Details have been announced for a large restructuring program affecting roughly 4 million people and covering about 500 billion Turkish lira in taxes, premiums and other public receivables. The arrangement introduces restructuring options for many types of debt, with particular emphasis on Credit Dormitories Institution (KYK) student loan debts.
Debt Restructuring Rates Have Been Determined
The debt restructuring rates and related details are now clear. Debts dated on or before August 31, 2020, will be eligible for the restructuring arrangement. For taxes collected by the Ministry of Treasury and Finance, tax returns that were due by this date and the resulting taxes, related penalties, delay interest and delay surcharges, as well as administrative fines issued before this date, will be included in the restructuring.
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Fines issued for failure to comply with public health board measures—such as not wearing masks, ignoring restrictions or violating smoking bans—are excluded from restructuring. These penalties will not be subject to debt restructuring.
The public receivables included in the restructuring are as follows:
- Tax debts collected by the Treasury,
- Student loan debts owed to the Credit Dormitories Institution (KYK),
- Motor vehicle taxes,
- Traffic fines,
- Military service, civil registry and election fines,
- Fines for illegal passage on toll roads and bridges,
- Customs duties and fines pursued by the Ministry of Customs,
- Insurance premiums owed to the Social Security Institution (SGK), unemployment insurance contributions, social security support contributions, voluntary insurance contributions, and premiums calculated for underdeclared workers at construction sites,
- Stamp tax, special transaction tax and education contribution fees applied under relevant laws,
- Receivables of provincial special administrations,
- Municipal taxes, property taxes and environmental cleaning taxes,
- Municipal water and waste service fees.
How to Restructure and Pay SGK Debts
Inflation Difference Will Be Applied at a Discounted Rate
For the restructuring of taxes, premiums and similar liabilities, instead of delay interest or delay surcharges, the domestic producer price index (PPI) will be used as the basis. Because inflation was higher after November 2016, the monthly inflation rate for the period from November 2016 to the present will be set at 0.35% per month. This corresponds to an annual rate of 4.20%. Consequently, an inflation difference of 16.1% will be applied for the period between November 2016 and September 2020.
For debts older than November 2016, actual inflation figures prior to that date will be used. Those wishing to restructure their debts must apply to the relevant institutions—the agencies where their debts are registered—by December 31, 2020. For tax debts and debts to provincial administrations and municipalities, the first installment payments will begin in January 2021; for debts to SGK, the first payments will begin in February 2021. Subsequent installments will be paid every two months, with a maximum of 18 installments.
Option to Pay in Equal Installments
When debts are paid in installments, debtors may choose among payment plans of six, nine, twelve or eighteen equal installments. It will not be possible to pay over a longer period than the chosen installment plan. The amount to be paid will include the principal and the inflation difference, and a coefficient will be applied depending on the chosen installment term. The coefficients are: 1.45 for six equal installments, 1.83 for nine, 1.105 for twelve, and 1.115 for eighteen installments.
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Debtors who pay in cash (lump sum) will receive a substantial discount. For those who pay the full amount with the first installment, only 10% of the calculated inflation difference will be collected and 90% of the inflation difference will be waived.