On 12 March 2023, Turkey issued Law No. 7440 on restructuring public receivables and amendment to certain laws. The Law has brought about an important change by introducing a one-time additional tax for specific corporate taxpayers who have utilized particular exemptions and deductions while calculating their corporate income tax base. The Law includes the following key measures:
Restructuring public receivables
- The law covers public receivables that have been accrued until 31 December 2022.
- 50% of the tax penalties are never due (fraud and special irregularity penalties) and the tax penalties due to participation will be waived, and the remaining 50% will have to be paid.
- Incomplete tax inspections and assessments initiated before 12 March 2023, will continue until completion. If the taxpayer pays 50% of the original tax amount and the amount calculated based on the monthly PPI (Producer Price Index) rates until 12 March 2023, and complies with the law, the remaining 50% of the tax, delay interests, and tax penalties (except for penalties not related to the original tax, where 25% of the penalty must be paid) will be waived.
Increasing taxes or tax base
Under the new law, taxpayers can prevent possible tax audits for the fiscal years 2018-2022 by voluntarily increasing their tax bases and paying additional taxes. Corporate income tax, VAT, and some withholding taxes can be increased. This tax mechanism serves as insurance against tax risks, but it may limit tax loss carry forward and prevent refunds of excess prepaid corporate income tax.
Additional tax
Corporate taxpayers are subject to a new tax under Law No. 7440, which charges 10% on deductions and exemptions in their fiscal year 2022 income tax returns and on tax bases with reduced corporate income tax rates. The additional tax must be paid in two installments, due by 30 April and 31 August 2023 respectively.
