The General Regulation Numbered 7143 Regarding the Reconstruction of the Tax and Other Certain Claims and Making Amendments in Certain Codes (Serial No:3) (“The Regulation”) is published in the Official Gazette dated 4th of July, 2018 numbered 30468. It includes provisions regarding the securities in domestic and abroad and capital market instruments as well as the exemption of certain earnings obtained abroad from income or corporate tax. The link of the regulation is below:
- The Ground
The Regulation is based upon the Article 10/13(ı) of the Code numbered 7143.
- Notification of the Assets Abroad
According to Article 3 of the Regulation, in order for the disposition of the money, gold, currency, securities and other capital market instruments that are abroad freely, these should be notified to be the banks and brokerage houses in Turkey until 30.11.2018 (including this date). The notification to the tax office is not required.
The date in which the assets are gained abroad is not essential for benefiting from the relevant provision if the assets subject to the notification are brought to the Turkey within three (3) months from the notification date.
- Bringing Assets from Abroad into Turkey
The tax examination or levy will not be made for the assets that are notified within the scope of Article 10/13 of the Code No. 7143. For benefiting from this provision, it is required that the tax levied for the notified amounts is paid at maturity and the assets subject to the notification is brought to Turkey within three months from the notification date or transferred to the account opened in banks or brokerage houses in Turkey.
- The Declaration to be Made by Banks or Brokerage Houses after the Notification of the Assets that are Abroad is Made
The banks and brokerage houses report the tax calculated as %2 of the value of the assets as tax responsible to the tax offices that they are affiliated with until 31.12.2018 and the tax offices levy the tax as %2 of the value of the assets. This tax is paid by the banks and brokerage houses until 31.12.18 in the capacity of tax responsible.
- The Conditions of Exemption in Taxes
In case of the following, no tax will be accrued within the scope of Article 10/13 of the Code No.7143:
i. For money, gold, securities and other capital market instruments abroad:
a) Notification and transfer to Turkey,
b) Use of the credits taken from banks or other financial institutions abroad and recorded in the legal accounts as of the date of 18.05.2018 for the close of credit by reducing from the account recordings,
c)On condition that to be brought before the date of 18.5.2018, in case of the capital advances that are recorded in legal accounts are deposited, the reducing of these advances from the account recordings,
ii. The notification and recording to the legal accounts of money, gold, currency, security and other capital market instruments and real estates which are in Turkey and belong to the income and corporate taxpayers but not included in the legal account recordings.
The conditions above shall be met until 31.7.2018.
- The Condition for Benefiting from the Exemption on Investigation and Levy with regards to the Assets Declared
For benefiting from the exemption on investigation and levy on the assets notified as indicated above, the taxes levied for the assets that were notified or declared should be paid on due time; and the assets notified or declared is brought to Turkey in 3 months starting from the notification date or transferred to the account to be opened in banks or brokerage houses in Turkey.
- Not Paying the Accrued Tax on Due Date or Not Fulfilling Other Conditions
The fact that the accrued tax is not paid on due time or other conditions included in the relevant article are not met, does not prevent the tax to be prosecuted and collected with the delay interest pursuant to the Code No.6183. In addition, the taxes that are collected as a result of the notification or declaration will not be declined or returned.
- Exemption for the Earnings Obtained Abroad and Beneficiaries of this Exemption
In Article 10/13(h) of the Code No. 7143, certain earnings obtained abroad are exempted from the income and corporate tax. The scope of the exemption comprises the following earnings including the ones obtained until 31.10.2018.
- The earnings arising from the sale of the participation stocks regarding the institutions whose legal and business centers are not in Turkey
- Participation earnings obtained from the institutions whose legal and business centers are not in Turkey
- Commercial earnings obtained through the workplaces or permanent representatives abroad.
The earnings arising from the liquidation of the institutions whose legal and business centers are not in Turkey and are transferred to Turkey until 31.12.2018 will be exempted from income and corporate tax.
Real persons and institutions that are fully accountable in Turkey (including the ones that operate in the free zones) may benefit from this exemption on condition that they transfer these earnings to Turkey.