New regulation for tax debtors from the Treasury and Finance Ministry: Interest rate cuts on the agenda

The Ministry of Treasury and Finance has launched a new study regarding the deferral system applied to the collection of tax debts. Within the scope of the regulation, it is planned to lower the interest rates applied in the current restructuring system and reshape payment terms.

INSTALLMENT OPTIONS UP TO 72 MONTHS IN CURRENT PRACTICE

In the current system, taxpayers with tax debts can pay their debts in installments for up to 72 months with an annual interest rate of 39 percent. With the regulation that came into effect recently, a restructuring opportunity had been provided to debtors.

INTEREST RATE CUTS ON THE AGENDA

According to NTV's report, the core of the ongoing work is the reduction of deferral interest rates. According to information provided by ministry sources, evaluations are continuing to enable taxpayers to restructure their debts at a lower cost.

REGULATION TARGETS THOSE EXPERIENCING PAYMENT DIFFICULTIES

The prepared draft is expected to cover taxpayers who are determined to have difficulty paying their debts. Accordingly, a tiered interest and installment system could be applied for individuals and businesses in difficult economic situations.

Economic indicators and inflation data will be taken into account when determining the new interest rate. It is stated that the interest rate is not expected to fall below the current level of 32 percent, where inflation currently stands.

TAX AND SGK DEBTS WILL ALSO BE COVERED

It is planned that not only businesses with debts to tax offices but also commercial taxpayers with premium debts to the Social Security Institution (SGK) will be able to benefit from the regulation.

NO COLLATERAL REQUIRED FOR UP TO 1 MILLION LIRA

One of the notable points in the study is the reorganization of collateral requirements. Accordingly, it is envisaged to abolish the obligation to provide collateral for public receivables up to 1 million lira.

NEW PRACTICE FOR HIGH-AMOUNT DEBTS

For debts exceeding 1 million lira, it is planned to request collateral only for a certain portion. For example, a taxpayer with a debt of 2 million lira will not provide collateral for the first 1 million lira. For the remaining 1 million lira, it will be sufficient to present a bank letter of guarantee or a real estate mortgage for half of that amount, i.e., 500 thousand lira.

IMPACT OF INTEREST RATE CUTS ON COSTS

It is stated that a possible reduction in interest rates will reduce the costs of debtors. For example, while the annual interest burden of a 1 million lira tax debt is 390 thousand lira at the current 39 percent rate, this amount could drop to 300 thousand lira if the interest is reduced to 30 percent.

DECREASE CALCULATED IN MONTHLY PAYMENTS

The decrease in the interest rate will also be reflected in monthly installments. While the monthly installment amount for a 12-month term is calculated at 115 thousand 833 lira with the current 39 percent interest rate, the monthly payment will drop to approximately 108 thousand lira if the interest rate falls to 30 percent.

DEBTORS' EXPECTATION: REGULATION ON LATE PAYMENT INTEREST

Tax debtors are also demanding a re-evaluation of the cost created by applying deferral interest on top of late payment surcharges during restructuring. Taxpayers are expecting a new regulation regarding late payment interest accumulated in past periods.