Asset Peace Once more – Tax Authorities

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Law No. 7256 introduced an asset peace and, with the

extension of its application period, taxpayers had the opportunity

to benefit from the asset peace until 30 June 2022. Following the

expiry of the asset peace under Law No. 7256, Law No. 7417,

approved at the General Assembly on 1 July 2022 and published on

the Official Gazette dated 5 July 2022, introduces a new asset

peace. The details of the new asset peace, which involves many

significant differences from the previous one, are provided

below.

New Developments

Law No. 7417 on Certain Amendments to Civil Servants Law and

Certain Laws and Statutory Decree No. 375 (“Law No.

7417“), which was published in the Official Gazette

dated 05.07.2022 and No. 31887, introduces a new asset peace under

Article 50 thereof.

What Does the New Asset Peace Introduce?

i. Foreign Assets to be Notified

Individuals or legal persons can notify their banks or

intermediary institutions of their money, gold, securities and

other capital market instruments abroad by 31 March

2023.

Individuals or legal persons can use these assets to fulfil the

loans obtained from foreign banks or financial institutions and

recorded in the legal books on the date that Law No. 7417 comes

into effect (i.e. 5 July 2022). These assets should be used to

fulfil the mentioned loans until 31 March 2023. In addition, these

assets will be written off from the records and the asset peace

applies to them without it being brought into Turkey.

The banks and intermediary institutions will collect taxes in

cash on the assets at the following rates:

At 1% for the notifications until 30

September 2022
At 2% for the notifications between 1

October and 31 December 2022 (this date included)
At 3% for the notifications until 31

March 2023 (this date included)

The banks and intermediary institutions will declare and pay the

taxes collected to the tax offices until the evening of the

fifteenth day following the notification.

If the notified assets are held in the account for at least one

year after they are transferred to the banks or intermediary

institutions in Turkey or deposited to these accounts as brought

from abroad, the tax will apply at 0%. Those

who made the notifications can apply to tax offices for the refund

of the taxes declared and paid previously by the banks and

intermediary institutions.

ii. Local Assets to be Declared

Income and corporate income tax payers must declare the money,

gold, foreign currencies, securities, other capital market

instruments and immovable properties that are in Turkey but not

recorded in the legal books to the tax offices by 31

March 2023.

The declared assets will be taxed at

3% of their value (regardless of the declaration

date) and this tax must be paid by the end of the month following

the assessment. In addition, the title deed fee will not apply to

the transfer of the immovable properties that are declared within

the asset peace and recorded in the legal books, and the transfer

of these properties will not be deemed as disposal under Article 80

of the Income Tax Law.

iii. Capital Premiums

The asset peace also applies to the capital premiums that are

recorded in the legal books on the date that it came into effect (5

July 2022) if these premiums are fulfilled before the same day

through transferring the money, gold, foreign currencies,

securities and other capital market instruments to Turkey from

abroad. Mentioned capital premiums must be written off from the

records by 31 March 2023.

iv. Important Points for Local and Foreign Assets

Regarding the recording of the local/foreign assets in the legal

books and their taxation:

Those keeping the legal books on a balance sheet basis will

record the local/foreign assets in a provisional special fund

account under the liabilities that will be opened at the date of

notification or declaration. The amounts in the fund account (i)

cannot be withdrawn from the fund for two years, (ii) can only be

used to contribute to capital and (iii) are not taxed in the case

of liquidation.
Independent professionals keeping an income book or those

keeping legal books based on the operation account method will

record the assets in their books as indicated separately on the

date of notification/declaration.
Declared/notified assets are not taken into account in the

calculation of the business profit of the taxation period. These

assets can be withdrawn after two years of notification/declaration

without being taken into account in the calculation of taxable

profit or distributable profit.
Those who are not income or corporate tax payers can also

benefit from the asset peace by only declaring the assets and

without any further requirements sought except for the declaration.

However, they should certify the assets, except the immovable

properties, by depositing them to banks or intermediary

institutions by the notification date at the latest.

In addition:

The taxes paid cannot be written off or deducted from other

taxes.
Depreciation provisions under Tax Procedural Law No. 213 do not

apply to local/foreign assets.
The losses incurred from the sale of the assets cannot be

considered an expense or a deduction in terms of income or

corporate income tax.
No adjustment can be made to the notifications/declarations

after the period for filing them.

v. Provisions for Tax Inspection or Valuation Commission

Decisions Regarding Local/Foreign Assets

Tax inspection and assessment cannot be made for the amount

corresponding to the notified/declared assets. In the results of a

tax audit conducted based on another reason or in a valuation

commission’s decision, if a tax base difference is found due to

the notified/declared assets, (i) no assessment is made if the

amount of the related assets is equal to or more than the base

difference found, and (ii) a tax assessment is made only for the

difference if the amount of the notified/declared assets is less

than the base difference.
If the tax assessment or valuation commission’s decision

finds a tax base difference for a reason other than the notified or

declared assets, the assessments are made without deducting the

notified/declared amounts from the tax base difference found. In

this case, reasons for the tax base difference could be the

incorrect application of the depreciation rate or procedures,

errors in the expenses in the calculation of the taxable income,

etc.
For the application of the provisions regarding tax inspection,

(i) the foreign assets must be brought to Turkey or transferred to

an account to be opened in a bank or intermediary institution in

Turkey within three months following the notification and (ii)

taxes on the local assets declared must be paid on time. In

addition, the notification or declaration must be made before the

tax inspection starts or the referral to the valuation commission

takes place.
If the taxes accrued are not paid, the original tax is followed

up and collected with a delay interest, and the taxes collected

cannot be subject to rejection and refund.

Conclusion

The new asset peace introduced by Law No. 7417, came into force

by publishing in the Official Gazette dated 5 July 2022 and No.

31887, is generally similar to the previous asset peace. However,

it also includes many significant differences, such as the gradual

tax rates foreseen for assets located abroad depending on the

notification date and the duration of the assets’ stay in the

bank accounts, the amount to be recorded in the accounts cannot be

withdrawn from the operation for two years, non-taxpayers can also

benefit from the asset peace for local assets and the title deed

fee is not charged in the declaration of immovable properties. As

with other asset peace, we expect the Ministry of Treasury and

Finance to issue a communiqué containing the details and

examples.

The content of this article is intended to provide a general

guide to the subject matter. Specialist advice should be sought

about your specific circumstances.