Latest changes to tax law include draft law on public receivables
The draft law enabling the restructuring of public receivables, including taxes, was submitted to parliament’s Planning and Budget Commission on April 20. The draft is a continuation of Law No. 6736 on the restructuring of public receivables, which entered into force on Aug. 19. The types of public receivables and public bodies in the scope of the draft law are identical to those covered by Law No. 6736, while the terms of the restructuring are similar too.
The draft law regulates the restructuring and settlement of outstanding public recei vables as of March 31. The types of receivables that would be subject to re structuring are taxes and tax penalties, customs duties, social security premiums, some administrative fines and late-payment interest charges based on the above-mentioned receivables.
VAT liability on sales is in force
The decision by the fourth office of the Council of State concerning value-added tax liability of the sales offices of the Civil Courts of Peace was published in the Official Gazette. In an auction administered by the Denizli First Civil Court of Peace, the VAT rate due on the sale of real estate was erroneously applied as 1 percent instead of 18 percent.
The miscalculation of the tax, due to the faulty characterization of the VAT rate, gave rise to the filing of a lawsuit, the main debate of which was whether the Civil Court of Peace’s Sales Offices should be considered liable for VAT.
The Supreme Court and the fourth department of the Council of State decided that the Sales Of- fices cannot be considered liable to VAT (Decision No: E.2012/4859, K 2016/2845, dated March 25). The decision of the Council of State was based on the fact that there is no express rule nor regulation in the applicable domestic law that holds sales offices liable for the VAT, either as a taxpayer or on a reverse-charge basis.
Tax exemption of Istanbul water agency
The decision rendered by the Constitutional Court on the tax exemption of the Istanbul Water and Sewerage Administration (ISKI) was published in the Official Gazette. The Constitutional Court rendered its decision on the legality of the tax exemption granted to ISKI on March 29 (Decision No. 2017/81).
The decision was rendered upon the request of the sixth office of the Court of Accounts invoking the annulment of Article 21/a of Law No. 2560 relating to ISKI, which reads as follows: “All immovable properties and facilities used by ISKI for the purposes of its duties as well as its transactions and activities are exempt from all types of tax, duty and fees.”
The sixth office argued that the concerned article violated the principle of legality, as well as the underlying requirement of certainty. The Constitutional Court held that the scope of the exemption granted to ISKI was clear and objective, without leaving room for any doubts. Accordingly, the court stated that the principle of legality was not violated by the disposition concerned, the annulment of which must be refused.