Turkey has introduced three different tax amnesties in the past decade. The last one was introduced within the "public debts programme" in 2016. This time, the Turkish government declared a new tax amnesty to restructure public debts in early May.
The draft law aims to reduce the tax burden of the private sector and increase the collection of public receivables. As in previous tax amnesties, the draft law also allows taxpayers to pay their public debts through instalments. However, the draft law does not cover the principal taxes but their auxiliaries.
The scope of the draft law
The draft law, which principally restructures defined tax debts and some public receivables, was proposed by the members of the Turkish Parliament on May 4 2015.
Under the draft law, the scope of the new restructuring programme for public receivables contains the following:
- Individual and corporate taxes, tax penalties, default interest and late payment interest regulated under the Turkish Tax Procedure Code and related to tax periods earlier than March 31 2017 (except for the advance individual and corporate income taxes of 2017 and second instalment of individual income taxes to be paid in 2017);
- Customs duties and their tax penalties, default interest and late payment interest and administrative penalties related to the periods earlier than March 31 2017;
- Social security premiums and other social security payments (unemployment contribution premiums) related to the periods earlier than March 2017; and
- Public receivables within the Law on Municipal Revenues (including all sort of default interest, late payment interest and administrative penalties).
On the other hand, some of the other public receivables included in the draft law are as follows:
- Public receivables under the Law on Regulation of Public Financing and Debts;
- Based on the respective law, stamp tax, special transaction tax, contribution to education fee and their late payment interest related to tax periods earlier than March 31 2017; and
- Public receivables (including all sort of default interest, late payment interest and administrative penalties) within the Law on Special Provincial Administrations regulated under the Turkish Tax Procedure Code and related to tax periods earlier than March 31 2017.
Restructuring of definitive public receivables
Provided that the unpaid amount of taxes and public receivables and the amount computed on the "Domestic Production Price Index (YI-UFE)" are together paid in the stated terms and way, it will be possible that the public debts of taxpayers are restructured.
Within this framework, default interest, late payment interest, tax penalties relating to original tax, and late payment interest relating to tax or administrative penalties, are not to be collected if one opts to apply for the restructuring programme.
Eventually, the draft law will enable, from the point of taxation, taxpayers to pay their public debts by either cash or instalments (starting from six months to 144 months of equal instalments) by restructuring tax and public debt claims that are difficult to collect.
Therefore, we believe that taxpayers that have difficulty in paying their taxes and public debts or would like to benefit from the law should apply for the programme during the upcoming period.
Duran Bülbül (email@example.com), of counsel, Centrum Consulting
Gazi University, Faculty of Economics and Administrative Sciences, Department of Public Finance
Tel: +90 312 216 1349
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