💼 Restructuring Tax Debts in Türkiye: Installments up to 72 Months
The law on the restructuring of tax debts has been passed by the Grand National Assembly (Meclis) and enters into force upon publication in the Official Gazette.
In our assessment, this is important news for two categories of clients:
- Foreign entrepreneurs with Turkish companies that have outstanding tax liabilities
- Businesses under pressure from high interest rates and inflation
We break down the conditions and potential pitfalls.
📋 Key Parameters of the Restructuring
Key terms:
- Maximum installment term: 72 months (6 years)
- Annual deferral interest rate (tecil faizi): 39%
- Available to all debtors with public taxes and dues
- Applies to both tax liabilities and SGK (social security) contributions
Who can take advantage:
- Legal entities with tax debts
- Legal entities with SGK (social security) arrears
- Individuals with outstanding public liabilities
🔓 Collateral Requirements: Significant Relief
This is the most practically significant change.
Old Rules
- Collateral was mandatory for the full debt amount
- Maximum restructuring term: 36 months
New Rules
- Debts up to 1 million TL: no collateral required
- Debts exceeding 1 million TL: collateral required for half of the amount above 1 million TL
Calculation Example
A debt of 2 million TL:
- First 1 million TL: no collateral required
- Remaining 1 million TL: collateral required for 500,000 TL (half)
A debt of 5 million TL:
- First 1 million TL: no collateral required
- Remaining 4 million TL: collateral required for 2 million TL (half)
Collateral Options
- Bank guarantee letter (teminat mektubu)
- Real estate mortgage established in favor of the tax authority
⚠️ Pitfalls: The 39% Interest Rate and the Risk of Collateral Forfeiture
In our assessment, many entrepreneurs may miscalculate the true cost of restructuring.
💰 An Annual Rate of 39% Is Not Insubstantial
Against the backdrop of current Central Bank policy, the rate might seem acceptable. However, in USD equivalent, this means:
- Over 6 years, the total payment will significantly exceed the principal debt
- If the lira depreciates, the effective rate in USD terms may prove disadvantageous
- If inflation declines and the lira stabilizes, the rate will become relatively high
🔥 Risk of Collateral Loss in Case of Default
⚠️ If a company fails to maintain the restructuring schedule:
- Accepting the 39% rate at signing signifies final and binding consent to it
- The tax debt may increase by the accrued interest amount
- The bank guarantee letter can be called (the bank pays the state and pursues recovery from you)
- The mortgage on the real estate can be foreclosed
🎯 Sound Strategy
- Calculate solvency with a conservative safety margin
- Do not opt for the maximum 72-month term if you can manage it faster
- Account for foreign exchange risk in your planning
- Maintain reserves in case of adverse cash flow shocks