Insights

The Law No. 7338 on the Amendment of Tax Procedural Law and Certain Other Laws (“Omnibus Law”) has entered into force through the publication in the Official Gazette dated 26/10/2021 and numbered 31640. Omnibus Law has introduced many significant amendments in tax laws, especially in the Corporate Tax Law, Income Tax Law and Tax Procedural Law.

Within this context, important amendments which is introduced by Omnibus Law can be summarized as follows under the main headings.

Removal of The Advanced Tax Return of The Last Quarter (4th period)

With respect to the current tax practice, income and corporate taxpayers pay their taxes upon their 3 month income. Taxpayers declare their advance taxes by submitting a declaration 4 times a year in quarterly periods. The advanced tax return for the last quarter has to be submitted until 17th of February.

Pursuant to the amendment by the Omnibus Law, the number of advanced tax returns has been reduced from four to three. Accordingly, taxpayers will submit a total of three advanced tax returns for the first nine months of the year, within quarterly period.

Payment Period of Annual Income Tax

Pursuant to the Omnibus Law, income tax accrued on the income declared with the annual income tax return is paid in two equal installments, in March and July.

Revaluation Practice

The Omnibus Law reintroduced the revaluation practice. Through the revaluation practice, the opportunity to re-evaluate the depreciable economic assets in their balance sheets and the depreciation shown in the liabilities of their balance sheets, in periods when the conditions for inflation adjustments are not met, provided depending on the taxpayers’ choice.

Tax Exemptions for Asset Management Companies

Through the amendment by the Omnibus Law, the five-year exemption from stamp tax, RUSF and dues that applied to the Asset Management Companies has been turned into a permanent exemption. Additionally, the banking and insurance transaction tax (“BITT”) exemption would no longer be available for those companies.

Tax Return Submissions Under Voluntary Disclosure

In the current practice, a taxpayer who is under a tax inspection cannot be file tax returns under voluntary disclosure for any type of tax. The Omnibus Law provides that even if the taxpayer is under tax inspection, a tax return under voluntary disclosure can be filed for the other types of taxes which are not subject to ongoing tax inspection.

Place of The Tax Inspection

Through the amendment by the Omnibus Law, the principle of making the tax inspection in the tax office has been adopted as a general rule. On the other hand, upon the request of the taxpayer and the tax responsible and if the workplace is available, the tax inspection can take place in the workplace of the taxpayer.

Deduction on Cash Capital Contribution

Through the Omnibus Law, the notional interest deduction rate that applied as 50% for the cash contributions has been increased to 75% for the part of the contributions made from abroad.

Tax Deduction for Compliant Taxpayers

To be qualified as a compliant taxpayers, one of the condition to be met is that the taxpayer should not be subjected to any additional tax assessment or additional ex officio tax assessment in the year when the deduction is calculated is and in the two preceding years.

The scope of the abovementioned condition has been narrowed down and restricted to the finalized tax assessments. In other words, taxpayers who are under assessments will also be benefitted from the deduction for their compliance until there is a finalized tax assessment against the taxpayer during the said period. Additionally, if the finalized assessments within the said period does not exceed 1% of the reduced amount limit, the said condition would be deemed as fulfilled.

Doubtful Trade Receivables

The Omnibus Law has determined the amount for doubtful trade receivables. Under the introduced amendment, unpaid receivables of the debtor despite the protests sent or demands made in writing, would be considered as doubtful trade receivable without conducting any litigation or execution procedure as long as those receivables do not surpass the TRY 3.000.

Integration of Irregularity/Special Irregularity Fines Within the Scope of the Tax Settlement Process

In accordance with the Omnibus Law, irregularity and special irregularity fines that exceed TRY 5.000 has been included into tax settlement process.

Accommodation Tax

The effective date of the accommodation tax has been changed from January 1, 2022 to January 1, 2023.

Income Tax Exemption for Social Media Content Producing and App Developing for Mobile Devices

The income of the social media content producers, coming from the activities of sharing content such as text, images, audio, video via social network providers and those who develop apps for mobile devices such as smart phones and tablets for the electronic application sharing and sales platforms will be exempted from the income tax. In order to benefit from the heresaid tax exemption, following conditions must be satisfied: (i) An account must be opened in a bank, established in Turkey and (ii) All revenues related to the activities listed above must be collected through this account. In addition, Turkish Banks, will withhold 15% of income tax as of the date of transfer upon the transferred amount of revenue.

You can access to the full text of the abovesaid Omnibus Law here (Turkish).