Our Explanations:

Constitutional Court Decision no. E.2022/110, K.2023/115 dated 22/06/2023

In the relevant dispute, it was claimed that the article allowed natural and legal persons with unrecorded movable assets at home and abroad to declare and record such assets until a certain date; however, taxpayers who declare their assets by benefitting from the rule were allowed to record such assets by paying an insignificant amount of tax although taxpayers who declare their assets on time had to pay higher amounts of tax; the situation was contrary to the determination of tax based on financial power and to the principle of fair and balanced distribution of tax burden, led to violation of property rights, contradicted with the principles of legal state and equality, and was contrary to Articles 2, 10, 13, 35 and 73 of the Constitution.

The Constitutional Court based its evaluation on the law’s preamble and concluded as follows:

• Regarding the fact that no tax inspections and tax assessment will be conducted for such assets under any circumstances in order to encourage bringing the assets stated in the law in Türkiye or recording the same:

Some changes in economic processes may require imposition of new taxes, cancellation of existing taxes, or decreases or increases in their rates, as well as leading to compromises on the financial purpose of tax. It is possible that declared assets are used as a means of achieving the mentioned purposes by compromises on the financial purpose of tax although such assets show the required financial power. Considering its importance for eliminating negativities brought by the global economic recession and achieving the economic program objectives, it cannot be concluded that making such assets integrated into and recorded in national economy does not offer any public interest. Although no tax inspections and tax assessment will be conducted, provisions of legislation other than tax laws will continue to be effective for such assets. Within this scope, it will be possible to subject these assets to necessary inspections and impose sanctions when necessary.

• Regarding the fact that losses arising from the disposition of assets brought to Türkiye or recorded in legal books will not be considered as expenses or discounts in terms of the implementation of income or corporate tax:

By stating that losses arising from the disposition of assets cannot be considered as expenses or discounts, the declared assets were disconnected from the taxation of taxpayers, preventing any favorable and unfavorable effects, with the purpose of eliminating any hesitations on whether losses arising from the sales of such assets can be taken into consideration in taxation.

• Regarding the authority of the Ministry of Treasury and Finance to determine the aspects of bringing the assets stated in the law in Türkiye and declaring and recording the same; basis values for declaration; method, contents, annexes and place of declaration; information and documents to be used in the implementation of the rules; and procedures and principles for implementation:

 As the basic principles of tax immunity is regulated with the law and the authority granted to the Ministry of Treasury and Finance is related to technical details, it cannot be concluded that the mentioned rule conflicts with the principle of tax legality.

The decision was published on the Official Gazette dated 19 September 2023, accessible via the attached link. https://www.resmigazete.gov.tr/19.09.2023

Regards,