01 May, 2023
Summary: The Law No. 7440, known to the public as the tax amnesty law, which provides for the restructuring of tax and other public debts, was published in the Official Gazette on March 12, 2023. The law covers customs debts and penalties related to customs declarations registered on or before December 31, 2022, in addition to tax debts. Significant reductions are offered for finalized and non-finalized debts, administrative fines are largely abolished or significantly reduced, and the payment of customs duties is offered at much lower Yi-ÜFE (D-PPI) interest rates instead of default interest. Taxpayers who wish to do so may pay their debts in installments for up to 48 months. Transactions currently under customs inspection can also benefit from this law. Furthermore, the law provides an opportunity for voluntary disclosure, allowing the payment of past customs debts with low interest rates and the cancellation of customs penalties.
The Law No. 7440, which is known to the public as the tax amnesty law, was published in the Official Gazette on March 12, 2023, providing for the restructuring of tax and other public debts. Although the law applies to many tax and public debts, this article focuses only on taxes and penalties collected by customs authorities.
Under the law, tax amnesty and restructuring opportunities are introduced for customs duties and penalties arising from customs obligations that occurred before (and including) December 31, 2022. In other words, the customs duties and penalties subject to restructuring must be linked to import declarations registered on or before December 31, 2022.
When examining the law, we can see that it bears great similarities to the restructuring law No. 7326, published in 2021, as it includes both finalized and non-finalized customs debts.
Taxpayers wishing to benefit from the restructuring must apply by May 31, 2023. This period, unless extraordinary circumstances arise, is expected to be extended by about one month, as in previous tax amnesties.
The amnesty and reductions on customs debts introduced by the law can be summarized as follows:
- Interest on overdue or yet-to-expire customs duties (in other words, finalized debts) and all related administrative fines will be canceled. Instead, a lower interest rate will be applied to the principal amount, based on Yi-ÜFE.
- 50% of administrative fines not linked to the principal amount of overdue or yet-to-expire customs duties (finalized debts) will be canceled.
- 70% of administrative fines based on the customs value of goods that are overdue or yet-to-expire (finalized debts) will be canceled.
- For customs duties subject to court cases or still within the period to file an appeal (i.e., non-finalized customs duties), 50% of the accrued duties and all interest and fines will be canceled. Instead, lower interest will be applied to the remaining 50% based on Yi-ÜFE. For non-finalized fines not linked to the principal amount, 75% will be canceled, and for those linked to the customs value of goods, 85% will be canceled. This provision also applies to accruals awaiting administrative objections or under dispute resolution.
- For customs duties under administrative or judicial appeal, where the appeal or revision period has not yet expired, 90% of the customs duties and all related interest and fines will be canceled. Lower interest will be applied to the remaining 10% based on Yi-ÜFE.
- If a court case has been filed solely for administrative fines, and customs duties have been paid (or will be paid as per this law), fines linked to the principal will be canceled. For non-principal administrative fines under court cases, 75% will be canceled. If the case is in appeal or revision, a 90% cancellation will apply if the final decision is annulment, and 50% if the decision is affirmation. For fines linked to the customs value of goods, 85% will be canceled if a case is filed, and 95% will be canceled in the appeal or revision stages if the decision is annulment, and 70% if the decision is affirmation.
- For inspections that began before the publication of the law but are not yet complete, 50% of the principal tax and all related interest and fines will be canceled. Lower interest will be applied to the remaining 50% based on Yi-ÜFE. For non-principal administrative fines, 75% will be canceled, and for fines linked to the customs value of goods, 85% will be canceled.
- If violations requiring accrual and collection according to Customs Law No. 4458 and other relevant laws are voluntarily declared by May 31, 2023, interest and administrative fines will not be collected. Instead, the principal will be subject to a lower interest rate based on Yi-ÜFE.
- All public debts within the scope of this law can be paid in installments of 12, 18, 24, 36, or 48 months, or in full. If paid in full, the Yi-ÜFE amount will be reduced by 90%. For installment payments, an additional interest rate of 1.09% to 1.9% will be applied depending on the payment period.
It is recommended that all foreign trade operators carefully examine this comprehensive law, which offers significant reductions and payment facilities, and have any potential risks analyzed by experts before the application period expires. It is advisable to take maximum advantage of the amnesty and voluntary disclosure opportunities offered by the law.