According to Article 19 of the Turkish Tax Procedure Law, the taxation relationship begins with the occurrence of the event that causes the tax liability. The individual in whose capacity the event occurred becomes subject to the status of “taxpayer”. To concretely determine the tax debt of the individual in taxpayer status, tax assessment is necessary. According to the Turkish Tax Procedure Law, tax assessment is the process of calculating the amount of tax debt by applying the tax rate to the base determined by various methods. After the assessment of the imposed tax is communicated to the taxpayer, if no tax case is filed within the specified period or if the filed case is rejected, the tax liability becomes due; it reaches a stage where it needs to be paid (Article 22 of the Tax Procedure Law).
As evident from the wording of the law, in order for the tax to be assessed, it is first necessary to know the subject of the tax, the economic unit on which the tax will be calculated, i.e., the base. Therefore, determining the base is a preparatory process. The base can be determined through an administrative process or calculated based on the declaration of the taxpayer. It should be noted that the authority of the administration to investigate the accuracy of this declaration exists.
The assessment process is an administrative and subjective procedure. The assessment process in accordance with the Tax Procedure Law can be evaluated in five different categories:
- Assessment based on declaration
- Supplementary tax assessment
- Ex officio tax assessment
- Tax assessment by the administration
- Assessment through correction
In Turkish law, the main assessment type is based on a declaration. The declaration can be made in writing or orally, but written declaration is preferred. Taxpayers generally cannot file a lawsuit against assessments based on their own declarations. In the declaration method, the stages normally known as assessment, notification, and accrual occur simultaneously.
Supplementary tax assessment is a taxation carried out to cover a difference in the base that arises after a specific tax assessment. For example, if a taxpayer submits a declaration for a specific period but an inspection of their records and documents reveals that their income was understated, additional tax will be assessed based on the income difference revealed by this material evidence.
Ex officio tax assessment occurs when the base cannot be determined partially or entirely based on material evidence or legal criteria, or when the declaration is not submitted on time. In such cases, the administration determines the base ex officio, and assessment is conducted accordingly.
After the tax is assessed, it is communicated to the individual who is subject to the tax. An important stage after notification is accrual. Accrual signifies that the tax becomes due for payment without being a separate administrative procedure. However, the accrual of the tax and its finality are not the same legal status. When a person is notified of the tax, they can either pay the debt without objecting to it, or if they believe an unjust action has been taken, they can object to the debt. According to Article 112 of the Tax Procedure Law, if a person exceeds the thirty-day objection period, they are deemed to have accepted the tax debt, and the tax debt becomes final. However, if the taxpayer applies to the tax court claiming an unjust action and the court proceedings are ongoing, the accrual is postponed until a court decision is obtained.
If the tax court accepts the taxpayer's claim, the tax is not accrued. On the other hand, if the tax court rejects the case, the court decision functions as evidence in favor of the action, and the tax debt accrues, entering the stage where it needs to be paid, as explained above. If the taxpayer, whose case has been rejected and the debt has been accrued, still believes that the assessment and court decision were unlawful, they can appeal to higher judicial authorities. The appeal to higher instances does not automatically suspend the execution unless the court issues an injunction to that effect. Since the tax has been accrued and paid but the avenues of legal remedy have not been exhausted, it is not considered final.
The tax assessment process concludes with the collection of the tax, and the corresponding tax debt is eliminated. The collection stage also constitutes a separate administrative procedure, and due to this nature, any legal violations at this stage can be subject to administrative and judicial review. The primary source regulating the collection stage in the Turkish tax system is Law No. 6183 “Law on Collection Procedures of Public Receivables”.
Statute of Limitations Periods Under Turkish Tax Law
Apart from payment, one of the most important reasons that terminate a tax debt is the statute of limitations. Under Turkish tax law, there are two types of statutes of limitations that restrict the tax authority's power to demand tax: accrual statute of limitations and collection statute of limitations.
With the expiration of the accrual statute of limitations period, the tax debt cannot be accrued or collected. According to Article 114 of the Tax Procedure Law, taxes that have not been assessed and communicated to the taxpayer within five years from the beginning of the calendar year following the year in which the tax obligation arose will be subject to the statute of limitations. This five-year period is applicable to all taxes falling within the scope of the Tax Procedure Law unless there is a contrary provision.
For the collection statute of limitations, regulations are provided in the Law on the Procedure of Collection of Public Receivables. According to this law, if a public debt is not collected within five years from the beginning of the calendar year following the maturity date, the statute of limitations applies. In this law, the maturity of the tax signifies the last day of the payment period for that tax.
Calculation of Statute of Limitation Periods in Turkish Tax Law
Article 18 of the Tax Procedure Law regulates how the time limits specified in tax laws are calculated when expressed in terms of days, weeks, months, or a specific day. If a time limit is specified in terms of days, the day it starts is not counted, and it ends at the end of the business hours of the last day; if the time limit is expressed in weeks or months, it ends at the end of the business hours of the last day of the corresponding week or month. If there is no day corresponding to the day it started in the month in which it ends, the time limit ends at the end of the last day of that month; for time limits specified with a certain day, it ends at the end of the business hours of that day; official holidays are included in the time limit. If the last day of the time limit falls on an official holiday, the time limit ends at the end of the business hours of the first working day following the holiday.
Extension of Statute of Limitation Periods in Tax Law
In the presence of any of these conditions, the statute of limitations period stops, and after the cause ceases to exist, the period that did not run during that time resumes.
- Force Majeure: The definition of force majeure is not provided in the law, but the following examples are listed: 1) Severe accidents, severe illness, and detention that prevent the fulfillment of any tax obligations to a degree; 2) Disasters such as fire, earthquake, and flooding that prevent the fulfillment of tax obligations; 3) Compulsory absence due to factors beyond the person's control; 4) Situations where records and documents are lost due to reasons beyond the owner's control.
- Difficult Circumstances: According to Article 17 of the Tax Procedure Law, those who cannot fulfill tax procedures and obligations within the legal period due to being in difficult circumstances can be granted an extension by the Ministry of Treasury and Finance for a period not exceeding twice the legal period. Those requesting an extension must apply to the authority before the legal period expires, and the authority must accept the provided justification. The Tax Procedure Law does not specify the conditions for "difficult circumstances." Although not considered a force majeure, many reasons that prevent a taxpayer from fulfilling tax procedures and obligations could fall under the "difficult circumstances" concept. For instance, if a taxpayer's mother is in the hospital due to a severe traffic accident and is in a life-threatening condition, this might not be a force majeure but could be considered a "difficult circumstance" by the Ministry of Treasury and Finance.
- Special Situations: In addition to the general provisions stipulated in the Tax Procedure Law, special tax laws also contain certain situations where specific time limits can be extended. For example, the Ministry of Treasury and Finance is authorized to extend the payment periods for tax offices with more than five hundred taxpayers for up to fifteen days after the end of the specified deadline.
Referral to the “Valuation Commission” also constitutes a reason that stops the accrual statute of limitations. The reasons that interrupt the collection statute of limitations are listed in ten articles in Article 103 of the Law on the Procedure of Collection of Public Receivables. These include payment, seizure, service of payment order, and other reasons specified in the law.