The reconciliation procedure which is a new concept for Turkish Customs disputes is introduced by the Regulation on Customs Reconciliation ("Regulation") that came into force on August 31, 2011.
The Regulation mainly specifies the procedures and principles as to the reconciliation procedure which has been introduced to the current customs system with the amendment with Article 137 of the Law numbered 6111 on Article 244 of the Customs Law numbered 4458.
With the Regulation, all additionally accrued custom duties and fines are included within the scope of the reconciliation. However, application for reconciliation cannot be made in cases where a) financial burdens are part of customs tax value but cannot be collected by the customs authority, b) the collection of debt is not definite or is conditional, c) definite collection of the receivables are not foreseen d) financial burdens attached to the crime of smuggling.
The reconciliation request can be made for the entire debt notified. Also, the reconciliation request can be made for the tax or penalty only. Yet, it is not possible to apply for partial reconciliation with respect to certain parts of the additional accruals, or the fines.
The Regulation specifies the reasons of applying for reconciliation which are a) misinterpretation or misapplication of provisions of law b) difference between the court decisions and the administrative opinion on a customs issue.
Reconciliation requests can be made by the taxpayer or its representative within fifteen days as of the notification of the tax and any kind of monetary fines. The Reconciliation Commissions of Customs and Enforcement General Directorate is authorized for the requests up to 500.000.-TL. On the other hand, the Central Reconciliation Commission is authorized for the reconciliation requests above 500.000. TL -
Application for reconciliation stays the opposition period. Before conclusion of the reconciliation process, which is foreseen to be concluded within thirty days at most, application for administrative opposition or application for the court case cannot be made.
If no reconciliation is achieved, the opposition period will start to continue from where it stayed. However, if less than 3 days are left following the non-reconciliation decision then the opposition period is prolonged automatically for a further period of 3 days.
The reconciliation application which is deemed a completely new procedure in terms of Turkish Customs Practice has also been a tool to bridge the legal gap that has been created by the abrogation of the application for correction stipulated under Article 242 of the Customs Law numbered 4458 Law, on 18.09.2009, by the law numbered 5911.
Because, with the application for correction, the taxpayers had had the opportunity to argue the legitimacy of the tax assessment with the customs authority issued the tax/ fine and solve the matters thereby easily without needing to file oppositions either to Customs and Enforcement Head Offices or tax/ administrative courts. Therefore, the taxpayers became concerned when the application for correction procedure had been abrogated.
However, together with the reconciliation procedure, taxpayers' concerns due to the lack of application for correction procedure have been smoothed away. Because the rules regarding the reconciliation procedure setting forth that the directors and examiners from the Customs Office raising the taxes/ fines shall also participate in The Reconciliation Commissions of Customs and Enforcement General Directorate, have paved a new way for the taxpayer and the tax officer to evaluate the accruals and fines together.
Nevertheless, there are also differences between reconciliation and application for correction in terms of procedure and content. Indeed, unlike application for correction, the accrued taxes and fines cannot be cancelled completely in reconciliation. Therefore, a taxpayer seeking full cancellation shall apply for opposition to the concerned Customs and Enforcement General Directorate directly, rather than reconciliation.
Tax payers now have a new alternative to solve their disputes with customs authority through administrative ways with the reconciliation procedure introduced to the Turkish customs system. The tax payers will be able to negotiate and reconcile with the tax authority by making partial payment through the reconciliation procedure without needing to make an administrative opposition or filing a court case.
However, the benefits of reconciliation procedure can only be reached if the reconciliation commissions act objectively and practically. Taxpayers may trust in the reconciliation procedure only if they believe that their reconciliation request will be evaluated reasonably, on a case-by-case basis and that they will be able to receive a reasonable reconciliation offer. Otherwise, the reconciliation commissions which are inclined to make fixed reconciliation offers, without considering the legitimacy of the tax/ fine, would potentially avoid the benefit expected from this new system.