The Turkish parliament has enacted Law No. 7524, which introduces amendments to the Tax Procedure Law (TPL). These modifications encompass several key areas: guarantee applications, asset valuation, valuation in precious metals, increased tax penalties for unregistered activities, and the narrowing of the tax conciliation procedure. Below is an analysis of these amendments and their implications.
Enhanced Guarantee Requirements
Law No. 7524 revises article 153/A of the TPL, particularly concerning the guarantees provided by taxpayers. This change comes after a ruling by the Constitutional Court. The amendment raises the maximum collateral amount that taxpayers must offer. Additionally, it extends the deadline for providing this collateral from 30 days to 60 days. This extension aims to provide taxpayers with ample time to comply with the guarantee requirements, facilitating a smoother process and better compliance.
Redefinition of Fair Value in Valuation
One of the notable changes under Law No. 7524 is the redefinition of “fair value” in article 263 of the TPL. The new definition describes fair value as the average value of transactions on the last trading day before valuation for assets listed on securities, foreign exchange markets, or commercial exchanges. This update aims to standardize the valuation process, ensuring that it reflects the most recent market conditions. Moreover, it permits the use of fair value in the valuation of precious metals, which brings us to another critical amendment.
New Valuation Method for Precious Metals
The amendment introduces article 274/A to the TPL, establishing a specific valuation method for precious metals like gold, silver, platinum, and palladium. According to the new provision, these metals are to be valued at their fair value. However, if a reliable fair value is not available or if there is suspicion of manipulation, the tax authorities will revert to using the cost price for valuation. This method is applicable to investment-related precious metals and their associated debts and credits, including those in deposit and credit accounts, whether physical or registered. This amendment aims to provide a transparent and reliable valuation framework for precious metals.
Increased Penalty for Unregistered Activities
Law No. 7524 introduces stricter penalties for unregistered activities. Individuals engaged in commercial, agricultural, or professional activities without notifying the tax administration will face a significant increase in penalties. Specifically, the tax loss penalty for such unregistered activities will now be increased by 50%. This change aims to deter tax evasion by imposing harsher consequences for non-compliance.
Restriction of Tax Conciliation Procedure
Perhaps the most impactful change brought about by Law No. 7524 is the restriction of the tax conciliation procedure. Previously, taxpayers could request conciliation for taxes assessed ex officio, administratively, or based on an audit, along with related tax loss penalties and irregularity penalties that exceeded TRY 23,000 for 2024. However, the new law removes the option of conciliation for the assessed tax. This amendment effectively eliminates the provisions related to the assessed tax from the law. It is worth noting that the tax administration had already been reluctant to pursue conciliation on the assessed tax amount, even before this amendment.
Implementation and Impact
All provisions of Law No. 7524 came into effect upon publication in the Official Gazette on 2 August 2024. For tax professionals and investors, staying abreast of these changes is crucial. The new regulations not only alter compliance requirements but also introduce stricter penalties and more precise valuation methods. Collectively, they aim to strengthen the Turkish tax system. For professionals in the tax and finance sectors, understanding these changes will be vital in navigating the new landscape effectively.
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