inspection or assessment will not be made
for the relevant periods.
Payments within the
scope of the relevant regulation include:
· Wage payments, professional
service payments, progress payments for multi-year construction works, rent payments,
various payments made to farmers, payments made to those who benefit from the
tradesman exemption,
· Progress payments
for multi-year construction works and rent payments made to cooperatives within
the framework of the provisions of Article 15 of the Corporate Tax Law,
· Progress payments
for multi-year construction, within the framework of the provisions of Article 30
of the Corporate Tax Law.
The tax bases for the
payments within the scope shall be increased by the following ratios:
Year |
Rate of increase in wages,
professional service payments and rent payments (%) |
Rate of increase in progress
payments for multi-year construction works (%) |
2018 |
6 |
1 |
2019 |
5 |
1 |
2020 |
4 |
1 |
2021 |
3 |
1 |
2022 |
2 |
1 |
In order to benefit from
the increase in income and corporate tax withholding tax base, it is not mandatory
to increase the income or corporate tax base.
3.
Value Added
Tax (VAT)
If the taxpayers increase
their annual total of the output value added tax which they submitted in VAT
returns with the following rates, the value added tax inspection and assessment
cannot be conducted for the relevant periods.
Year |
Rate of increase
(%) |
2018 |
3 |
2019 |
3 |
2020 |
2,5 |
2021 |
2 |
2022 |
2 |
It is not possible to
consider the VAT paid within the scope of the relevant regulation as an expense
in determining the income or corporate tax base. In addition, it is not
possible to deduct the relevant amounts from the VAT payable amount or to be
subject to a refund.
It is obligatory for
taxpayers to increase for all taxation periods of the calendar year based on
the increase.
Tax payers who have
submitted at least 3 of the VAT returns in a specific year, can calculate the
average VAT amount paid for a month and then calculate the 12 months’ VAT
amount and apply the rates above to this amount.
4.
Other
Arrangements Regarding Base and Tax Increase
The application for
the tax base and tax increases summarized above must be made until 31 May 2023.
Increasing the tax base
and tax does not prevent the implementation of the provisions of the Tax
Procedure Law regarding the preservation and presentation of legal books and
documents.
The tax base or tax
increase does not constitute an obstacle to the tax inspections that were
started before the Law was published. However, in case the tax inspections
initiated for the taxpayers who applied to the tax base and tax increase cannot
be concluded within 7 work days, then these inspections will not be continued.
Pre-assessment settlement requests regarding tax inspections concluded within this
period will not be considered.
In case a tax base or tax
base difference is determined as a result of inspection, the tax difference
found as a result of the inspection will be evaluated together with the
provisions regarding tax base increase.
1000 TRY stamp tax will
be charged for tax returns to be submitted by taxpayers due to tax base or tax
increase.
If the whole tax amount calculated
according to the tax base or tax increase regulation is paid within the 1st
installment period, 10% deduction will be applied to the tax amount and no inflationary
adjustment coefficient will be applied.
C- CORRECTION
of RECORDS
In accordance with the
law; it is possible to correct cash balances and receivables from shareholders’
that are recorded in accounts as of 31.12.2022 but do not physically exist in
the company, provided that a 3% tax is paid over the relevant balances.
Taxes paid within the
scope of the specified article cannot be deducted from income and corporate
taxes and they will not be considered as expenses in determining the tax base.
Additionally,
inventory that is recorded as of 31.12.2022 but do not physically exist can be
corrected by issuing invoices and performing other tax-related obligations.
In the invoices to be
issued, the gross profit rate determined according to the current year records
for the same type of commodities, the fair market values to be determined by
them or the Professional organization to which they are affiliated will be
taken into account in terms of machinery, equipments.
For goods, machinery,
equipment that are not included in the records although they are present in the
enterprise; it is possible to record them over the fair market value determined
by taxpayers or professional organizations. For these goods and
machinery/equipment a special provision account is assigned. If the provision
amount for the goods is distributed to the shareholders, it will not be
taxable. The provision amount for the machinery/equipment will be considered as
depreciation.
During the correction
process, a reduced-rate (half-rate) value added tax shall be declared and paid.
This tax paid on machinery, equipment cannot be deducted from the calculated
value added tax. The VAT calculated for the goods can be deducted according to
general principles however it is not subject to VAT refunds.
D- COMMON PROVISIONS
It is possible to pay
the amounts that are payable within the scope of amnesty in a single
installment, or in 12 to 36 installments that elapse to a period of 12 to 36
months subject to an inflationary adjustment (coefficient).
In case all the taxes
accrued as a result of the tax base or tax increase are paid in advance within
the first installment payment period, a 10% discount will be applied to the tax
amount.
If the entire amount of
tax restructured is paid within the first installment payment period, then
coefficient will not be applied and a discount of 90% will be applied for the
auxiliary amounts to be calculated based on the D-PPI.
Taxpayers can select from
one of the installment plans below:
Number of Installments |
Period (Months) |
Coefficient |
12 |
12 |
1,09 |
18 |
18 |
1,135 |
24 |
24 |
1,18 |
36 |
36 |
1,27 |
48 |
48 |
1,36 |
The deadline for benefitting
from the provisions of the Law is 31.05.2023