On the New Asset Peace Arrangement Adopted in the Turkish Grand National Assembly
Asset peace is the registration of unregistered assets in Turkey or assets located abroad (such as money, gold, securities) by notifying banks, intermediary institutions or tax offices in Turkey, and bringing them to Turkey within certain periods. After the old asset peace ended on 30.06.2022, a new asset peace regulation has been accepted in the Turkish Grand National Assembly. In this information note, the details of the new asset peace regulation will be examined.
WHAT ARE THE ASSETS THAT CAN BE REPORTED?
According to the regulation, assets in Turkey that can be reported are money, gold, foreign currency, capital market instruments, securities and real estates that are not registered on their legal book records. Securities of natural or legal persons abroad such as money, gold, foreign exchange and capital market instruments are within the scope of the regulation. Accordingly, the relevant persons will be able to ensure that such assets are registered by reporting such assets to banks and intermediary institutions. According to the General Notice on Bringing Certain Assets to the Economy (“NOTICE”)published in the Official Gazette dated 09.08.2022, in case the assets abroad are not one of the assets allowed to be declared for asset peace, such assets can also be converted to the ones that are allowed and brought to Turkey until 31.03.2023. For example, it will be possible to benefit from these provisions by notifying the real estate abroad by selling it thus converting to money.
WHO CAN BENEFIT?
First of all, Turkish or foreign real persons, Turkish companies with local or foreign shareholders can benefit from such opportunity.
It is not mandatory to be a taxpayer in order to bring such assets abroad to Turkey. Everyone can benefit from asset peace, whether a company or real person.
However, in order to declare domestic assets, the person who makes the declaration must be an income tax or corporate tax payer.
According to the NOTICE, the declaration to be made by real or legal persons can also be done through their proxies or legal representatives.
WHERE WILL BE THE NOTIFICATION MADE?
Assets located abroad to be declared will be notified to banks or intermediary institutions. The declaration of assets located in Turkey will be received by tax offices.
HOW IS THE VALUE OF REPORTED ASSETS CALCULATED?
According to the NOTICE, the valuation criteria of the assets to be reported, regardless of whether they are located in the country or abroad, are as follows:
|Reported Asset Type||Criteria|
|Money in TRY||With the nominal value|
|Gold||With the market value|
|Money in foreign currency||With the foreign exchange buying rate of the Turkish Central Bank.|
|Share certificates||If available, with the market value, if not, with the market value, if this value cannot be determined, with the purchase price, if this is not known, with the nominal value.|
|Debt instruments such as bonds, bills, eurobonds||If available, with the market value, if not, with the market value, if this value cannot be determined, with the purchase price, if this is not known, with the nominal value.|
HOW WILL BE THE TAXATION OF ASSETS THAT ARE LOCATED ABROAD?
There are 3 different tax rates in the regulation. These tax rates are applied only to assets located abroad and declared. These tax rates, which are determined as 1%, 2% and 3%, vary according to the notification date.
According to this;
– A tax of 1 % will be charged on assets declared until 30th September 2022,
– A tax of 2 % will be charged on assets declared between 1st October 2022 and 31st December 2022,
– A tax of 1% will be charged on assets declared 1st January 2023 and 31st March 2023
Money, foreign exchange, gold, stocks, bonds and other securities owned abroad will be reported to banks and intermediary institutions and brought to Turkey within 3 months after such declaration.
HOW WILL BE THE TAXATION OF ASSETS IN TURKEY?
A fixed 3% tax rate will be determined for the assets located in Turkey and to be declared. According to the relevant regulation, 31.03.2023 appears to be the deadline for notifications, and it is not possible to declare assets after this date unless there is a new regulation in the future.
Income and corporate taxpayers will declare the assets and immovables that are not included in their records to the tax office and pay 3 percent tax on their value and take them into their records on the next month of date of declaration.
Those who are not taxpayers will prove their assets by depositing them in banks or intermediary institutions and will pay 3 percent tax on the value of the assets. Based on asset peace notifications and declarations, no tax inspection and assessment will be made.
WHEN AND HOW WILL THE TAXES TO BE PAID?
According to the new regulation, the payment methods of taxes determined during the declaration of domestic and foreign assets also differ.
- Taxes determined during the declaration of assets located abroad will be collected in advance by the intermediary institution or bank to which the notification will be made.
- Fixed tax of 3% on domestic assets must be paid by the end of the following month of the month of notification is made.
IS IT POSSIBLE TO GET ANY EXEMPTION FOR TAXATION?
The tax rates to be applied to the assets to be declared have been mentioned in the previous heading. According to the new regulation, if the declared assets are brought to Turkey and kept there for at least 1 year, these rates will be applied as 0% and the tax received during the notification will be refunded. For this, after the notification is made, the relevant assets must be brought to the accounts opened in any bank or intermediary institution in Turkey and kept in relevant accounts for at least 1 year.
The taxes collected in advance by the bank or intermediary institution and paid to the tax office during the notification regarding the assets located abroad will be returned to the person who reported, together with the application to the tax office.
WHAT TYPE OF PROTECTION DOES THIS REGULATION GRANT?
This regulation allows real persons and legal entities to bring assets abroad to Turkey with a considerably low amount of tax. Also assets in Turkey that are not declared before can be declared with a certain amount of tax payment. In other words, with the regulation, it allows that the assets will be officially declared, source of the assets will not be questioned and not ordinary tax rates but considerably lower tax rates shall be applied to the assets. The regulation also stipulates that the persons and/or legal entities that make such declarations and/or bring assets to Turkey will not be inspected by tax offices regarding those assets so it also covers from a future tax inspection by tax offices.
The asset peace application, which has been enacted in order to alleviate the effects of the recent economic situation, provides an important advantage for the relevant people. They can register their unregistered assets with very affordable taxes or tax-free if they keep these assets in Turkey for 1 year. In this information note, the details of the new regulation is examined. Feel free to contact us further details of the regulation.
For your kind attention,