A new wealth amnesty programme

In detail

The last wealth amnesty programme, introduced by law no. 7256 ended on 30 June 2022. Following the expiry of this amnesty programme, legislation published in the official gazette on 5 July 2022 brought another amnesty programme into effect. The new amnesty is similar to the previous one in general, however there are certain significant differences (i.e., payment of tax, although it is very minimal). Here is an overview of the new programme:

General overview

Wealth amnesty is available to both individuals and companies. It allows them to regularize their undisclosed assets in and outside Turkey. The tax authority will not demand any past taxes or penalties because of prior non-compliance. The main conditions for benefitting from the amnesty are:

• Assets that are abroad must be physically repatriated to Turkey or must be transferred to a Turkish bank or intermediary institution account within three months after declaration, 
• Taxes applied to the declared assets under the amnesty must be paid on time. 

What type of assets can be declared?

The range of assets falling under the amnesty programme includes:

• assets held abroad: money, gold, foreign currency, securities and other capital market instruments, 
• assets in Turkey: money, gold foreign currency, securities, other capital market instruments and immovable property.

The undisclosed asset may have been acquired in any year; the length of time the undisclosed asset has been in the possession is irrelevant for the purposes of the amnesty. The amnesty applicant is not required to provide any details or supporting documentation regarding the date of initial possession.

Disclosure, format, timeline

Declaration of the undisclosed assets must be submitted on or before 31 March 2023. For offshore assets, the declaration will be made to banks and intermediary institutions. For assets in Turkey, the declaration will be made to tax offices.

Physical repatriation of offshore assets to Turkey

It is not sufficient to declare the assets benefitting from the amnesty; the offshore assets must also be repatriated to Turkey or be transferred into a Turkish bank or intermediary institution account within three months after declaration.

Offshore assets that are declared can be utilized until 31 March 2023 to close loans obtained from foreign banks or financial institutions and recorded in the legal books on the date the amnesty law was published (5 July 2022). In this type of situation, the physical repatriation requirement of the asset will not apply.

Taxation

Assets in Turkey will be taxed at 3% of their value. (regardless of the declaration date). The amnesty applicant must pay the amount due to the tax office by the end of the month following assessment. The title deed fee will not apply to the transfer of immovables that are declared and recorded in statutory books under the amnesty.

For offshore assets, the amnesty imposes different tax rates based on the declaration date.

• 1% for declarations until 30 September 2022 (inclusive) 
• 2% for declarations between 1 October and 31 December 2022 (inclusive) 
• 3% for declarations until 31 March 2023 (inclusive)

Upon declaration the amnesty applicant will pay the tax due to the bank or financial institution, which will then forward the concerned amount to the tax office within 15 days after the applicant’s declaration.

If declared offshore assets are held in Turkey for at least one year after they are transferred to a bank or intermediary institution in Turkey or deposited in these accounts when brought from abroad, the tax rate will be 0%. In this situation the amnesty applicant can apply to the tax office for a refunding of the tax previously declared and paid by the bank or intermediary financial institution.

Special fund account related to the recording of declared assets

Those keeping books on a balance sheet basis will record the declared assets (local or offshore) in the statutory books. At the same time, a provisional special fund account will be created and credited for the value of assets recorded as such. The amounts in the special fund will not be considered in the calculation of taxable corporate income.

As opposed to the previous amnesty, under this amnesty program the amount in the fund account cannot be withdrawn from the company for two years. After two years, it can be withdrawn from the company without being subject to any corporate income tax or dividend tax. The two-year limitation applies only to the special fund account. Assets declared and recorded in the legal book can be freely used.

We expect the Ministry of Treasury and Finance to issue a communiqué providing guidance on the implementation of the new amnesty programme.