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Wanda Wu

The debt write as an income and cause more tax?!

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Hi everyone,

I wanted to close my company. But my accountant told me that I will pay 100000 TL income tax because of the liquidation profit! They will write the outstanding payable/debt as an income, which will cause more income tax. My company was almost bankrupt and unable to pay anything. 

Is that reasonable to account the debt as an income? Is there any cheaper way to close the company? Any help or feedback will be appreciated. Thanks.

Wanda

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Hi Wanda Wu,

Your questions almost exclusively fall within the scope of an accountant expertise, but I would be happy to briefly advise you as a legal practitioner in Turkey. 

First of all, that does not sound wise to me, saying that your company is responsible of paying income tax in a position which you are unable to pay your debt. Based on your reference, your company's balance sheet must state otherwise but not due income tax. 

However, I know that is quite a fund needed to pay "closing" the company. Drafting of balance sheet documents, appointing a liquidation officer, registration and publication fees, official government fees etc. These are usually even more costly than opening up a new company :)

For this reason, in daily practice, most of the bankrupted companies (who are already in financial problem due to the nature of their status) prefer to just stop filing the tax to the authorities and no longer engage to any work through the company, instead of following the company liquidation procedures. 

To my experience, I have not seen any major problem caused by the legal authorities because of not completing the closure, provided that your company does not owe any money to public bodies (such as Tax Office, Pension Authority etc.). 

Good luck !

 

 

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