A new tax amnesty law

The new Tax Amnesty Law accepted by the GNAT includes varied topics such as the liquidation of specified receivables, liquidation of undue and litigious receivables, tax base increase, the possibility to adjust the registers of unregistered commodities and fixed assets as well as of safes, receivables from shareholders, commodities and fixed assets that are registered but that do not exist physically, and the re-raise to current values of real estate and fixed assets registered in the balance sheet.

Dear Fortune readers, in this article, I would like to share with you my evaluations on the regulations featured in Law No. 7326 entitled tax amnesty.

These types of regulations have so far been made repeatedly and a narrow-scoped amnesty law had been issued in November 2020 on specified receivables.

This newer regulation has a much broader scope, however, it excludes provisions on foreign affiliate incomes, foreign affiliate sales incomes and foreign affiliate liquidation incomes.

Taxes due to administrations such as the Ministry of Treasury and Finance, Ministry of Trade, Social Security Institution, Special Provincial Administrations, Municipalities, Investment Monitoring and Coordination Department and pertaining to the periods before 30.04.2021, as well as numerous debts such as social security, customs taxes and the entirety of the sanctions, interest rates and administrative fines relating to these are reconstructed in the scope of this new law.

Furthermore, not only specified receivables but also public receivables that have been the subject of legal actions and that are in the inspection and assessment processes are included in the law. Receivables that benefit from the reconstruction as determined per the law will be payable in advance or in six, nine, twelve or eighteen equal installments with a specific coefficient increase. Moreover, with the tax base increase, taxpayers will be able to increase -in rates specified as per the law- the tax base of income taxes, corporate taxes, value-added taxes and some declared taxes pertaining to the periods they deem to be risky, thus eliminating the risks in questions. Tax base and tax increases can be made for the years 2016, 2017, 2018, 2019 and 2020

To be able to benefit from the provisions of the law, applications must be made until 31.08.2021.

The passing on to legal registers of commodities, machines, equipment and fixtures registered but not physically present in the business will be made possible within the period determined by the law and by way of issuing an invoice without any additional payments. Similarly, businesses will be able to pass on to legal registers commodities, machines, equipment and fixtures that have been acquired without any invoice but that are physically present in and that have not been registered legally, by way of being provisioned at their market value. In case the provisions reserved for the above-stated assets are distributed to shareholders in the future, these will not be subject to any tax either.

Another regulation gives corporate taxpayers the possibility to adjust the records of cash balances and receivables from shareholders not physically present on the premises of the business and as they appear on balance sheets as of 31.12.2020, by way of paying a tax of 3%.

The law also gives the possibility to subject fixed assets and other depreciable economic assets featured in the balance sheets of taxpayers to a reassessment until 31.12.2021. Thus, fixed assets and other depreciable economic assets that feature on records under their purchase cost will be registered in records under their current values by way of applying the domestic producer price index. Taxpayers benefiting from this opportunity will have to pay a tax of 2% based on the value increase shown in a special liabilities fund account following reassessment. The President of the Republic has the authority to extend the application deadline for tax amnesty up to one month.