TAX NEWS NO: 2018/7
Subject: General Communiqué on Wealth Amnesty was published.
In the Official Gazette dated July 4, 2018 and numbered 30468, General Communiqué No. 7143 on the Restructuring of Taxes and Other Certain Laws and Amendments to Certain Laws, Series 3 on "Wealth Amnesty" was published.
As you may recall in the Law No. 7143 published in the Official Gazette dated 18 May 2018; restructuring of receivables from tax, customs and social security institutions, increase of tax base, correction of business records, settlement of tax matters without going to trial, provision of asset peace and zoning peace were settled.
This Communiqué explains the provisions of the Law on the wealth amnesty.
1) Which assets are in the scope?
The below assets of real and legal persons are in the scope:
• Cash, foreign exchange, gold, movable properties and other capital market instruments located out of Turkey.
• Cash, foreign exchange, gold, movable and immovable properties, other capital market instruments located in Turkey.
2) Until when should the assets located out of Turkey be declared in Turkey and to where should they be reported?
Assets located abroad should be reported to the banks or intermediary institutions in Turkey until 30/11/2018 via the form in attachment 1. Mentioned assets will not be declared to Tax Offices in any case.
3) Shall the assets located abroad be transferred to Turkey?
The assets located abroad, shall be transferred to the accounts (bank accounts or intermediary institution accounts) within 3 months from the date of declaration.
4) Under which circumstances the abroad assets would not be brought to Turkey?
Assets located abroad can be used till 18/11/2018 for repayment of loans credited from banks or financial institutions or until 18/11/2018, they can be used to close of credits recorded on legal books by the date of 18/05/2018. The assets used for above purposes will not be required to transferred to Turkey. The tax payers benefitted from the above mentioned conditions would be obliged to prove with receipts documents that loans credited from banks and financial institutions located abroad are closed.
5) What is the tax liability for assets located abroad?
The banks and brokerage houses shall calculate income tax with rate of %2 on the assets declared to themselves and file a tax return to the accredited tax offices until 31/12/2018 (including 31/12/2018). The calculated income shall be paid out by banks and brokerage houses as tax responsible on behalf of the tax payer.
6) What is the expiration date of the declaration of assets in Turkey and where will the assets should be reported?
Assets like cash, gold, foreign exchange, movable and immovable properties and other capital market instruments located in Turkey and owned by income or corporate taxpayers, but not recorded in the legal books, shall be declared to tax offices till 30/11/2018 with income tax return in attachment 3. Pursuant to provisions of 340 Numbered General Communique of Tax Procedure Law, declaration can be completed through e-filing.
7) What is the tax liability associated with assets located in Turkey?
Tax offices shall calculate income tax with rate of %2 on the assets declared to them and calculated income tax shall be paid out until 31.12.2018 (including 31/12/2018).
8) Are these assets taken into consideration in the determination of the period earnings? Can it be withdrawn from the company without considering the distributable profits?
The assets brought to Turkey and recorded into the statutory books by the income and corporate taxpayers, may be included in the company regardless of earnings determination can be drawn from the same assets of the taxable earnings and distributable earnings
9) In which circumstances income tax will not be remitted?
As mentioned above;
• Banks and financial institutions should calculate income tax of 2% for the assets located abroad,
• Tax offices should calculate income tax of 2% for the assets located in Turkey,
However, until 31/7/2018 (including 31/7/2018):
a) Foreign currency, gold, foreign exchange, movable properties and other capital market instruments will not be subject to income tax under the conditions of;
• They are notified and transferred to Turkey.
• They are used to close of credits loaned from banks located outside of Turkey or they are used to close of credits recorded on legal books by the date of 18/05/2018.
b) Assets like cash, gold, foreign exchange, movable and immovable properties and other capital market instruments located in Turkey and owned by income or corporate taxpayers, but not recorded in the legal books previously, declared and recorded on the legal books will not be subject to income tax.
10) The conditions for which assessments or tax investigation will not be sought.
In order not to be subject to assessment or tax investigation, the below conditions shall be met:
- Income tax calculated for assets shall be remitted to the tax office before due date,
- Assets shall be transferred to Turkey in 3 months following to notification or to transfer into the account which is opened in the Turkish bank or financial intermediary institution
11) Due Dates
July 31, 2018
To benefit from the tax-free option:
• Assets located abroad shall be notified and transferred to Turkey,
• Assets located in Turkey but not recorded on statutory books, shall be declared and recorded on legal books.
November 30, 2018
• Notification of assets located out of Turkey to Turkish banks or intermediary institutions,
• The use of foreign assets in the closure of foreign loans,
• Tax declaration of local assets,
• Recording of local assets into the statutory books of the Turkish company
December 31, 2018
• The banks and brokerage houses shall declare the taxes they have calculated with rate of 2% in relation to the assets notified to them.
• The tax assessed with rate of %2 on the value of the declared assets, will be paid by banks and intermediary institutions as tax responsible.
3 Months Condition
The assets located abroad, should be brought to Turkey within 3 months from the date of notification or should be transferred to a bank or brokerage account at the institution.
Sincerely yours,
Deloitte Turkey
For more information, please do not hesitate to contact the following individuals:
Gülfer Irmak: Tax Partner
girmak@deloitte.com
Barbaros Yeşin: Tax Director
byesin@deloitte.com
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