Tax Newsletter

Read below the latest legal developments in Turkey. This latest roundup provides insight on the latest amended and repealed laws and regulations affecting different sectors.

To discuss how these developments affect your business interests please contact Fethi Pekin, Managing Partner. Email:



Effective date of the Agreement on the Avoidance of Double Taxation between Turkey and Gambia

  • Avoidance of Double Taxation Treaty between Turkey and Gambia was signed on February11, 2014 and was determined to be effective after ratifications of both parties. Under the Decree of the Council of Ministers (Decree No. 2018/11635) (published in the Official Gazette dated May 2, 2018 and numbered 30409), the effective date of the “<Agreement on the Avoidance of Double Taxation of Income Tax between the Government of Republic of Turkey and the Government of Republic of Gambia” was determined to be January 26, 2018.

The Opportunity of Tax Base/Tax Principal Increase under Tax Amnesty Law

  • Tax payers shall not be subject to any tax audit and tax assessment for the years and taxes that they increased on their behalf, if ones pay the total sums calculated where, income and corporate tax, value added tax and income (withholding), corporate income (withholding) tax are subject to an increase in base or tax principle on the condition of paying within the determined time and required form; on certain circumstances listed below in accordance with Article 5 of the Law numbered 7143 (published in the Official Gazette published on May 18, 2018 (“Tax Amnesty Law”). Tax Base Increase on Income and Corporate Taxes Income and corporate income taxpayers may benefit from the tax base increase provisions of the Tax Amnesty Law if they increase their tax bases in their declarations as such increase shall not be less than 35% for the year 2013, 30% for the year 2014, 25% for the year 2015, 20% for the year 2016, 15% for the year 2017 . Tax Increase on Income (Withholding) and Corporate (Withholding) Taxes A tax increase is possible for withholdings required to be calculated over salaries, progress payments related to construction works extending to years, rent and payments for independent professional services, payments to the farmers and traders that benefit from the exemption. Tax Increase on Value Added Tax Value added tax (“VAT”) payers shall declare the VAT, as it shall not be less than 3.5% for the year 2013, 3% for the year 2014, 2.5% for the year 2015, 2% for the year 2016 and 1.5% for the year 2017, over the cumulative sum of the annual VAT, calculated regarding the declaration about each taxation period as tax increase. Tax payers wishing to apply for a tax base and tax principal increase are obliged to make an application until the August 31, 2018. Taxes calculated within the scope of tax base and tax principal increase may be prepaid or may be paid with installments. If it is prepaid, taxes should be paid until October 1, 2018. Moreover, sums before mentioned shall also be paid in two month terms, with a maximum of 6 equal installments, if wanted to be paid in installments. In a situation where the above mentioned payment requirement forms are not to be followed, pursuance and collection shall continue with a late payment surcharge.

Tax Amnesty Provisions related to the Structuring of Tax Receivables and Procedures in the Stage of Tax Inspection

  •   The provisions of Tax Amnesty Law regarding the structuring of tax receivables and procedures at the assessment stage that are listed below entered into force on the publication date of Tax Amnesty Law. Tax receivables which are finalized As of the date of May 18, 2018; providing that unpaid due or undue tax principals and the amount to be calculated on the basis of monthly change rates on domestic PPI; late payment interest, accessory public receivables such as late payment surcharge and tax penalties respecting the principal and late payment surcharges regarding the penalties are waived. Taxes which are not finalized or which are on trial With respect to tax assessments in relation to which a lawsuit has been filed or the term of litigation has not passed as of May 18, 2018 (including this date); if 50% of the tax principal and the amount which is calculated based on domestic PPI over this 50% amount are paid, the collection of the remaining 50% with the delay interest, late payment surcharge and tax loss penalties related to the principal amount with the late payment surcharges related to the these tax penalties are cancelled. Transactions at the stage of inspection and assessment The tax inspections that are incomplete despite being initiated prior to May 18, 2018, appraisal, assessment and accrual proceedings would be carried on. Following the completion of these transactions, 50% of the assessed tax and the amount to be calculated on the basis of monthly change rates on domestic PPI, the entire late fees to be calculated until the expiry of litigation term set as per the submission of notice, with written application in 30 days as of the date notice was submitted, provided that it’s paid in 6 equal instalments per bimonthly periods with the first instalment starting from the month following the date that notice was submitted; the other 50 % and delay interest, late fee applied on taxes until May 18, 2018, all penalties linked to the tax base would be abandoned. Except the special application period contained in the Article 3, taxpayers demanding the structuring of tax debts under the law are required to submit their applications until the end of second month following the Law’s publication date (July 31, 2018). Except the special payment periods contained in the Article 3, receivables restructured as per the Law could be paid in advance or instalments. In the circumstance that payment in instalments is preferred, bimonthly payments in maximum 18 equal instalments to start from the 4th month (September 2018) following the Law’s publication date will be possible. If payment in advance is preferred, all of the calculated debt must be paid within the first instalment payment period (September 2018). In this case, the collection of 90% of the domestic PPI difference is abandoned.

Repatriation of Capital under the Tax Amnesty Law

  • Individuals and legal entities informing of a bank or brokerage house in Turkey with respect to their money, gold, foreign currency, securities and other capital market instruments abroad until November 30, 2018 will be able to save these freely. Taxes calculated at a rate of 2% for the assets abroad notified to the banks or brokerage houses shall be declared to the affiliated tax office through a tax return until December 31, 2018 as a taxpayer and paid within the same period. Income or corporate income taxpayers will be able to declare their money, gold, foreign currency, securities, other capital market instruments and immovable resident in Turkey but non-existent within the legal book-keeping entries until November 30, 2018. These assets may be registered in legal books regardless of the detection of the period earnings until the same date. In that case, such assets may be withdrawn from operation regardless of the detection of income subject to taxation and the distributable income for the institutions. Taxes at a rate of 2% will be levied on the value of the above assets declared to the tax office. This tax should be paid until December 31, 2018. However, taxpayers declaring their assets abroad and bringing them to Turkey until July 31, 2018, taxpayers using those assets to close loans extended abroad or falling capital advances from book entries with these assets, income and corporate taxpayers declaring their domestic assets and entering them to legal books would not pay the concerning 2% tax.    Any tax inspection and tax assessment will not be handled due to the notified and declared assets. However, so as to benefit from this provision; payment of the assessed taxes on time, bringing the assets abroad to Turkey in 3 months starting from the date of notification or transferring them to an account opened in a bank or brokerage house in Turkey is essential. Regarding the real persons and corporations that are fully amenable; earnings acquired through the affiliates without legal or business center in Turkey, gains from the sale of participations in these institutions, gains from the liquidation of these institutions, the business profits that they have gained through their place of business and permanent representatives abroad will be exempted from income or corporation tax, provided that they are transferred to Turkey as of May 18, 2018 until December 31, 2018.
This legal newsletter has been prepared for informational purposes only; it has not been prepared for advertising purposes or with the intention of creating an attorney-client relationship. It does not seek to provide information on all legal developments in Turkey with the quarter specified. None of the information contained in this legal newsletter shall constitute legal advice or anything akin thereto. To unsubscribe email the Editor:
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