Page 8 - EY-VG_Kasim_2020_v2

Vergide Gündem
English Translation

Restructuring to tax debts is on the way

Provisions on debt restructuring have been added to the draft law submitted to the
Presidency of the Turkish Grand National Assembly on 16 October 2020 during the
negotiations in the Planning and Budgetary Committee. Renamed as the "Draft Law
for the Restructuring of Certain Receivables and Amendments to Certain Laws", it
has been sent to the General Assembly after the approval by the Commission on 23
October.

In this article, we will be focusing on the regulations of the proposal approved by
the Commission regarding the restructuring of the taxpayers' finalized tax debts.

Debts within the scope

The date of 31 August 2020 is important in terms of the scope of the law. In
general, we can say that the tax debts related to the periods before this date
and the taxes on the tax returns submitted until this date are within the scope of
restructuring.

In addition, tax penalties and default interest and late payment charges related to
these taxes are also within the scope of the law. Tax penalties (such as irregularity
and special irregularity) imposed on the detections made before the same date are
also within the scope of restructuring.

Estate taxes

Receivables monitored by the collection offices of municipalities are also within
the scope of restructuring. Accordingly, in addition to the above-mentioned taxes
especially the estate tax; water, wastewater and solid waste fees collected by
municipalities are also within the scope of restructuring.

Some part of the interest written off

There is no reduction for taxes that have not been paid or have not yet expired
despite being matured as of the publication date of the law, Taxpayers requesting
restructuring have to pay the whole primary obligation any case. Tax penalties
based on the principal tax debt (such as tax loss penalty) are completely written
off. Debts such as default interest and late payment charge are also written off, but
instead, an amount calculated based on the domestic producer price index (D-PPI)
monthly change rates until the publication date of the Law should be paid. We can
briefly call this PPI difference calculated as inflation difference.

Half of the irregularity fine

For tax penalties that have not been paid or have not yet expired despite being
matured as of the publication date of the law and not based on the principal tax
debt (such as irregularity and special irregularity), half of the amount is written
off. It will be possible to get rid of the debt by paying the remaining half and the
calculated inflation difference instead of the increase. The same applies to tax
penalties imposed due to participation.

8 November 2020