1- When did this law get enacted and published?
The law related to %5 tax discount was enacted at Parliamentary Counsel on the date of 23.02.2017 and it was published on the official gazette numbered 30001 on the date of 08.03.2017.
The complete name of the law: “RESTRUCTURİNG OF CERTAIN RECEIVABLES AND AMENDING CERTAIN LAWS AND LAW DECREES”
Law number 6824
It is published as the article 4 of the law known as “bag law”.
2- Which Taxes Will Benefit From The %5 Tax Discount?
%5 Tax reduction will benefit income tax and corporate tax.
Any other VAT, Witholding, Stamp and others are excluded.
3- Which articles of the Bag Law and İncome Tax were modified?
It’s entered in tax legistlation with the repeating addition of the 121st article in income tax law. The title of the repeating article is “Tax Reduction For Compliant Taxpayers”
4- Did the reduction article enter into force when it was published?
No. Some articles of the bag law are entered into force on the date of publication, however the %5 tax reduction article will enter into force on the date of 01 January 2018.
5- Which years’ income will it apply to first?
The law will apply to the Income and Corporate Taxes which were obtained in 2017 and declared in the months of 2017 March- April.
6- Which Taxpayers will benefit from the reduction?
Taxpayers who pay income tax and corporate taxes because of commercial, agricultural or professional actions will benefit from the reduction.
7- Which Taxpayers won’t be able to benefit from the reduction?
Those who operate on finance and banking, insurance and reinsurance companies, retirement companies and retirement investment funds won’t be able to benefit from the reductions.
8- How Will The Reduction Be Implemented?
The 5% of the calculated taxes on the annual revenue and corporate tax declarations is reducted from the income or corporate tax.
In other words, the reduction of 5% will be made over the calculated taxes, not the tax basis.
The reduction amount which the tax payers will benefit from is calculated according to the percentage of the income made from commercial, agricultural and professional operations in the total income tax basis.
9- Will there be an upper limit for the reduction as TL currency?
Yes. The calculated 5% reduction won’t surpass 1 Million TL. The amounts that surpass it won’t be taken into account. This amount will be increased in the following years.
10- Will the amount that was calculated but not reducted that year be transferred to the next year?
Yes. In case where the reduction amount is more than the tax amount that needs to be paid, the remaining amount can be eliminated from the other taxes upon the declaration of the taxpayer within exactly one year following the due date of the annual income tax or corporate tax. The tax amount that is not eliminated within this period will not be objected to or returned.
11- What are the conditions for reduction?
1. The declarations belonging to the year of the declaration for reduction calculation, and the declarations for the previous two years must be made within their legal period. (The declarations which were made for correction purposes or made at one’s own accord after missing the due date do not count as infringement of the condition) Also the accrued taxes must be paid within their legal period)
(The payment of missing amounts upto 10 TL per declaration do not count as infringement of the condition),
2. No additional, ex officio or administrative assessment was made within the date stated in the clause numbered (1) in respect of taxes subject to declaration (It does not count as infriengment of the condition if the assessments that were made are abolished by final verdicts or according to compromise or correction articles of the Tax Procedure Law numbered 213),
3. There is no overdue tax debt surpassing 1.000 Turkish Liras (including tax penalty) from the submission date of the reduction declaration.
12- Those who commit tax evasion will not benefit from the reduction!
Those who are identified to have committed the acts stated in the Tax Procedure Law numbered 213, article 359 within the year for which the reduction will be calculated and the previous 4 calendar years, will not benefit from the provisions of the article.
13- Will those who benefit from the reduction unjustly pay loss of tax?
No. If it is determined that the taxpayers who benefit from the tax reduction do not possess the requisite qualifications, the taxes which were not paid within the taxation period because of the reduction will be levied without the application of tax loss penalty.
This provision will be implemented if the declarations for a tax made within the year of the reduction calculation declaration and the previous two years is not reflecting the truth.
In this case, for the tax which was not paid because of the reduction process, the time out begins at the start of the calendar year following the assessment.
14- Calculation Example:
ABC Ltd. Co.
2017 corporate tax basis : 100.000 TL
Calculated corporate tax (100.000 TL x %20) : 20.000 TL
Calculated reduction (20.000 TL x %5) : 1.000 TL
The tax which will be paid after reduction (20.000 TL – 1.000 TL) : 19.000 TL
Source: The Official Gazette, Income Tax Law and Tax Procedure Law
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