News about a tax amnesty have recently resurfaced. Because restructuring in the tax and social security (SGK) areas carries significant economic implications, a proposed tax and SGK restructuring has again become part of the public discussion as a potential tool to help the economy recover from recent difficulties.
Virus Impact on Tax and SGK Restructuring
Employers and civil society organizations alike are calling for a comprehensive tax and SGK restructuring. The global coronavirus pandemic has generated economic strains that have severely affected markets and businesses, prompting demands for measures to alleviate those impacts and cover the resulting losses.
In addition to the virus, various political issues have driven the exchange rate upward, affecting nearly every sector from large corporations to small businesses. Many inputs and raw materials are tied to foreign currency, which has increased operational costs. At the same time, those unable to pay their SGK debts would benefit from restructuring designed to reduce the pandemic’s economic burden, since many individuals and companies have experienced lost income and fallen behind on premium payments.
Currently, there is no active bill in the Turkish Grand National Assembly (TBMM) specifically proposing a restructuring of tax and SGK debts. However, intense pressure from the private sector and businesses has increased expectations that a restructuring provision could be included in a comprehensive bill when TBMM reconvenes in October.
Debts Are Reorganized, Not Erased
There is a common misconception that tax and SGK debt restructuring means debts will be wiped out. In reality, restructuring typically provides payment relief rather than cancellation. This distinction is important because many people await restructuring hoping for debt forgiveness, which can lead to misunderstandings and later complications when full forgiveness does not occur.
Through restructuring, the public treasury often secures significant collections by offering measures such as base increase (matrah arttırımı), cash register amnesty (kasa affı), stock regularization, and recognizing non-physical inventory in records subject to gross profit additions so that invoiced items are recorded. In short, restructuring can present tangible advantages both for debtors and for public revenues.
The Last Restructuring Was in 2018
To meet growing fiscal needs, the government has implemented several laws allowing the restructuring of debts. The last major program was introduced in 2018 under Law No. 7143 on the Restructuring of Tax and Certain Receivables. That measure provided substantial relief for taxpayers and yielded important revenue for the state.
Given current economic pressures, the likelihood of a new restructuring before the end of 2020 is seen as high. Nevertheless, any new regulation should include updated provisions: ensure company debts can be repaid without immediate enforcement, allow at least one year before mandatory payments begin, eliminate default interest and penalties, and offer substantial discounts for early payment.
A comprehensive SGK and tax debt restructuring law should include options such as base increases, cash register and partner current-account corrections, stock reconciliation, immediate inflows to the treasury, and a 50% reduction in administrative fines where appropriate. Renewing measures similar to the recently expired building amnesty would also be welcomed by many. While the precise effect on the economy remains to be seen, a well-designed restructuring could provide short-term relief and meaningful support to businesses and individuals struggling under current conditions.