Stamp Duty: Definition, Scope and Liabilities

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What Is Stamp Duty?

Stamp duty is an indirect tax levied on documents that are drawn up between individuals or institutions and have legal value. This tax applies when the documents are official and can be presented as evidence. In other words, any written document that proves an agreement or transaction between parties is subject to stamp duty. A wide variety of documents fall under this scope, including contracts, undertakings, powers of attorney, tender decisions, financial statements, lease agreements, letters of guarantee, and similar documents. These documents do not have to be in physical form; digital documents prepared and signed with a secure electronic signature in accordance with the Electronic Signature Law No. 5070 are also subject to stamp duty.

The tax is calculated based on the content, scope, and type of the document. Some stamp duties are fixed amounts, while others are calculated proportionally based on the monetary value stated in the document. For example, in a lease agreement, the stamp duty is calculated as a percentage of the rental amount, while fixed amounts may apply to other types of documents. Stamp duty must be declared and paid periodically. Typically, it must be declared by the 23rd day of the month following the date of the document’s issuance and paid by the 26th day. However, these deadlines may vary depending on the type of transaction and the taxpayer's status.

Who Is Liable for Stamp Duty?

Stamp duty is a legal obligation that arises upon the creation and signing of a document. All parties signing the document are considered liable for the tax. That is, any individual or institution that signs a contract or any legal document is deemed a taxpayer for stamp duty. However, there are exceptions to this rule. For example, when a document is drawn up between a public institution and an individual or a private legal entity, only the private party is liable to pay the stamp duty. This exemption is granted to public institutions to ensure the efficient use of public resources and the uninterrupted delivery of public services.

The obligation for stamp duty is not limited to documents signed with a physical (wet) signature. With the advancement of technology, documents prepared and approved electronically are also subject to stamp duty. In fact, in some cases, symbols, logos, barcodes, or special signs that serve as a substitute for a signature may fall within the scope of the tax. Therefore, when evaluating whether a document is subject to stamp duty, one must consider not only its physical structure but also how it was prepared, who the parties are, and its intended purpose.

Why Is Stamp Duty Collected?

The primary purpose of stamp duty is to ensure that certain written documents are legally valid and possess official status. This tax guarantees that contracts, agreements, official letters, and other similar documents created between parties are recognized by the state. Once stamp duty is paid, the document gains a form of official approval, enhancing its role in business transactions, the legal system, and public order. Paying stamp duty confers legal validity to the document and ensures that it can serve as evidence in the event of disputes.

How Is Stamp Duty Calculated?

Stamp duty is calculated either as a fixed amount (lump sum) or proportionally (percentage-based), depending on the type of document and its content. Accurate calculation is essential for taxpayers to pay the correct amount.

Lump Sum Stamp Duty (Fixed Amount Calculation)

Lump sum stamp duty is applied to documents that do not contain a monetary value and is collected at a fixed rate. In this case, the amount of tax does not change depending on the type of document and is calculated at a predetermined amount. Lump sum stamp duty is generally applied to small-scale transactions that do not involve financial value, simplifying the tax process by imposing the same charge regardless of the document type.

Proportional Stamp Duty (Percentage-Based Calculation)

Proportional stamp duty is calculated based on the monetary value contained within a document and is usually applied as a percentage. In this scenario, the applicable rate is calculated over the monetary amount stated in the document. Proportional stamp duty is more common for high-value transactions, commercial contracts, and documents involving payment plans.

Declaration and Payment Period of Stamp Duty

When documents subject to stamp duty are prepared, taxpayers must fulfill their obligations accurately and on time. The declaration of stamp duty must be submitted by the end of the 23rd day of the month following the issuance of the document. The declaration can be submitted to the tax office or electronically through the Revenue Administration’s (GİB) online portal. Taxpayers are also required to complete their payment obligations following the submission. The stamp duty must be paid no later than the end of the 26th day of the same month.

Declarations and payments can be made to the taxpayer’s affiliated tax office. Payments can also be made directly at the tax office or through online banking systems. Taxpayers should ensure they use the payment channels designated by the tax office.

Failure to declare or pay stamp duty on time may result in serious penalties. These include a tax loss penalty if the stamp duty is not declared within the stipulated period, calculated as a percentage of the original tax due. Additionally, if payment is not made, late payment interest is charged, increasing the total amount payable day by day.

It is crucial for taxpayers to declare and pay their stamp duty on time to fulfill their legal obligations and avoid penalties. If payments are not made by the deadline, the resulting sanctions imposed by the tax office may create a significant financial burden. Therefore, it is essential to monitor declaration and payment deadlines and act in accordance with legal regulations.

Conclusion

Stamp duty is a significant type of tax that ensures the legal validity and official status of documents. By fulfilling their stamp duty obligations accurately, both individuals and institutions ensure that their documents are legally valid and protected. The calculation of stamp duty depends on the type and content of the document and may be done on a fixed or proportional basis. This process allows taxpayers to pay the correct amount and avoid legal penalties.