Tax Amnesty Law - 2016
Brief Introduction
Turkish authorities have accepted the Tax Amnesty Law No: 6736 on 3 August 2016. New law offers taxpayers a broad amnesty for most types of unpaid taxes and for unpaid social security insurance premiums relating to the period up to June 30, 2016.
The Law also addresses restructuring of certain public receivables, repatriation to Turkey of assets held abroad by individual and corporate Turkish taxpayers without risk of any inspection or tax penalty, adjustment of unrecorded assets and adjustment of assets that are recorded but which do not exist or are not available.
In accordance with the accepted law, the following will fall within the scope of the amnesty;
- Taxes relating to periods preceding 30 June 2016 (inclusive), band with respect to declaration-based taxes, taxes relating to declarations to be filed before that date, and related tax fines, late fees and interest accrued on amounts in arrears;
- In relation with the year 2016, taxes assessed prior to 30 June 2016 (inclusive) and related tax fines, late fees and interest accrued on amounts in arrears;
- Tax fines not relating to underlying taxes which arise from determinations made prior to 30 June 2016 (inclusive);
- Customs taxes, administrative fines, accrued interest, late fees and interest accrued on amounts in arrears having arisen prior to 30 June 2016 (inclusive);
- Insurance premiums and related fees and interest accrued on amounts in arrears subject to collection under the terms of Law number 6183 by collection offices under the Social Security Administration;
- Stamp taxes, special transaction taxes, education fund contributions and interest accrued on related amounts in arrears arising in or before June 2016 and subject to collection under the terms of relevant laws.
As mentioned above, the Law mainly focuses on 2 main points as follows;
1. Restructuring of Receivables
The new law offers full or partial amnesty for the principal amount, penalties and interest accrued provided that the taxpayer fulfills the conditions and follows the processes set forth by the law.
According to accepted tax amnesty law, taxpayers could avoid from aforementioned liabilities by paying total amount of tax dues at the pre-determined deadlines. Moreover, law also provides opportunity to pay tax dues by installments as stated on the table below;
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2. Tax Base Increase and Tax Boost
Income and corporate tax base increases
With the new law, taxpayers can avoid from corporate tax wise inspections by increasing the corporate tax base of the Company. Tax base increase rates and minimum tax base increases for corporate taxpayers are as follows:
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VAT base increases
Under the provisions of the accepted law, if taxpayers increase VAT base of the Company, tax rates to be used in the increase according to the certain years covered by the law are given below;
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Witholding Tax
Under the provisions of the accepted law, if taxpayers increase witholding tax bases for different payments, tax rates to be used in the increase indicated by the law are given below:
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Conclusion
As a consequence, newly announced law is very comprehensive and provides big advantages for the Companies in terms of amnesties. Companies should assess their specific tax-wise issues case by case with their service providers and be proactive about the actions to be taken. In order to benefit from the provisions of the law, taxpayers shall complete the application process to the respective authority until the end of October 2016.