The Ministry of Finance and Finance issued the “General Communiqué on In…
The Ministry of Finance and Finance has issued the “General Communiqué on the Inclusion of Certain Assets in the Economy” (“the communique“) in Official Gazette No. 31318 of November 28, 2020.
The Communiqué establishes procedures and policies regarding the implementation of the provisions of Article 21 of Law No. 7256 on the Reorganization of Certain Claims and Amendment of Certain Laws and the provisions of Provisional Article 93 added to Law No. 193 on Income Tax.
The communique focuses on incorporating certain assets held outside of Turkey into the national economy by bringing those assets into Turkey. It also covers the registration of assets and real estate held in Turkey but not registered in legal books.
Individuals and legal entities can report their assets held outside Turkey to banks or intermediaries (exclusively for securities and other capital market instruments) and there is no reporting of such assets to tax offices. Notifications can also be made by authorized persons or legal representatives. It is important to note that in cases where Taxable Banks or Intermediaries disclose under the Communique, under no circumstances will a tax audit and assessment be conducted in respect of their assets so disclosed.
In order to benefit from this regime, reportable assets must be brought to Turkey or transferred to banks or intermediaries in Turkey within three months from the date of notification. If an account holder reporting assets and the person transferring those assets from abroad are different, this will not affect the benefit of the provisions.
Until June 30, 2021, assets held outside Turkey can be used to pay off loans from banks or financial institutions based abroad and be registered in taxpayers’ legal books from November 17, 2020. In such cases, this does not apply to assets used to pay off the debts, which must be brought to Turkey on condition that the assets are removed from their legal books.
In addition, natural and legal persons in cases where capital advances recorded in taxpayers’ legal books as of November 17, 2020 can be compensated by bringing any of the above-mentioned assets held abroad to Turkey before November 17, 2020 will, provided these provisions are exercised, such capital advances be stricken from their legal books.
Assets held outside Turkey that are not included in the relevant provisions of the communique (e.g. real estate) can be brought to Turkey under these provisions if they are converted into one of the listed assets by June 30, 2020.
The communiqué also sets out the procedures for banks or intermediary institutions to report assets held outside Turkey. Banks or intermediary institutions do not require any documentation on the assets affected by the tax amnesty after the announcement has been made.
Income or corporate tax payer can inform tax offices online about their money, Gold, foreign currency, securities, other capital market instruments and real estate held in Turkey that are not yet registered in statutory books. Assets other than real estate which are notifiable are to be deposited with banks or intermediary bodies.
Individuals or legal entities can also benefit from these provisions if their properties are registered in their books of accounts as capital in kind, on the conditions that (i) the decision to raise capital is made on the notification date and (ii) the decision is made by the end entered in the commercial register within the tenth month after the notification date.
Companies or their legal representatives or shareholders and persons authorized to manage the assets listed in the Regulation on behalf of the company or its shareholders on the basis of a power of attorney or representation agreement drawn up by authorized institutions before November 17, 2020 may in certain cases benefit from these provisions if they (i) bring the assets they held abroad to Turkey by November 17, 2020 by communicating the provisions of the communiqué on behalf of the company, or (ii) the assets to banks or intermediaries Transferred to institutions in Turkey or (iii) report assets held in Turkey not recorded in the legal books in relation to the provisions of the Communiqué dated November 17, 2020.
Assets of a company or its shareholders managed by persons other than legal representatives, shareholders or other representatives of the company may be reported on behalf of the company in accordance with the relevant provisions of the Communiqué. The provisions can also be invoked in cases where the assets of individuals are held by foreign-based corporations where the individual is a shareholder or legal representative. However, any investigation made for reasons other than notification will require proof that such assets belong to the Company or its shareholders or individuals.
Reporting of assets held abroad to banks or intermediary institutions and reporting of assets held in Turkey to tax offices is calculated as follows: Money held in Turkish lira is charged at face value. The value of gold is calculated at its current market value. The value of foreign currency is 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, is first calculated at their market price, if not available, then at their current market value, if this cannot be determined, at their acquisition price, and then at their acquisition price which is not known to them Nominal value is used. The value of debt instruments such as bonds, bills and eurobonds, and derivative instruments such as derivatives and option contracts are calculated in the same way.
The value of participation shares in investment funds is calculated using their closing price on the relevant market. And the value of real estate is calculated at the current market value.
The equivalent value of assets in Turkish Lira is taken into account in the notifications.
Reportable assets abroad can be entered in the legal books of a corporation by the corporation itself if the assets are reported in the name of the corporation. In cases where assets are reported on behalf of individuals, since they can benefit from the opportunities provided for in the Regulation, they can also register those assets in the legal books of companies.
This article was first published here.