New Developments
The Law on the Restructuring of Certain Receivables and Amendments to Certain Laws No. 7256 (“Law No. 7256“) published on the Official Gazette No. 31307 on November 17, 2020 introduced a new asset peace incentive.
What Does the Law No. 7526 Introduce?
Asset Peace for Assets Held Abroad
- Individuals and legal entities can freely dispose of their money, gold, foreign exchange, securities and other capital market instruments held abroad if they duly notify these assets to Turkish banks or intermediary institutions by June 30, 2021.
- Individuals and legal entities can utilize the abovementioned assets until June 30, 2021 to close loans from banks and financial institutions abroad and which are recorded in taxpayers’ legal books as of November 17, 2020. Assets used to repay loans can benefit from this provision without being brought into Turkey if they are removed from the legal book entries.
- If the capital advances recorded in taxpayers’ legal books as of November 17, 2020 are compensated by bringing money, gold, foreign exchange, securities and other capital market instruments held abroad to Turkey before November 17, 2020, taxpayers can benefit from the provision if the capital advances are removed from legal book entries.
- Taxpayers who keep legal books in accordance with the Tax Procedure Law can include the assets brought into Turkey into their enterprise without including them in the determination of their current income and can withdraw these assets from their enterprise without including them in the determination of their taxable income or distributable income.
- In order to benefit from this provision, taxpayers must bring the assets into Turkey or transfer them into a Turkish bank/intermediary institution account within three months from the notification date.
- Losses arising from the disposal of assets brought into Turkey cannot be considered an expense or deduction for income and corporate income tax purposes.
- Neither a tax audit will be conducted nor will a tax assessment be made regarding these assets notified in line with the provision.
Asset Peace for Assets in Turkey not Recorded in Legal Books
- Income and corporate income taxpayers can notify the tax authorities about their money, gold, foreign exchange, securities, other capital market instruments and immovables held in Turkey but not recorded in their legal books by June 30, 2021.
- These assets can be recorded into taxpayers’ legal books without being considered when determining their current income by June 30, 2021. These assets can also be withdrawn from the enterprises without including them in the determination of their taxable income or distributable income.
- Losses arising from the disposal of assets recorded in legal books cannot be considered an expense or deduction for income and corporate income tax purposes.
- Neither will a tax audit be conducted nor will a tax assessment be made regarding these assets notified in line with the provision.
Conclusion
The new asset peace incentive’s goal is to bring assets held abroad into Turkey and include them in Turkey’s national economy.
