- Liquidation period
The liquidation period will be valid instead of the accounting period in the taxation of the companies that have gone into liquidation, whatever the reason might be.
Liquidation begins on the date of registration of the general assembly decision regarding the liquidation of the corporation and ends on the date of registration of the liquidation decision.
The period from the start date to the end of the same calendar year and for each calendar year after this period and for the period in which the liquidation ends, the period from the beginning of the relevant calendar year to the end date of the liquidation is considered an independent liquidation period.
In case the liquidation ends within the same calendar year, the liquidation period will start on the date the corporation goes into liquidation and will continue until the liquidation ends.
If the liquidation is concluded within the same year:
The date of liquidation of the corporation………… : 18/1/2006
End date of liquidation ……………………………………… : 12/12 /2006
Liquidation period …………………………………………… : 18/1/2006-12/12/2006
If the liquidation continues for more than one year:
The date of liquidation of the corporation………… : 15/4/2006
End date of liquidation ………………………………………. : 4/6 /2008
- Liquidation period ………………………………………… : 15/4/2006-31/12/2006
- Liquidation period ………………………………………… : 1/1/2007-31/12/2007
III. Liquidation period ………………………………………. : 1/1/2008-4/6/2008
1.1. Correction if the liquidation is ended with a loss
If the liquidation is ended with a loss, the result of the liquidation is corrected towards the previous liquidation periods and the taxes paid in the previous periods are returned to the taxpayer. In case the tax base is declared as a result of the final liquidation, the previous liquidation periods will not be corrected.
Changes in the tax rate while the liquidation transactions are in progress will not require the said corrections to be made. Corrections will only be made if the last liquidation period results in a loss.
In a corporation that went into liquidation on 3/6/2006, the liquidation was completed on 15/4/2009. In this institution, the period between 3/6/2006-31/12/2006 will constitute the first liquidation period, the second and third liquidation periods between 2007 and 2008, and the fourth and final liquidation period between 1/1/2009-15/4/2009.
In the 1st liquidation period …………………. 20,000.- TL……. Profit,
In the 2nd liquidation period ……………………. 150.000.- TL……Profit,
In the 3rd liquidation period …………………….. 50.000.- TL…… Profit,
In the last liquidation period, …………………….. 25,000.- TL……. Loss
According to these statements, in the first two periods (4.000 + 30.000 =) 34,000.- TL corporate tax was paid.
However, according to the final result of the liquidation, the profit is [(20,000 + 150,000) – (50,000 + 25,000) =] 95,000.- TL. The corporate tax to be paid on this base will be 19.000.- TL.
In this case (34.000 – 19.000 =) 15.000.- TL will be returned to the corporation.
1.2. Statute of limitations in liquidation
For liquidations lasting more than one year, the assessment statute of limitations starts from the year following the end of the liquidation.
If the liquidation is completed on 4/6/2006 in corporation that went into liquidation on 11/2/2002, the statute of limitations begins as of 1/1/2007 and assessments can be made for the liquidation periods covering 11/2/2002-4/6/2006 until 31/12/2011.
- Withdrawal from liquidation
If the liquidation is cancelled, the liquidation provisions do not apply to the corporation. In this case, the decision to cancel the liquidation will be valid from the beginning of the liquidation period when this decision is taken, and the declarations for the liquidation period submitted until the date of the decision to cancel the liquidation will replace the normal operating declarations.
The provisional tax liabilities of the corporation of which liquidation is canceled will start from the beginning of the provisional taxation period covering the date of the decision to cancel the liquidation.
The date of liquidation of the corporation………… : 14/2/2006
Date of withdrawal from liquidation ……………… : 15/4/2008
- Liquidation period …………………………………………. …. : 14/2/2006-31/12/2006
- Liquidation period …………………………………………. . : 1/1/2007-31/12/2007
Normal declaration period……………………………………… : 1/1/ 2008-31/12/2008
As it can be understood from the example, the normal declaration period begins as of the beginning of the year on which the decision to cancel the liquidation is taken, and provisional tax liability begins as of the beginning of the quarterly temporary tax period (1/4/2008), which includes the date of the decision to cancel the liquidation (15/4/2008).
- Liquidation declarations
In case the liquidation started and completed within the same calendar year, the liquidation declaration will be submitted to the tax office to which the corporation is affiliated, within thirty days from the completion date of the liquidation.
If the Start Date to Liquidation and the Completion Date Liquidation are realized in different calendar years, the liquidation declaration for each liquidation period will be given to the tax office of the taxpayer from the first day of the fourth month following the month of liquidation period to the evening of the twenty-fifth day by the liquidator.
The liquidation declaration for the period when the liquidation ended, on the other hand, will be submitted to the tax office to which the corporation is affiliated, within thirty days from the date of the liquidation.
The date of liquidation of the corporation………………………… : 4/6/2006
The date the liquidation was concluded……………………………. :15 /4/2008
Period of filing the declaration for the prorota period (1/1/2006 – 3/6/2006): 1-25/10/2006
Period to submit a declaration for the 1st liquidation period (4/6/2006-31/12/2006) :1-25/4/2007
Period to submit a declaration for the 2nd liquidation period (1/1/2007–31/12/2007): 1-25/4/2008
III. Period to submit a declaration for the 3rd liquidation period (1/1/2008–15/4/2008): 15/5/2008
A detailed list of the money and other values distributed to the partners according to the balance sheet and income statement and the liquidation balance sheet will be attached to the declarations to be submitted in this way.
- Liquidation profit
The tax base of the corporations in liquidation is the liquidation profit. Liquidation profit is the positive difference between the value of wealth at the end of the liquidation period and the value of wealth at the beginning of the liquidation period.
When calculating the liquidation profit;
– Any payments made in advance or in other ways to the shareholders or the owners of the corporation during the liquidation will be added to the wealth value at the end of the liquidation.
– In addition to the existing capital, the payments made by the partners or owners, and the tax-exempt earnings and revenues obtained during the liquidation will also be added to the wealth value at the beginning of the liquidation period.
Moreover, the values of the economic assets distributed, sold, transferred or returned to the owner of the corporation as a deduction for their shares will be determined according to the provisions of the disguised profit distribution through transfer pricing of the Corporate Tax Law as of the day of distribution, sale, transfer or return.
In addition, while calculating the liquidation profit, the provisions of the Law on deductible expenses, loss deduction, other discounts and non-deductible discounts will also be taken into account.
The liability of those who do not have a legal personality among economic public institutions and economic enterprises belonging to associations or foundations, which do not have any provisions regarding liquidation transactions in their special laws, will end with the cessation of the business, as in sole proprietorships. Liquidation in such businesses will be concluded by either selling the existing economic assets or withdrawing them from the business by being invoiced to the institution, association or foundation to which they are affiliated. In this context, the corporate tax returns of the taxpayers who quit the job for the relevant period will be submitted within the period specified in Article 14 of the Corporate Tax Law.
- Wealth value
The wealth value at the beginning and end of the liquidation period is the company’s equity, which appears on its balance sheet at the beginning and end of the liquidation period. In liquidations lasting more than one year, the wealth value at the beginning of the following liquidation periods is the wealth value seen in the last balance sheet of the previous period.
All kinds of provisions and undistributed earnings are included in this capital, except for the following:
– All kinds of depreciation and provisions made according to tax laws and technical provisions of insurance companies,
– The portion of earnings to be distributed to shareholders or non-owners.
- Liability of liquidators
Liquidation officers cannot make payments to the creditors written in the fourth line of article 206 of the same Law and apportion them to the partners without allocating a provision in accordance with article 207 of the Execution and Bankruptcy Law No 2004. Otherwise, they will be personally and severally liable for the original and increase of these taxes and tax penalties.
As a result of the above-mentioned taxes and the examination of the liquidation process, the originals and increments of the taxes to be levied can be sought from the partners to whom an apportionment is made over the remaining part of the liquidation, as well as from the partners to whom an economic asset is transferred through distribution, transfer, return or sale during the liquidation. No further application will be made to the liquidation officers for the originals of taxes collected from the partners.
Liquidation officers can recourse to the partners to whom an economic asset was transferred or a share from the liquidation remainder during the liquidation due to the originals of the taxes they paid pursuant to Article 17 of the Law. If these values received by the partners are not sufficient to cover the taxes, they can recourse to the creditors who have collected the receivables written in the fourth line of Article 206 of the same Law, in whole or in part, within the rates in accordance with Article 207 of the Execution and Bankruptcy Law.
- Examination of liquidation transactions
Tax examinations will begin within three months at the latest, following the submission of the petition containing the request for the examination of the liquidation proceedings to the tax office, and within thirty days following the end of the tax examination, the tax office will notify the liquidation officers about the result of the said tax examination. Accordingly, until the result of the taxes required from the corporation is received, the responsibilities of the liquidation officers according to Article 17 of the Law will continue.
The Ministry of Finance is authorized not to have the liquidation process inspected by taking into account the legal status of taxpayers, the fields in which they operate and the size of their assets at the date of liquidation.
- Assessments to be made about corporate taxpayers whose legal personality has been terminated in the trade registry after being liquidated
Regulations regarding all kinds of tax assessment and fines related to the pre-liquidation and liquidation periods are included, regarding the taxpayers whose legal personality has been deleted from the trade registry by liquidation.
Accordingly, in all kinds of tax assessment and fines to be made after 27/3/2018 regarding the corporate taxpayers whose legal personality has been deleted from the trade registry after being liquidated, regarding the pre-liquidation and liquidation periods, the provisions of the fifth paragraph of Article 10 of the Tax Procedure Law must be taken into account.
Source: Revenue Administration of Republic of Turkey – Translated by Karen Audit – The rights of this translation belong to KarenAudit and unauthorized use is prohibited.
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