Turkey introduces restructuring possibilities for taxpayers


On 17 November 2020, Turkey enacted the Law on Restructuring of Certain Receivables and Amendment of Certain Laws No 7256, which allows the restructuring of certain public receivables and introduces several amendments to the tax legislation.

Public receivables subject to restructuring based on the Law include taxes, tax penalties, delay interests, late payment interests, administrative penalties, public receivables subjected to enforcement proceedings, customs duties and penalties, customs duties and penalties related to the Social Security Institution, receivables of municipalities and special provincial administrations, and certain other public receivables.

The Law applies to obligations dated 31 August 2020 or earlier. In addition, only completed debts are included in the scope of the new restructuring mechanism, which excludes uncompleted debts, debts that are the subject of ongoing legal proceedings, transactions under examination or evaluation procedures. 

According to the Law, the Producer Price Index (“PPI”) will be used to recalculate the following: the parts of taxes not paid in due time, taxes due but not overdue, and secondary public receivables relating to these unpaid parts, such as delay interests and late payment fees. If the unpaid part is only the secondary claim, this amount is calculated on the basis of the PPI. 

If the taxpayer makes a payment in accordance with the Law, secondary receivables (e.g. delay interests and late payment interests) and tax penalties (e.g. those paid before 17 November 2020) are written off and not collected. Tax penalties independent of the original taxes that are not paid on time or due, but not overdue, are reduced by 50% and recalculated according to the PPI.

Taxpayers wishing to take advantage of the Law must submit an application to the relevant administrative body before 31 December 2020. Payments will be made in a maximum of 18 equal instalments. If the taxpayer decides to make the advance payment within the period of the first instalment, no coefficient will be applied and the new secondary claim amount calculated using the PPI will be reduced by 90%. In the case of advance payments within the period of the first two instalments, the reduction is 50%. 

The law offers taxpayers the opportunity to reduce their financial burden during the COVID 19 pandemic. Taxpayers covered by the Law should consider benefiting from an advance payment and submit the application within the deadline set by the Law. 

For further information, please contact your regular CMS consultant or local CMS experts: Dr. Döne Yalçın and Umut Korkmaz.