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Turkey Plans Tax Amnesty

by Lorys Charalambous,, Cyprus

17 November 2010

Late taxpayers in Turkey are to be granted interest and penalty abatements and more time to get their payments up to date.

Deputy prime minister Ali Babacan and labor minister Ömer Dinçer have announced some measures to facilitate people having trouble paying their dues to the government. At a press conference in Ankara announcing the details, the types of debt to be covered were said to include tax debt accruing up to July 31, debt on social security charges before June 30 and utility bills up to July 31.

Babacan said tax inspections would be stepped up afterwards and 1,500 tax inspectors are to be recruited as an incentive for people to take this opportunity to clear their debt. There would be no amnesty on the debt itself, but half of the tax penalties imposed over tax evasion, and all penalties imposed as a result of late or non-payment would be written off.

Babacan added that 50% of administrative fines imposed by the social security administration and 50% of other levies not including the principal debt would be revalued to take into account inflation, but released from further late penalties.

Individuals and institutions wishing to benefit from the amnesty must apply within two months of the legislation taking effect. Rescheduled installments would be required on a bimonthly basis over a 12, 24 or 36 month period, but failure to meet any installment would result in loss of benefits from the arrangement. Payment by credit card would be permitted. Publicly owned banks, Türkiye Halk Bankası and T.C Ziraat Bankası, are gearing up to provide special loans for taxpayers who want to clear their debt immediately without applying for installments.

The Turkish government also proposes to extend the time period allowed for claiming shelter from tax fines under the wealth amnesty program. This program was introduced last year as a crisis measure to allow untaxed funds held abroad to be repatriated witout penalty.

For disputed tax claims, any legal proceedings must be halted before claimants can benefit from the scheme, but where inspections or compensations are still in progress, restructurings may be allowed after settlement on a final amount has been reached. There has been press comment about how the Doğan Media Group, with tax claims of almost USD4bn under dispute, could benefit.

Babacan denied that the government expected to garner TRY50bn (USD34.5bn) tax revenues from this policy as reported in the media, but media analysts are still confident that the yield will be in billions. The measure will be debated in Parliament after the 2011 budget is approved and may be adjusted during committee deliberations, Babacan said.

TAGS: court | compliance | tax | tax compliance | interest | law | agreements | social security | penalties

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