The Restructuring of Certain Receivables and Amendments to Certain Laws
Law on Restructuring of Certain Receivables and Amendments to Certain Laws numbered 7440 was published in the Official Gazette dated 12 March 2023 and numbered 32130.
With the Law on Restructuring of Certain Receivables and Amendments to Certain Laws numbered 7440 ("Law"), a number of new provisions have been introduced regarding the waiver of the collection of certain public receivables, tax base increase, reduction in tax rates and correction of business records.
The receivables subject to restructuring are mainly determined by taking into account the date 31/12/2022, and the years 2018, 2019, 2020, 2021 and 2022 are considered within the scope of tax and tax base increase.
The Law regulates that the collection of certain public receivables will be waived if certain conditions are met. Some of the issues regulated in the Law are as follows:
Regarding the Finalised Receivables
In finalised tax receivables, the remaining 50% of the penalties that are not related to the original tax; the penalties or administrative fines imposed in connection with the original tax; the remaining 50% of the tax penalties imposed due to participation, aid and incentive acts; the collection of all accessory receivables such as default penalty, default increase, default interest are waived within the scope of the Law.
In respect of receivables that have not been finalised or are at the stage of litigation
The Law regulates in detail the rate and manner in which the collection of tax receivables that have not been finalised and are in the litigation phase will be waived. Tax receivables that have not been finalised and are under litigation are divided into two categories: i) tax assessments for which a lawsuit has been filed before the courts of first instance or for which the time for filing a lawsuit has not yet expired; and ii) tax assessments for which the time for appeal has not expired or for which an appeal has been filed or for which the time for requesting a correction of decision has not expired. The details regarding the tax assessments to be waived at these two stages are also regulated in detail in the Law.
Regarding the Transactions at the Stage of Examination and Tax Assessment
50% of the taxes to be levied as a result of the completion of the tax inspections and assessment, levy and accrual procedures that were started before the publication date of the Law and could not be completed as of the publication date of the Law; and 50% of the tax penalties/administrative fines and default increases are waived under the Law.
Tax Base and Tax Increase
Within the framework of these regulations, it has been decreed that if the taxpayers increase their income and corporate tax bases and pay as specified, there will be no tax examination and penalty assessment for the year in which the tax base is increased. Within the scope of the Law, different tax bases, such as corporate tax, income tax, value-added tax, dividend withholding, are stipulated on a year basis. For example, while the income and corporate tax base increase rate for 2022 is 25%, it is 2% for value added tax.
Creation of Additional Financial Funds for the Earthquake
In accordance with the amendments made with the Law, additional tax liabilities are imposed to the corporate taxpayers in order to use and create fund for the area affected by the earthquake based in Kahramanmaraş. However, the corporate taxpayers in places where force majeure was declared due to earthquakes are exempted from this additional tax. In addition, the exceptions and deductions specified under Corporate Tax Law will not be considered within the scope of additional tax.
Regulation on the Purchase of Participation Shares During Mergers and Acquisitions
In order to support the mergers and acquisitions of the companies, the financial expenses incurred due to the purchase of participation shares are allowed to be reduced in the determination of the corporate income after the transfer.
Regulation on the Traffic Administrative Fines
The current penalty points which were granted to the drivers according to the traffic administrative fines are become passive, and it is stated that the current penalty points will not be considered during the penalty calculation. Additionally, it is regulated that the current situation of the driver’s license which are captured and not delivered to the relevant person will become passive and will be delivered upon the application of the relevant person and will not be considered during the calculation of the following seizures.
Procedures of the Payments
According to Article 9 titled “Common Terms” of the Law, taxpayers, who will benefit from these regulations must apply to the relevant authority until 31/05/2023 (including this date), and first installment of the amounts which will be paid to the revenue services of the governmental authorities must be paid until 30/06/2023 (including this date).