Download Turkish Tax Law and Introduction 2 and more Lecture notes Law in PDF only on Docsity!
Section Three
Section Four
- I. EVENTS GIVING RISE TO TAXATION TAXATION PROCESS
- II. ASSESSMENT OF TAX
- A. Description
- B. Assessment Based on Declaration
- C. Unilateral (one-sided) Assessment by Tax Administration
- III. NOTIFICATION of TAX
- I V. ACCRUAL OF TAX
- V.COLLECTION OF TAX
- A. Notion of Collection
- B. Payment Period
- C. Consequences of not Paying Taxes in Due Time
- I. OBLIGATIONS OF TAXPAYERS OBLIGATIONS OF TAXPAYERS AND PERIODS IN TAX LAW
- A. Obligation to Submit Declaration
- B. Obligation to Keep Books
- C. Obligation to Follow Document Format
- D. Obligations of Recording Entry
- E. Obligations Related to Vise of Books........................................................................
- F. Obligation to Preserve Documents
- G. Obligation to Submit Tax Return
- H. Obligation for Valuation
- II. PERIODS IN TAX LAW
- A. Classification of Periods
- B. Calculation of Periods...............................................................................................
- C. Extension of Periods
Section Three TAXATION PROCESS
- Subject (event giving rise to taxation): To talk about taxation, first of all, there should be an event giving rise to taxation.
- Taxpayer/Person Responsible for Tax: The person or entity, that will be a counter party towards the taxation office and pay taxes, should exist.
- Exemption: The event giving rise to taxation may occur, but the tax-payer may be exempt from taxation. In this case, tax shall not be imposed.
- Exclusion: The event giving rise to taxation may occur, there may be a concerned tax-payer or a responsible person, but the event could have been excluded from taxation. In this case, tax shall not be imposed.
- Determining Gross Proceeds: If there is no problem up to this stage, then the gross proceeds being subject of taxation are determined.
- Deductible Expenses: The allowable expenses are deducted from the gross proceeds to reach the tax base.
7. Non-Deductible Expenses: If there are expenses that are deducted from the
proceeds but are not accepted as rebate by the tax laws, at this stage they are added back to the proceeds.
- Tax Base : After all the procedures mentioned above are completed, the taxable income, that is the tax base, is obtained.
- Assessment of Tax: The tax payable is calculated through applying the rates determined by the laws to the tax base.
- Notification : At this stage, competent authorities notify the relevant persons about the assessed tax.
- Accrual : The tax that is notified becomes “receivable/payable”, following the end of litigation period for filing a lawsuit or administrative objection (generally 1 month).
- Collection/Payment (when, where, offsets): Accrued tax is paid to the related tax office in due course of time. If the taxpayer has paid withheld taxes (including advance taxes) in the taxation period, these are deducted from the tax payable and remaining amount is paid.
I. EVENTS GIVING RISE TO TAXATION The event giving rise to taxation is specified in every tax law separately.
For example; in the Personal Income Tax Law, it is the acquisition of income, but in the Value Added Tax Law it is the delivery of good or performance of service.
Even if the event giving rise to taxation is a prohibited activity by laws, it shall not abrogate the tax liability and responsibility. For example; if someone is continuously practicing usury although it is forbidden in Turkey, his income is considered as commercial income.
iii. Administrative Assessment of Tax Administrative assessment of tax is the assessment made by the administration in the cases other than those call for additional or ex officio assessment.
III. NOTIFICATION OF TAX it is informing the taxpayer about the administrative assessment transactions.
documents are notified by registered mail to real and legal persons whose addresses are known and by announcement to those whose addresses are unknown.
Notification can also be made at the tax office or commission on condition that the concerned person agrees on.
Notification is addressed (made) to taxpayers, their legal representatives and general proxies or the person who incurred tax penalty.
In the case of absence of the person who should be notified; a person who exists at the domicile or one of the officers or doorman in workplace is given the notification. (The person who receives the notification instead of the person addressed should not seem to be under the age of 18 and have capacity to act)
Notification to taxpayers abroad shall be made via the Turkish attaché or consulate. The documents shall be sent to the Ministry of Foreign Affairs and from there to the Turkish Embassy or Consulate.
Notification to military persons abroad is made via Marine, Land, Air Forces or Gendarmerie Commanderships.
Notification to public administrations and organizations shall be addressed to their top managers or their deputies or their officers who are entitled by the top managers.
Once the necessary technical infrastructure is established by the Ministry of Treasury and Finance, the notification can also be made by means of an electronic address, without applying the abovementioned procedures.
IV. ACCRUAL OF TAX
The accrual of tax is the stage where assessed and notified tax becomes payable. After the accrual of tax, tax administration becomes the claimant and taxpayer becomes the debtor.
Taxpayers have right to make objection to the assessment performed by the tax administration. The period to file a suit is determined as 30 days in tax jurisdiction. If the taxpayer does not sue or if the case is concluded against him/her, it is deemed that the tax has accrued.
V.COLLECTION OF TAX
A. Notion of Collection Collection of tax means the ceasing of tax debt through payment to the tax office. B. Payment Period Periods for tax payment have been determined for each kind of tax in pertaining law: For example: For personal income tax, in 2 installments in March and July of the following year. For corporate income tax, in April of the following year. For value added tax, until the evening of 26th^ day of the following month. For taxes collected through deduction at source (withheld taxes), until the evening of 26 th^ day of the following month. For ex-officio assessment, additional assessment and assessment by the administration, within one month starting from the date of accrual. For a tax court case, within one month starting from the date of notification of the tax court decision to the taxpayer.
C. Consequences of not Paying Taxes in Due Time
1. Default Interest and Late Fee If the tax is not accrued in time or not paid in due time, default interest or late fee is applied to the tax debt.
Default interest is related to the accrual stage and applies to taxes whose accrual is delayed. Monthly rate of default interest is 2%. Fractional days of a month are not taken into account in calculation of default interest.
In case those who are not registered as taxpayers do obtain a document proving they are not registered as taxpayer from any tax office, necessary payment/transaction shall be made without requesting the document presenting overdue tax debt status.
These documents shall be valid for 15 days as of the date they are issued.
3. Prohibitions on going abroad (overseas journeys) It has been repealed. That is, the freedom of overseas journeys of taxpayers is not restricted anymore due to their failure to pay taxes. In this case, only the other enforcements shall be applied. 4. Coercive Collection (By Force) Coercive collection is applied for those who have not paid their tax debt in due time. First of all, a “payment order” is sent to the taxpayer to ask him/her to pay his/her tax debt within 15 days or to provide property declaration within this term.
In spite of that notice, if the taxpayer still does not pay the tax debt, coercive enforcement is applied to him/her.
The following is applied successively until the public receivable is collected: Firstly , the collateral is realized or if any, the guarantor is charged. Secondly , goods as much as that can cover the tax debt are seized and liquidated. Lastly , announce of bankruptcy for the debtor is requested.
Section Four OBLIGATIONS OF TAXPAYERS AND PERIODS IN TAX LAW
I. OBLIGATIONS OF TAXPAYERS
A. Obligation to Submit Declaration tax payers are obliged to notify; commencement of business within ten days starting from the commencement, quitting of business, change of address and changes in business within one month following the occurrence of the event.
B. Obligation to Keep Books Merchants and artisans, trading companies, economic enterprises of associations and foundations, self-employed persons and farmers are obliged to keep books mentioned in TPL. The books are; journal, ledger, stock-taking book, operating book, self-employment income book, manufacturing book, finishing work book, proceeds book, warehouse book and operating book of farmers****.
Merchants are divided into two in terms of keeping books: Merchants of first class shall keep their books on the balance sheet method , Merchants of second class shall keep their books on the operation account method.
First Class Merchants:
- Those who sell the goods and whose total annual amount of purchase exceeds 190,000 TRY or total annual amount of sales exceeds 260,000 TRY,
- All trading companies,
- Other legal persons subject to corporate income tax,
Second Class Merchants: Those are other than first class merchants.
Books to be Kept on Balance Sheet Method: ● Journal ● Ledger ● Stock taking book
Proceeds Book of Foreign Transport Companies Foreign transportation companies or their branches or agents representing them in Turkey shall keep a proceeds book and, enter their proceeds in Turkey therein.
Warehouse Book The operators of depots and warehouses shall keep a warehouse book.
Self-Employment Income Book Self-employed persons shall keep a self-employment income book. The expenses are entered in the left hand side of the book, and the proceeds in the right hand side.
Operating Book of Farmers The farmers, enter expenses in the left hand side and proceeds in the right hand side of the “operating book of farmers”.
C. Obligation to Follow Document Format Tax-payers are obliged to document their certain works and transactions and preserve these documents.
Some of the documents that taxpayers are obliged to use are; invoice, retail sale voucher, statement of expense, producer’s receipt, receipt of self-employed persons, payroll, waybill, passenger list and daily customer list****.
Invoice Invoice is the commercial document delivered to the customer by the merchant in order to indicate the amount owed by the customer in exchange of goods sold or services rendered.
Obligation of Using Invoice Merchants are obliged to issue invoices for the goods sold or services rendered: to first and second class merchants, to self-employed persons, to merchants whose profits are determined on the simple procedure basis, to farmers obliged to keep books, to tradesmen exempt from personal income tax.
Persons mentioned above are also obliged to ask invoices for the goods bought or services received.
Retail Sale Vouchers Sales and remunerations for the works done, by the merchants for which they are not required to give invoice, shall be authenticated by any one of the following documents; Retail sale receipts (up to 1,000 TRY), Mechanical cash register vouchers, Admission and passenger tickets.
Statement of Expense Statement of expenses shall be drawn up for services received or goods purchased
by merchants from the tradesmen exempt from tax. (in lieu of invoice)
This document may also be drawn up for gold and jewelry purchased by merchants from persons selling their personal effects.
Producer’s Receipt merchants are required to draw up producer’s receipt for the goods they bought from
farmers who are not subject to taxation on real basis. (in lieu of invoice)
Receipt of Self-Employed Persons Self-employed persons are obliged to issue a receipt for every kind of collections relating to their professional activities.
Payroll Employers shall draw up a payroll for the wages and salaries they pay each month. Documents used in salary payments by general and special budget administrations and municipalities are in lieu of payroll.
Waybill All real and legal persons forwarding goods in return for remuneration are obliged to draw up waybill for the goods that they forward.
Passenger list The taxpayers who are obliged to draw up tickets for carrying passengers between cities (excluding State Railway Administration) shall be obliged to prepare a passenger list for each trip and keep one copy in the vehicle.
Daily customer list Taxpayers who run hotel, motel and boarding house shall draw up and keep at the place of work daily customer lists according to room and bed plan.
H. Obligation for Valuation Taxpayers are obliged to valuate their assets in certain periods.
Other obligations: In addition to these obligations, taxpayers have other obligations like; using payment recorder instruments, getting and using tax IDs, submitting information, and getting tax label.
II. PERIODS IN TAX LAW
A. Classification of Periods periods can be examined under three headings as legal periods, administrative periods, and judicial periods.
1. Legal Periods The periods in tax law are determined by tax laws
These refer to when the liabilities start, when they end, when the tax returns are submitted or when the payments are made
2. Administrative Periods Administrative periods are the periods provided in order to finalize some transactions.
For instance, in case a taxpayer does not disclose the information in the tax return, 15 days is given by tax administration in order to eliminate such deficiencies
3. Judicial Periods The judicial periods are those determined by the juridical authorities.
For instance; the period for filing a suit in tax courts is 30 days and, filing a suit against a payment order shall be realized within 15 days.
B. Calculation of Periods
In case the period is specified as day ; the starting day is not taken into account in the calculation and the period ends at the end of the office hours of the last day. For example, if a term of 15 days is given starting from May 10, the period of 15 days starts on May 11 and ends at the end of the office hours of May 25.
In case the period is specified as week ; the period ends on the same day that corresponds to the starting day of the last week. For instance, a period of one week starting from Wednesday ends at the end of the office hours of the following Wednesday.
In case the period is specified as month ; the period ends on the day that corresponds to the starting day of the last month. For example, a given term of one month starting from April 1 ends at the end of the office hours of May 1. In case, there does not exist a corresponding day in the related month, the period ends at the end of the office hours of the last working day of the coming month. For instance, a given term of one month starting from January 31 ends at the end of the office hours of February 28 or 29.
In case that the period is specified with a definite ending date; The period ends at the end of the office hours of that date.
The official holidays shall be included in the period. If the end of the period corresponds to a holiday, the period finishes at the end of the office hours of the first following working day.
C. Extension of Periods The periods can be extended in some special cases. These are:
1. Periods in Force Majeure and Predicament (difficult circumstances) In the case of force majeure , the periods are pended until the reasons are eliminated. In order for this rule to be applied, the force majeure should be known or proven by the concerned persons.
Fiscal recess shall not be applied for the taxes, dues and fees imposed and/or collected by customs administrations, special provincial administrations and municipalities.
