With the end of the year approaching, attention turns to tax payments. Those who have received wages from more than one employer at the same time in the past five years, or who changed jobs during the year, are being invited to tax offices. Those who voluntarily come forward and benefit from the remorse provisions before being summoned do not pay tax penalties.
Remorse Provisions in Tax Payments
Tax offices issue invitations as the year-end approaches to individuals who have earned wages from multiple employers at once in the last five years or who switched workplaces during the year. Even if no invitation arrives, people in this situation who have not filed a tax return can apply voluntarily and benefit from the remorse provisions and related practices if they are not yet detected by audit staff. Those who take advantage of remorse provisions avoid paying the tax loss penalty.
Employees who receive wages from more than one employer at the same time or who change workplaces during the year are required to file a tax return for all wages received from all employers when the amount from the second or subsequent employers exceeds the second income bracket subject to 20% tax. Under the Tax Procedure Law, taxpayers who fail to fulfill their tax duties on time or do so incompletely—resulting in taxes not being collected on time—are subject to a tax loss penalty. The tax loss penalty is calculated as an amount equal to the lost tax for those who did not submit their declaration on time. For example, if it is determined that a person who owed 3,000 lira in tax for 2020 did not file a return, they must pay the 3,000 lira tax plus a 3,000 lira tax loss penalty.
Invitations to Pay Taxes
However, those in this situation may be unable to file a return because they are not required to file or to pay the tax until the issue is identified. To prevent taxpayers from being overlooked, the Ministry of Treasury and Finance—using Social Security Institution data as in previous years—identifies taxpayers who receive wages from multiple employers at the same time or who changed workplaces during the year. Letters are sent to those who should have filed returns within the past five years but did not, inviting them to the tax office.
The Ministry of Treasury and Finance seeks to raise public awareness and encourage voluntary compliance. For the initial invitations, instead of imposing tax penalties, authorities collect only the principal tax and the remorse surcharge, applied as a late payment charge, while waiving the tax loss penalty. However, those who fail to pay later will not receive the same concession. The remorse surcharge is charged at 2% per month.
Which Taxes Are Covered by the Remorse Provision?
According to the law, remorse provisions apply to taxpayers who commit offenses that would otherwise trigger a tax loss penalty for taxes based on declarations. The taxes covered under remorse provisions include:
- Income tax
- Income withholding tax
- Corporate tax
- Value added tax
- Special consumption tax
- Banking and insurance transactions tax
- Inheritance and transfer tax
For employees, the relevant tax is income withholding tax. Remorse provisions do not apply to property taxes or other taxes that are not based on declaration.
To benefit from remorse provisions, the taxpayer must apply before any official notification or audit is initiated. No tax audit should have been started by the authorized officers for the taxpayer before the voluntary disclosure petition is submitted. The tax return must be filed within 15 days from the date the taxpayer makes the voluntary disclosure, and any resulting unpaid tax and calculated surcharge must also be paid within 15 days.