The Ministry of Treasury and Finance Revenue Administration has issued the "General Communique on Inclusion of Certain Assets in the Economy" ("the Communique") in the Official Gazette No. 31318 on November 28, 2020.
The Communique sets out procedures and principles regarding the implementation of the provisions of Article 21 of The Law on Restructuring of Certain Receivables and Amendment of Certain Laws No. 7256, and the provisions of provisional article 93 added to Income Tax Law No. 193.
The Communique focuses on the inclusion of certain assets held outside of Turkey to the national economy by bringing those assets to Turkey. It also covers the registration of assets and real estate held in Turkey but not recorded in legal books.
Individuals and legal entities can notify banks or intermediary institutions (exclusively for securities and other capital market instruments) of their assets held outside of Turkey and no notification will be made to tax offices regarding these assets. Notifications can also be made by authorized or legal representatives. It is important to note that in cases where taxpayers inform banks or intermediary institutions in accordance with the Communique no tax inspection and assessment will be made under any circumstances in respect of their assets notified in this way.
In order to benefit from this regulation, assets that are subject to notification must be brought into Turkey or transferred to banks or intermediary institutions in Turkey within three months of the notification date. Should an account holder who makes notification of assets and the person who transfers those assets from abroad differ, it will not affect any benefit of the provisions.
Until 30 June 2021, assets held outside of Turkey can be utilized to clear loans from banks or financial institutions located abroad and recorded in taxpayers’ legal books as of 17 November 2020. In such cases, assets used for the payment of the debt do not have to be brought into Turkey upon the condition that the assets are removed from their legal books.
Additionally, in cases where capital advances recorded in taxpayers’ legal books as of November 17, 2020 are compensated by bringing any of the aforementioned assets held abroad to Turkey before November 17, 2020, individuals and entities can benefit from these provisions on the condition that such capital advances are removed from their legal books.
Assets held outside of Turkey not included in the relevant provisions of the Communique (for example real estate), may be brought to Turkey under these provisions if converted into any of the listed assets by June 30, 2020.
The Communique also regulates the procedures for banks or intermediary institutions regarding the notification of assets held outside of Turkey. Banks or intermediary institutions will not request any documentation regarding the assets subject to the tax amnesty once notified.
Income or corporation taxpayers can notify tax offices online of their money, gold, foreign currency, security, other capital market instruments and real estate held in Turkey that are not already recorded in legal books. Assets other than real estate that are subject to notification must be deposited with banks or intermediary institutions.
Individuals or corporations can also benefit from these provisions in cases where their real estate is registered in their business records as capital in kind on the conditions that (i) the decision of capital increase is taken as of the notification date and (ii) the decision is registered in the trade registry by the end of the tenth month following the notification date.
Corporations or their legal representatives or shareholders and individuals who are authorized to manage assets listed in the regulation on behalf of the corporation or its shareholders upon a power or representing agreements drafted by authorized institutions before November 17, 2020, can benefit from these provisions in cases where they (i) bring the assets that they held abroad into Turkey as of November 17, 2020 by notifying on behalf of the corporation in respect of the provisions of the Communique or (ii) transfer the assets to banks or intermediary institutions in Turkey or (iii) make notification of assets held in Turkey that are not recorded in legal books as of November 17, 2020, in respect of the provisions of the Communique.
Assets belonging to a corporation or its shareholders that are under the management of individuals other than legal representatives, shareholders, or other representatives of the corporation, can be subject to the notification on behalf of the corporation under the pertaining provisions of the Communique. In addition, in cases where assets belonging to individuals held in corporations located abroad, in which the individuals are a shareholder or legal representative, can also benefit from the provisions. However, during any investigation made for reasons other than the notification, proof that these assets belong to the corporation or its shareholders or individuals will be required.
In respect of notifications of assets held abroad to banks or intermediary institutions, and notification of the assets held inside Turkey to tax offices, calculations will be undertaken as follows: Money held in Turkish Lira will be calculated at its nominal value. The value of gold will be calculated at its current market value. The value of foreign currency will be calculated at the exchange rate of the Central Bank of the Republic of Turkey.
The value of securities and other capital market instruments, such as shares, will be calculated first at their stock exchange prices, if none exists then at their current market value, if that cannot be determined their purchase price will be used, and if their purchase price is not known their nominal value will be used. The value of debt securities such as bonds, bills, and Eurobonds, and of derivative instruments such as derivatives and options contracts will be calculated in the same way.
The value of investment fund participation shares will be calculated with their closing price determined in the relevant market. And the value of real estate will be calculated at its current market value.
Turkish lira equivalent prices of assets will be considered in respect of notifications.
Assets held abroad that are subject to notification can be recorded in the legal books of a corporation by the corporation itself in cases where the assets are notified on behalf of the corporation. In cases where assets are notified on behalf of individuals, since they can benefit from the opportunities provided in the regulation, they can also record these assets in the legal books of corporations.