New tax reliefs offered to taxpayers

The Law No. 7338 Amending the Tax Procedure Law and Certain Laws enacted by The Grand National Assembly of Turkey (GNAT) encompasses important regulations

Dear Fortune readers, I would like to share with you my evaluations on the Law No. 7338 Amending the Tax Procedure Law and Certain Laws in this article.

First and foremost, I would like to state that the regulation in question was drawn up in order to introduce amendments that ensure tax compliance, increase tax security, strengthen social justice and the competitive environment, encourage investments and end conflicts, and ensure predictability in tax practices. To this end, I would like to convey the amendments to the law that I regard as significant.

I deem the abolition of fourth - period income and corporate provisional tax returns, which has long been debated in the public and first will be implemented for the taxation period beginning in 2022, as one of the significant amendments. Thus, while the burden of submitting returns for accounting departments will be eased, companies will be able to pay the provisional tax they will pay for the fourth period with their corporate tax returns in April. However, I would like to warn company accounting officers about the possibility of delay to occur in year-end procedures due to the abolition of the fourth provisional tax return.

Besides, the practice of not having an assessment made on behalf of the taxpayer in the previous two years and the current year in the 5% tax deduction provided to tax-compliant taxpayers, make conditional on the assessment being finalized is another important amendment Thus, it will be possible for many taxpayers to benefit from a 5% tax reduction without having to worry about a future assessment.

In addition, calculated reduction on cash capital brought from abroad was increased from 50 points to 75 points in order to encourage cash capital increase in foreign company subsidiaries in Turkey.

Setting off 10% of the total investment contribution amount calculated over the investment expenditure made in the reduced corporate tax practice to other taxes excluding SCT and VAT,  will allow taxpayers especially, those who cannot make a profit in the first period of their investment, to benefit from the reduced corporate tax regulation.

Accepting documents issued by banks, payment institutions, PTT and public institutions as a substitute for note of expenses will expedite the application of return of goods, providing the retail industry with significant sales advantage flexibility.

While it was previously impossible to benefit from the repentance provision if there had been a previous tax examination or referral to the valuation commission, the new regulation allows taxpayers in this situation to file correction returns with repentance for taxes other than those subject to the examination and valuation commission. 

It is permissible to extend depreciation periods by taking into account longer useful lifespans, provided that depreciation may be split according to the number of days and the useful life extended does not exceed twice the useful life or 50 years and the same rate is used each year.

Moreover, the part of the interest expenses of the loans used in the financing of economic assets, up to the date the commodity enters the stocks, can now be added to the cost. Loan interest, which was previously considered an immediately-expensed item, will now have to be added to the cost of the goods under the aforementioned legislation.

Once more, I would like to emphasize that the regulations in question are of a reassuring nature to taxpayers.