Debt Restructuring Opportunity for Exporters

The law on "Restructuring Certain Receivables and Amending Certain Laws" was published in the Official Gazette and entered into force. Restructuring of Certain Receivables Public Receivables Subject to Restructuring The receivables subject to restructuring under Law No. 7256 are as follows:

• Taxes (taxes, duties and fees within the scope of the Tax Procedure Code) and tax penalties,
• Customs duties and administrative fines,
• Insurance premiums,
• Community insurance premiums,
• Pension withholding and employer contribution,
• Unemployment insurance premium,
• Social security support premium,
• Various administrative fines,
• Debts to exporter associations, chambers and exchanges,

All ancillary receivables such as interest, increases, late payment surcharges, late payment interest, penalty interest and late payment penalties related to the receivables mentioned above.

The following receivables and ancillary receivables within the scope of the Tax Procedure Code may be subject to restructuring.

• Taxes relating to periods prior to 31 August 2020 (this date inclusive), and for declaration-based taxes, taxes relating to declarations that should have been submitted by this date, and related tax penalties, late payment interest and late payment surcharges,
• Taxes accrued before 31 August 2020 (this date inclusive) relating to 2020, and related tax penalties, late payment interest and late payment surcharges,
• Tax penalties not dependent on the principal tax amount relating to determinations made before 31 August 2020 (this date inclusive).

As in previous restructuring applications, debtors are provided with the opportunity to pay in installments ranging from 6 to 18, payable every two months. Debtors wishing to benefit from this Law must apply to the relevant administration by 31 December 2020. With the restructuring of debts to tax offices, the first installment is required to be paid by 31 January 2021, while for social security debts the first installment is due by 28 February 2021, and other installments are to be paid in equal installments at maximum eighteen installments in two-month periods following these dates. Amounts calculated according to the provisions of the Law may be paid in full or in installments. If the full calculated amount is paid in advance within the first installment payment period, no coefficient shall be applied and 90 percent of the amounts calculated on the basis of monthly Yİ-ÜFE change rates shall be waived instead of ancillary receivables. If the restructured receivable consists only of ancillary receivables, 50 percent reduction shall be made from the amount calculated on the basis of monthly Yİ-ÜFE change rates instead of ancillary receivables. If the full calculated amount is paid within the first two installment payment periods, no coefficient shall be applied and 50 percent reduction shall be made on amounts calculated on the basis of monthly Yİ-ÜFE change rates instead of ancillary receivables. If the restructured receivable consists only of ancillary receivables, 25 percent reduction shall be made from the amount calculated on the basis of monthly Yİ-ÜFE change rates instead of ancillary receivables. The provisions of the Law shall not apply to debts for which the declaration filing/payment period has been postponed to October/November/December 2020 due to force majeure.

Debts of Exporter Associations, Chambers and Exchanges

The full principals of membership fee debts owed by exporters to exporter associations of which they are members in accordance with the provisions of the Law dated 18 June 2009 and numbered 5910 on the Establishment and Duties of the Turkish Exporters Assembly and Exporter Associations, In accordance with the provisions of the Law dated 18 May 2004 and numbered 5174 on the Union of Turkish Chambers and Commodity Exchanges and the Chambers and Commodity Exchanges Law, membership fees, chamber shares to be taken from freight revenue and exchange registration fees owed by members to chambers and exchanges, and membership fees owed by chambers and exchanges to the Union of Turkish Chambers and Commodity Exchanges as principals, and in accordance with the twenty-third paragraph of Article 26 and the seventh paragraph of Article 27 of the Insurance Law dated 3 June 2007 and numbered 5684, the full principals of insurance expert and insurance agent plate membership fee debts payable to the Union of Turkish Chambers and Commodity Exchanges, In accordance with the provisions of the Law dated 7 June 2005 and numbered 5362 on Artisan and Craftsmen Professional Organizations, the full principals of membership fee debts owed by artisans and craftsmen to the chambers of which they are members, and participation fees and artisan and craftsmen professional training development and support fund debts owed by chambers to the unions and federations of which they are members and by unions and federations to the Turkish Confederation of Artisans and Craftsmen, if paid as the first installment by the end of the third month following the date of publication of this Law, and the remainder in monthly periods in equal installments of a maximum of six total installments, the ancillary receivables such as interest, late payment interest and late payment surcharges applied to these receivables shall be waived, and if the principal receivables have been partially or fully paid before the date of publication of this Law, the ancillary receivables such as interest, late payment interest and late payment surcharges attributable to the paid principal debts shall be waived.

Asset Declaration

Individuals and legal entities that declare money, gold, foreign exchange, securities and other capital market instruments located abroad to a bank or brokerage firm in Turkey by 30 June 2021 shall be able to freely dispose of these assets. It may be used in closing credits used from foreign banks or financial institutions and recorded in legal books by 30 June 2021. In this case, subject to deduction from book records, the provisions of the law shall apply without requiring the condition of bringing assets used in debt payment to Turkey.

Income Tax Reduction on Express Cargo Exports

Under the scope of Law No. 7256 on Restructuring Certain Receivables and Amending Certain Laws, under Income Tax Law No. 193, 50 percent of the income obtained by full taxpayers as natural persons through goods exports carried out with electronic customs declarations issued by the Postal Administration authorized as indirect representative within the scope of Article 225 of Customs Law No. 4458 dated 27 October 1999 or by companies engaged in express cargo transportation may be reduced.

Customs Duties

The full unpaid portion of customs duties that have come due or for which the payment period has not yet passed, and instead of related secondary public receivables such as interest, late payment interest and late payment surcharges, the amount to be calculated on the basis of monthly Yİ-ÜFE change rates up to the date of publication of this Law; if the unpaid receivable consists only of secondary receivables, instead of secondary receivables, the amount to be calculated on the basis of monthly Yİ-ÜFE change rates, provided that it is paid in full within the period and manner specified in this Law, secondary public receivables such as interest, late payment interest and late payment surcharges related to customs duties and all administrative fines levied in connection with the principal, including those paid before the date of publication of this Law, shall be waived.

Administrative Fines and Administrative Fines Levied under Participation Provisions

50 percent of administrative fines that have come due or for which the payment period has not yet passed and that have been levied due to customs obligations under Law No. 4458 and other related laws independent of customs duty principals, and administrative fines levied due to participation provisions of Law No. 5326 dated 30 March 2005 (Misdemeanor Law), provided that the full amount is paid within the period and manner specified in this Law, 50 percent of the remaining fines shall be waived.

Administrative Fines Levied Based on Customs Value

30 percent of administrative fines levied on the basis of the customs value of goods and, if any, the full principal of customs duties and instead of related secondary public receivables such as interest, late payment interest and late payment surcharges, the amount to be calculated on the basis of monthly Yİ-ÜFE change rates up to the date of publication of this Law, provided that it is paid in full within the period and manner specified in this Law, 70 percent of the remaining fines and all secondary public receivables such as interest, late payment interest and late payment surcharges related to the principal receivables shall be waived.

Domestic Processing and Temporary Admission Regime

The duration of application of the exemption for the supply of materials to be used in the production of goods to be exported under the domestic processing and temporary admission regimes regulated in Temporary Article 17 of the VAT Law has been extended to 31 December 2025. The said Decision, which shall enter into force from the date of publication, is accessible at https://www.resmigazete.gov.tr/eskiler/2020/11/20201117-1.htm   Source