Turkey: The Tax Amnesty Law No. 6736 Brought An Opportunity For Restructuring Of Public Receivables

Last Updated: 14 November 2016
Article by Bezen & Partners

I. Introduction

The Law No. 6736 on Restructuring of Certain Receivables published in the Official Gazette numbered 29806 and dated 19 August 2016 (the "Tax Amnesty Law") enables restructuring of outstanding public receivables (including tax) and also introduces rules on restructuring and settlement of outstanding public receivables and taxes accrued as of 30 June 2016. Within the context of the Tax Amnesty Law, all taxes, customs duties, administrative fines, social security premia and all related interests, penalties and late payment charges related to a date before 30 June 2016 are covered.

The tax related receivables covered within the Tax Amnesty Law that would be subject to restructuring have been categorised as follows:

  • Public receivables based on a final court decision;
  • Public receivables subject to an ongoing litigation process; and
  • Transactions that are subject to ongoing tax audits or pending assessments.

As a part of the restructuring program introduced with the Tax Amnesty Law, a certain amount of taxes, related penalties and interests are reduced or cancelled (with different ratios depending on the status of the underlying public receivables) and the remaining amounts can be payable in a lump-sum or in instalments subject to an adjustment. The debtors of tax related public receivables can restructure their debts whether or not the receivable is based on a final court decision or subject to ongoing litigation.

II. Public receivables based on a final court decision that have not been paid

The subject matter of the receivable The way of structuring
Taxes and customs taxes The whole amount of the taxes and customs taxes will be collected.
Penalties which are related to tax and default penalties Collection of the relevant penalties and the default penalties will be waived and an amount calculated based on the monthly producer price index rates will be collected.
Penalties which are not related to the original amount of the tax i.e. irregularity fines 50% of penalties which are not based on the original amount of tax will be collected. Collection of the whole remaining amount will be waived.

III. Public receivables subject to ongoing litigation process

1. The following structure will be applied for the disputes if the first degree litigation process is ongoing:

The subject matter of the receivable The way of structuring
Taxes and customs taxes 50% is payable. Remaining 50% will be waived.
Penalties which are related to tax, administrative penalties and default penalties Collection of the relevant penalties and the default penalties will be waived and an amount calculated based on the monthly producer price index rates will be collected. For the lump-sum payments 50% of the amount calculated based on the monthly producer price index will be waived as well.
Penalties which are not related to the original amount of the tax i.e. irregularity fines 25% of penalties which are not based on the original amount of tax will be collected. The remaining 75% will be waived.

2. The following structure will be applied for the disputes if the appeal procedure is ongoing:

The subject matter of the receivable The way of structuring
Taxes and customs taxes 20% of the first assessment/accrual will be collected. The remaining 80% will be waived.
Penalties which are related to tax, administrative penalties and default penalties Collection of the relevant penalties and the delay penalties will be waived and an amount calculated based on the monthly producer price index rates will be collected. For the lump-sum payments 50% of the amount calculated based on the monthly producer price index will be waived as well.
Penalties which are not related to the original amount of the tax i.e. irregularity fines 25% of penalties which are not based on the original amount of tax will be collected. The remaining 75% will be waived.

IV. Transactions that are subject to ongoing tax audits or pending assessments.

Subject to the condition that the audit or assessment has been commenced before the publication of the Tax Amnesty Law and has not been completed yet, the following restructuring scheme will be applied after the completion of the audit or assessment provided that the application is made within 30 days following the receipt of the notification from the tax office:

The subject matter of the receivable The way of structuring
Taxes and customs taxes 50% is payable. The remaining 50% will be waived.
Penalties which are related to tax and default penalties Collection of the relevant penalties and the default penalties will be waived and an amount calculated based on the monthly producer price index rates will be collected.
Penalties which are not related to the original amount of the tax i.e. irregularity fines 25% of penalties which are not based on the original amount of tax will be collected. The remaining 75% will be waived.

V. Conclusion

The restructuring scheme mentioned above under section III is applied for the lump-sum payments only. If it is preferred to pay the amounts subject to the dispute in instalments, a different coefficient will be applied for the calculation of the amount to be paid. It must be noted that the restructuring application must be made to the relevant tax office before 31 October 2016. Upon the calculation of the amount to be paid by the relevant tax office, such amount must be paid until 30 November 2016.

After the payment of the restructured amount, the remaining public receivables will be waived, which means that the lawsuit arising from a dispute will be dismissed. However, since it is presumed that there are excessive number of applications, it may take some time for the court to decide for the dismissal of the lawsuit. Therefore, it is suggested to apply to the court and submit a petition to the relevant lawsuit file with the evidence of the payment and state that the payment has been made within the restructuring process under the Tax Amnesty Law.

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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