The Turkish Parliament ratified a Tax Amnesty Law on May 11 2018. The Law aims to reduce the tax burden of the private sector which may have financial difficulties. The Law allows taxpayers to pay their public debts through instalments (up to 18 months) and covers the principal taxes and their auxiliaries. The Turkish government also seeks the repatriation of assets held in foreign accounts by Turkish individuals and corporates.
The scope of the new restructuring programme for public receivables contains the following:
1. Individual and corporate income taxes, tax penalties, default interest and late payment interest regulated under the Turkish Tax Procedure Code and related to tax periods earlier than March 31 2018 (except for the advance individual and corporate income taxes of 2018 and individual income taxes to be paid after March 31 2018);
2. Custom duties and their tax penalties, default interest and late payment interest and administrative penalties related to the periods earlier than March 31 2018;
3. Social security premiums and other social security payments (unemployment contribution premiums) related to the periods earlier than March 2018;
4. Public receivables within the Law on Municipal Revenues (including all types of default interest, late payment interest and administrative penalties).
In terms of unpaid taxes or public receivables, default interest, late payment interest, tax penalties relating to principal tax, and late payment interest of tax or administrative penalties, are not to be collected if a taxpayer is eligible for the restructuring programme. However, the taxpayer will pay their taxes or public receivables together with the amount computed on the 'Domestic Production Price Index' (YI-UFE) in accordance with the pre-defined terms.
No tax audit will be carried out by the Turkish tax authorities on the financial years between 2013 and 2017 if taxpayers voluntarily increase their tax base for these financial years. To claim tax inspection immunity, a taxpayer must increase their tax base by at least 35% for FY2013, 30% for FY2014, 25% for FY2015, 20% for FY2016 and 15% for FY2017, respectively.
The Law also allows taxpayers to repatriate their foreign assets (e.g. cash, gold, foreign exchange, or securities). If a taxpayer declares and transfers their foreign assets until November 30 2018, there will be 2% tax applicable. Taxes will be collected and paid by financial institutions by December 31 2018 upon the declaration of foreign assets.