In brief

On 27 January 2023, the Draft Law on the Restructuring of Certain Receivables and Amending Certain Laws (“Draft Law”) was submitted to the Turkish Parliament. It includes provisions regarding the restructuring of various public receivables, including customs receivables. The Draft Law is expected to be enacted by within March.

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In depth

We discuss below the ways in which the Draft Law will affect customs receivables.

1. Finalized customs receivables write-offs

Regarding tax receivables not paid on time and tax receivables whose payment period has not yet expired as of the promulgation date of the Draft Law:

• If the taxpayer pays the entire customs duty as well as the amount to be calculated based on the Producer Price Index (PPI) monthly rates until the promulgation of and in accordance with the Law (if the unpaid receivable only consists of delay interest, the amount calculated based on monthly PPI rates),  the entire amount of delay interest and administrative fines will be written off.
• If the taxpayer pays 50% of administrative fines not derived from a customs duty or tax penalty arising from the participation provisions of Misdemeanor Law No. 5326 and the amount calculated based on the PPI monthly rates until the promulgation of and in accordance with the Law, the remaining 50% of the penalty will be written off.
• If the taxpayer pays 30% of administrative fines calculated on the customs value of the goods, and the entire customs duty and the amount calculated based on the PPI monthly rates instead of the delay interest until the promulgation of and in accordance with the Law, the remaining 70% of the penalty and the entire delay interest will be written off.

2. Customs receivables that are not finalized or are in litigation
   • Accruals related to customs duties in litigation before first-degree courts or whose deadline for filing a lawsuit has not expired as of the promulgation of the Law

• If the taxpayer pays 50% of the customs duty as well as the amount to be calculated on 50% of the customs duty amount based on the PPI monthly rates until the promulgation of and in accordance with the Law, the remaining 50% of the customs duty amount and the entire tax penalty (including delay interest on customs duties and related penalties) will be written off.
• If the taxpayer pays 15% of administrative fines calculated on the customs value of the goods in accordance with the Law, the remaining penalty will be written off.
• Customs duties that have been administratively appealed will fall within the scope above, provided the deadline for filing an administrative appeal has not expired.

• Accruals related to customs duties whose deadline for filing an appeal or objection has not expired, that are in appeal or in correction of decision, or whose deadline for the correction of the decision has not expired

In these situations, the amounts written off will depend on the last court decision rendered before the promulgation date of the Law as to the cancellation, approval or reversal of the amount. In this regard

• Where the last decision cancels the tax assessments:
  • If the taxpayer pays 10% of the customs duty and, instead of delay interest, the amount to be calculated over 10% of the customs duty based on mothly D-PPI rates applied until the promulgation date of the Law  , within the periods and procedures stipulated in the Law, the remaining 90% of the tax principal and the entire tax penalties will be written off.
  • If the taxpayer pays 10% of penalties not derived from a tax principal, the remaining 90% of those penalties will also be written off.
  • If the taxpayer pays 5% of administrative fines calculated on the customs value of the goods in accordance with the Law, the remaining penalty will be written off.
• Where the last decision approves the tax assessments or approves them with amendment,
  • If the taxpayer pays the entire approved customs duty, 10% of the reversed customs duty and the amount to be calculated, instead of delay interest, based on monthly PPI rates applied until the promulgation date of the Law and within the periods and procedures stipulated in the Law, the remaining 90% of the customs duty and the entire tax penalties will be written off.
  • If the taxpayers pays 50% of the approved amount  and 10% of the reversed amount, the remaining amount of the penalty that is not derived from a tax principal will also be written off.
  • If the taxpayer pays 30% of the approved fine amount and 5% of the reversed amount in administrative fines calculated on the customs value of the goods in accordance with the Law, the remaining penalty will be written off.
• Where the last decision reverses the decision,
  • If the taxpayer pays 50% of the customs duty and the amount to be calculated, instead of delay interest, over 50% of the customs duty based on monthly D-PPI rates applied until the promulgation date of the Law and within the periods and procedures stipulated in the Law, the remaining 50% of the tax principal and the entire tax penalties will be written off.
  • If the taxpayer pays 25% of the penalties that are not derived from a tax principal, the remaining 75% will be written off.
  • If the taxpayer pays 15% of administrative fines calculated on the customs value of the goods in accordance with the Law, the remaining penalty will be written off.
• If the last decision is on a partial approval and partial reversal:
  • For the approved part, if the taxpayer pays the entire approved customs duty, 10% of the reversed customs duty and the amount to be calculated, instead of delay interest, based on monthly D-PPI rates applied until the promulgation date of the Law and within the periods and procedures stipulated in the Law, the remaining 90% of the customs duty and the entire tax penalties will be written off. In addition, if the taxpayer pays the remaining part the penalties that are not derived from a tax principal, 50% of the penalties will also be written off.
  • For the reversed part, if the taxpayer pays 50% of the customs duty and the amount to be calculated, instead of delay interest, over 50% of the customs duty based on monthly D-PPI rates applied until the promulgation date of the Law within the periods and procedures stipulated in the Law, the remaining 50% of the customs duty and the entire tax penalties will be written off. In addition, if the taxpayer pays 25% of penalties that are not derived from a tax principal, 75% of the penalties will be written off.
  • If the taxpayer pays 30% of the approved fine amount, 5% of the reversed amount and 15% of the reversed part related to the administrative fines calculated on the customs value of the goods in accordance with the Law, the remaining penalty will be written off.

3. Customs receivables under customs inspection or assessment

Customs inspections and assessments that were initialized but are incomplete by the promulgation date of the Law will continue to be carried out.

Once these customs duty assessments have been completed, if the taxpayer pays the first 50% of the customs duty and the amount to be calculated on 50% of the customs duty based on the PPI monthly rates until the promulgation of the Law and in accordance with the Law, the remaining 50% of the customs duty and delay interest will be written off. For tax penalties, if the taxpayer pays 15% of the penalty calculated on the customs value of the goods, the remaining 85% will be written off.

4. Payment methods

To benefit from the restructuring opportunity, taxpayers should apply to their tax office by 30 April 2023. Taxpayers may pay the amounts calculated under the Law in cash, either in one payment or in installments.

If taxpayers prefer to pay in installments, they may make the payment in a maximum of 48 equal installments on a monthly basis, with the first installment to be paid by the end of May. In this case, taxpayers should choose 12, 18, 24, 36 or 48 equal installments during the application process. The amount to be paid will be multiplied by (i) 1.09 for the 12 equal installments option, (ii) 1.135 for the 18 equal installments option, (iii) 1.18 for the 24 equal installments option, (iv) 1.27 for the 36 equal installments option, and (v) 1.36 for the 48 equal installments option.

If the entire calculated amount is paid in cash at once before the first installment is due, the above ratios will not be applied. In addition, 90% of the amount calculated, based on monthly D-PPI rates applied until the promulgation date of the Law instead of delay interest will be written off.

Key Takeaways

The Draft Law offers taxpayers many opportunities to restructure and settle their customs debts at a significant discount. Taxpayers with customs debts or disputes that fall within the scope of the Draft Law should consider the financial advantages provided by the restructuring.

Please contact us for further information.

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