A draft law has been submitted to the Turkish Parliament
for amendment in some laws and regulations with the primary purpose
of enhancing the investment environment in Turkey.
The draft law proposes significant amendments in the current
laws and regulations by introducing additional exemptions and
incentives for taxpayers as well as regulating the use of certain
financial instruments and company law provisions. The requested
revisions can be taken as positive signs for Turkish
Governments' intention to enhance the investment environment
and increase the country's potential for attracting further
The law proposes changes in various fiscal laws currently in
force. We would like to draw attention to the some of the key
changes proposed by the draft law, which could be of higher
interest for multinational investors.
Voluntary Disclosure Regime provides an Amnesty to Turkish
taxpayers having undisclosed assets out of Turkey
The draft law provides a one-time opportunity for the Turkish
taxpayers (real or legal persons) who has unrecorded assets out of
Turkey. The cash, gold, marketable securities or other capital
market instruments as well as receivables and real estate
properties may be subject to a voluntary disclosure scheme until
31/12/2016. Such assets has to be notified to a Turkish bank or
financial institution and has to be transferred to Turkey in 1
month following the notification (with the exception that the value
of real estate properties has to be brought to Turkey within 1
year). Turkish taxpayers may also make such declaration on behalf
of other real or legal persons.
The assets subject to voluntary declaration will not be subject
to any tax audit or investigation and there will be no taxes to be
paid on the disclosed amounts. There are no other conditions to be
fulfilled to benefit from these provisions (such as adding the
disclosed amount to capital of a Turkish company, not distributing
for a certain period, paying a minimum tax etc. that existed in
previous Tax and Asset Amnesty laws). Therefore, this regime could
be perceived as a one-time tax amnesty provided to such persons
having unrecorded assets out of Turkey.
Enhanced "Regret Filing" clause provides a tool for
Voluntary Disclosure before a tax audit tax places
The current "regret filing" provision enabled by the
Turkish Tax Procedural Code (VUK) is proposed to be enhanced. Under
current practice, it is not possible to apply regret filing in case
of a subject that is already in the knowledge of the tax authority.
In the new proposal, if tax authority has information on a
transaction that may have potentially led to underpayment of taxes,
tax authority may first issue a notification to the taxpayer before
starting an official investigation. If the taxpayer acts upon such
notification and make a voluntary correction of its tax
declarations, the tax principal and late payment interest (1.4% per
month) will be payable as usual, but the tax loss penalty (i.e.
normally 100% of tax principal) will be only applied as 20%. By
virtue of this revision, the voluntary compliance of taxpayers in
tax regulations is promoted through reducing the applicable tax
It is also expected to reduce the workload of tax auditors and
tax courts through.
Incentives for Regional Headquarters (Management Centers) in
Another significant revision proposed through the draft law is
related to the incentives to be introduced for establishment of
Regional Headquarters (Management Centers) in Turkey. Due to the
geopolitical feasibility of the country and along with the purpose
of becoming a center of the regional managements; a corporate
income tax exemption is planned to be introduced for 'Regional
Headquarters' or 'Management Centers' to be established
in Turkey provided that all costs of these structures will be
covered by foreign corporations and financially not associated with
the accounts of a resident or non-resident entity in Turkey. In
addition to the proposed corporate income tax exemption, the law
also offers payroll tax exemptions for the employees to be
registered in these Regional Headquarters or Management
It should be noted that the Law is currently in draft form,
subject to possible discussions and change during the Parliamentary
negotiations. We will continue to follow up on the legislative
process and provide an update as soon as the final version of the
Law is enacted.
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.
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