The Law Regarding the Restructuring of Taxes and Other Certain Receivables and Amendments Made to Certain Laws (the "Tax Restructing Law") entered into force on 11 May 2018. The Tax Restructuring Law offers, among other things, Turkish residents various penalty exemptions and rate reductions on declaring previously undisclosed offshore assets and certain ledger corrections.
The General Communiqué on the Law Regarding the Restructuring of Taxes and Other Certain Receivables and Amendments Made To Certain Laws Numbered 7143 with serial number 3 dated 4 July 2018 (the "Tax Restructuring Communiqué") has recently been published by the Department of Revenue (Gelir İdaresi Başkanlığı) of the Ministry of Finance (Maliye Bakanlığı) of the Republic of Turkey in order to provide clarification and to determine details of applicable procedures under the Tax Restructuring Law .
The Tax Restructuring Communiqué makes clarifications regarding:
- the methods of bringing currency, foreign currency, gold, security and other capital market instruments to the Republic of Turkey from other countries;
- the methods of declaring currency, foreign currency, gold, security, capital market instruments and immovable that already are in the Republic of Turkey to tax offices; and
- how certain earnings gained from other countries may be held exempt from income or corporate tax.
Procedures and methods
According to the Tax Restructuring Communiqué, if real and legal persons declare their currency, foreign currency, gold, security and other capital market instruments currently located in countries other than the Republic of Turkey to banks and intermediary institutions located in the Republic of Turkey by 30 November 2018 and physically bring such assets to the Republic of Turkey within three months of declaration, such real and legal persons will be able to dispose freely over the assets declared.
The value of the assets will be declared on the basis of their Turkish Lira equivalent according to the exchange rate announced by the Central Bank of the Republic of Turkey (Türkiye Cumhuriyeti Merkez Bankası). No further declaration or tax reporting will be required in relation to these assets.
Multiple declarations may be made until expiry of the deadline stated above. Multiple declarations may be made to increase or decrease the value of assets that have already been declared, to declare additional assets or otherwise to correct a previous declaration.
Eligible assets owned by taxpayers, that are currently located in the Republic of Turkey but have not been recorded in statutory ledgers, must be declared to tax offices until 30 November 2018 either physically or via an electronic medium. The declarations will again need to be made on the basis of, where applicable, the Turkish Lira equivalent of the relevant assets as above.
Exemptions and reductions
In all above cases, taxpayers are offered the opportunity to benefit from certain tax exemptions and rate reductions in relation to declared assets.
The Tax Restructuring Law and the Tax Restructuring Communiqué also offer certain tax exemptions with respect to foreign revenue such as disposal proceeds from sale of foreign capital stock, participation earnings from foreign investments and revenues if these are transferred into the Republic of Turkey by 31 December 2018.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.