On May 27, 2017, the Law on the Restructuring of Certain Receivables and Amendment of Certain Laws and Decree-Laws No. 7020 ("Amnesty Law") was published in the Official Gazette No. 30078 and entered into force.
The Amnesty Law introduces a new amnesty for certain public receivables in relation to the period before March 31, 2017, including but not limited to taxes, customs duties, social security premium liabilities and certain administrative fines, as well as penalties and delay interests related to these public receivables.
New Tax Amnesty
a. Scope of taxes
The Amnesty Law covers only tax receivables finalized as of March 31, 2017. Unlike the previous tax amnesty applicable last year, it does not cover tax receivables at the tax inspection, tax assessment or the litigation stages, nor an amnesty for Turkish residents' assets abroad. The scope of the Amnesty Law includes:
- Taxes relating to taxation periods before March 31, 2017 that should have been declared and paid by this date, as well as any related tax penalties and delay interests,
- Taxes relating to the fiscal year 2017 that were accrued before March 31, 2017, as well as any related tax penalties and delay interests,
- Irregularity penalties and special irregularity penalties relating to taxation periods before March 31, 2017.
Those who benefitted from the provisions of the previous tax amnesty under Law No. 6736 cannot avail of the new Amnesty Law.
b. Scope of amnesty
For tax receivables that have not been paid on time, as well as tax receivables whose payment period has not yet expired as of May 27, 2017, the entire tax loss penalty and delay interests will be written off if the taxpayer pays the entire tax amount and the interest amount calculated based on the Producer Price Index ("PPI") monthly rates.
For irregularity penalties and special irregularity penalties that have not been paid on time, as well as tax receivables whose payment period has not yet expired as of May 27, 2017, related delay interests and 50% of the penalty will be written off if the taxpayer pays the other 50% of the penalty and the amount to be calculated based on the PPI monthly rates.
c. Payment methods
In order to benefit from the tax amnesty, taxpayers must apply to their tax office by June 30, 2017. In conjunction with their application, they must pay the required amounts stipulated, either at once or in a maximum of 18 equal installments (paid on a bi-monthly basis); the first installment is due on July 31, 2017.
If taxpayers pay the required amounts within the scope of the Amnesty Law at once within the due time, they can enjoy additional benefits provided by the Amnesty Law.
If taxpayers prefer to pay the required amount in installments, they must do so in 6, 9, 12, or 18 installments. In this case, the required amount will be multiplied by 1.045 for the 6 equal installments option; (ii) 1.083 for the 9 equal installments option; (iii) 1.105 for the 12 equal installments option; and (iv) 1.15 for the 18 equal installments option.
Affected taxpayers should be aware of the Amnesty Law and take the necessary steps in order to benefit from the new tax relief.