The Law No. 6552 that has been enacted by the Turkish Parliament and has been published as of September 11, 2014.
The new Law provides an opportunity to taxpayers, who have unpaid tax debts, administrative penalties and late payment interests to restructure those liabilities so that the liabilities could be paid through instalments and with a low interest burden.
Also the new Law enables corporate tax payers to correct their fictitious cash and receivable from shareholder balances in their statutory accounts as of December 31, 2013 by way of a declaration and adjustment in year 2014.
Correction of the fictitious “cash” and “receivable from shareholders” balances by way of a voluntary disclosure
Under the new Law, it is possible for taxpayers to correct their fictitious cash and receivable from shareholders balances (i.e. that exist in statutory books but do not actually exist) in their statutory balances as of December 31, 2013.
Taxpayers are able to benefit from this provision through a declaration to the tax office until December 31, 2014 by calculating additional tax of 3% over the adjusted amounts.
By virtue of the new Law, the amounts declared as such will not be subject to any further tax assessment. There is no further disclosure required as to the reason of the underlying balance being corrected.
The amount of fictitious cash or receivable balance declared by the company has to be written off as an extraordinary expense which cannot be deducted for tax purpose. Also the 3% tax to be paid on the declaration cannot be deducted as expense or offset against other income or corporate income tax liabilities.
Restructuring of the existing tax liabilities
The New Law enables the restructuring of the below listed tax liabilities;
a) Taxes based on declaration that needed to be submitted until April 30, 2014 (including this date); and the associated tax penalties and late payment interests,
b) Taxes accrued between January 1, 2014 and April 30, 2014 (including this date), and the associated tax penalties and late payment interests,
c) Tax penalties not related to tax principals, applied for the period before April 30, 2014 (including this date),
d) Administrative fines imposed for the period before April 30, 2014 (including this date).
e) Other fiscal obligations under the scope of Law No: 6183 regarding collection of public receivables
Requirements for benefiting from restructuring
The requirements which must be satisfied in order to benefit from the provisions of the Law are as follows:
- Not opening any lawsuit, the withdrawal of any existing lawsuits and not taking any legal steps against the tax liability,
- During the implementation period, tax and premium payment obligations for the current periods should be met in accordance with the restructuring plan.
Application period and payment requirements
Taxpayers should apply to the tax office until November 30, 2014 to benefit from the provisions of the Law.
Taxpayers are obliged to pay the liabilities, beginning with the first installment within third month following the date in which this Law is enacted, within maximum eighteen installments to be paid in every two month.
In case it is requested to pay in installments, it is essential to choose to pay in six, nine, twelve or eighteen months. It is not possible to pay the debt in a longer period than the selected period.
The payment amount will be multiplied with the ratio determined for these periods. Please find below the ratios;
- Six equal installments (1,05)
- Nine equal installments (1,07)
- Twelve equal installments (1,10)
- Eighteen equal installments (1,15)
Please contact us should you have any queries regarding the issue.