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What is Tax Amnesty?

What is Tax Amnesty?

Tax amnesty is an application that allows the state to delete or reduce tax debts under certain conditions. It can be an important opportunity, especially for taxpayers experiencing financial difficulties. However, some conditions and consequences of tax amnesty should also be considered.

The concept of “forgiveness” is a word meaning, and it is defined as the forgiveness of a crime, a fault, or an error. The institution of amnesty is regulated in the Constitution and the Turkish Penal Code in the general sense of Criminal Law in Turkish Legislation.

Tax amnesty”, in the narrow sense, means that the state gives up the collection of tax penalties partially or completely. And in a broad sense, it is defined as the partial or complete waiver of the collection of taxes and all tax-related receivables. There is no provision regarding tax amnesty in the Tax Procedure Law or any other Law. However, tax amnesty can only be introduced by Law. For this reason, tax amnesty is realized with a separate and detailed Law in which the scope of amnesty will be determined in practice.

When Tax Amnesty Laws in Turkish Law are examined, it is seen that a new Tax Amnesty Law enters into force approximately every 2 or 3 years. When these Laws are examined, it can be observed that the scope of tax amnesty has changed due to the political or economic situation of the period. While the scope of tax amnesty covers certain receivables or tax types in some Laws, it covers tax liabilities within a certain date range in some Laws. These Laws also regulate the conditions for participation in tax amnesty.

Although it is accepted that tax amnesty can be arranged individually, a general amnesty is generally realized in practice.

Tax amnesty does not have continuity, unlike practices such as cancellation, penalty reduction, repentance, reformation, and reconciliation in the Tax Procedure Law, which terminates tax debts and penalties.

Laws should regulate the features of tax amnesty since it involves the state relinquishing certain tax receivables, and as a result, the amnesty has a retroactive impact on past events.

The new tax amnesty regulation came into force with Law No. 7440 on the Restructuring of Certain Receivables and the Amendment of Certain Laws, last published in the Official Gazette dated March 12, 2023, and has kept the scope of the amnesty very wide. Although almost all taxes and other public receivables are subject to amnesty, a certain date limit has been introduced.

In accordance with this legal regulation, in summary, all tax originals and related tax penalties, late fees, and interests that were finalized before 31.12.2022 were included in the amnesty. In addition, it is seen that the tax receivables, which still need to be finalized, in other words, for which the legal remedy has been applied, have partially given up on collection.

In addition, with this Law, although tax receivables were widely waived, some additional obligations were also introduced. In particular, an example is the fact that additional tax is imposed on some of the expenditures of corporate taxpayers within the scope of deductions or exemptions for the previous year.

At this point, it is not possible to define a tax amnesty in a general framework since the scope, content, and conditions of participation in tax amnesty, which enters our lives with the legal arrangements that contain differences every time due to the economic or social conjuncture our country is going through, are regulated by a separate Law each time.

However, under Article 73 of the Constitution, following the regulation that the tax will be imposed, changed, or abolished only by the Law, it will be necessary to evaluate the legal regulation enacted regarding each tax amnesty within itself.

In conclusion, tax amnesty can be a solution that offers taxpayers the opportunity to pay their debts. However, it may only sometimes be the right decision to apply for this application. Those who owe taxes should first consider other options to pay their debts. Getting help from an expert tax advisor before using options like tax amnesty can help you make better decisions.

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