Bring it home
Government again enticing Turks to bring their assets back to Turkey with new law
1 No back-dating
The law will give real and legal persons the opportunity to register their domestic and overseas assets. According to the proposal, the assets registered in Turkey will be exempt from tax inspection and assessment. There is no fundamental difference from the old regulations in this regard. There is no obligation to prove that the asset existed at a certain date in the past. Meeting the condition that the asset is brought or registered in the country within the given period will be enough.
2 Assets covered
The scope of the law is the same as the 2008 cash repatriation law. According to the proposal, the assets that will be brought into the country or registered within the scope of the cash repatriation law is as follows:
● Money, gold, foreign exchange, securities and other capital market instruments abroad
● Money, gold, foreign exchange, securities and other capital market instruments, immovables within the country.
3 Time of declaration
In order to benefit from the advantages brought by the law on repatriation of capital:
● Eligible overseas assets should be declared to banks and stock brokers in Turkey by December 31, 2019.
● Domestic assets must be declared and registered at tax offices by December 31, 2019.
4 Repatriation time frame
Eligible overseas assets should be brought to Turkey or transferred to an account to be opened in a bank or a stock broker in Turkey within three months from the date of declaration.
5 Cases where assets are not required to be brought into the country
Overseas assets may be used to pay off a loan issued by banks or financial institutions abroad and registered in statutory books as of the effective date of the regulation by December 31, 2019 at the latest. In this case, there is no obligation to bring the asset to Turkey provided that it has been deleted from the registry.
6 Assets brought to Turkey as capital advance before the effective date
In the case that capital advances are brought to Turkey prior to the law’s effective date, it is still possible to benefit from the advantages of the regulation provided that the advances are deducted from the registry. It is not clear what is meant to be deducted from the registry in the proposed regulation. What we understand is that adding the capital advance to the capital is within the scope. However, whether the return of the capital advance or its transfer to another account is within the scope is controversial.
7 Declared value of assets
There is no provision in the law regarding valuation of domestic and foreign assets. The Ministry of Treasury and Finance is authorized to determine the value of assets. How to evaluate the assets to be declared is an important issue because the declared value will determine both the tax base payable and its sales value. Leaving valuation in the hands of the Ministry results in the determination of the tax amount to be paid by the Ministry. This is against the constitution.
8 Tax to be paid
According to the law, a tax of one percent of the declared value of both foreign and domestic assets will be paid. Law no. 7143, which was applied in 2018, stipulated that if the foreign assets were brought to the country by July 31, 2018, and if the domestic assets were registered up to that date, no tax would be paid, and if it was brought or registered after that date, two percent tax would be paid. This time a single rate is determined for all transactions.
9 Disposal of the assets to be registered
According to the law, the gains arising from the disposal of assets registered under the regulation will be taxed under the general regulations. Losses arising from the disposal of assets cannot be considered as expense or deduction in terms of income or corporate tax.
10 Benefits of the regulation
According to the law, no tax inspection and assessment will be made on the assets brought to or registered in Turkey. However, this is provided on condition that the declared tax is paid at the due date and other requested conditions are satisfied.