Turkey Cuts Interest Rates on Public Debt Delays and Installment Plans

A significant regulatory change affecting citizens with outstanding tax liabilities, social security premiums, customs debts and various administrative fees has been published in the Official Gazette. The government reduced the monthly interest applied to overdue public receivables, lowering it from 4.5 percent to 3.7 percent effective immediately. In addition, the annual interest rate used for restructuring and paying public debts in installments was revised downward from 48 percent to 39 percent. Officials noted that this update will create a substantial financial advantage for taxpayers who have difficulty meeting their obligations.

Government Reduces Interest Rates Applied to Public Receivables

The decision was enacted under the authority of President Recep Tayyip Erdoğan. It involved amendments to the interest rate framework outlined in the Law on the Procedure for the Collection of Public Receivables, known as AATUHK No. 6183. The regulation updates the critical interest categories used during the collection process, which cover late payment charges as well as the interest applied during installment arrangements.

Late Payment Interest Declines Sharply on an Annual Basis

One of the most significant revisions concerns the late payment interest charged on public debts, including taxes, fees, duties, and social security contributions. The monthly interest rate that determines penalties for delayed payments has been reduced from 4.5 percent to 3.7 percent. Although this figure is calculated monthly, its cumulative effect over the course of twelve months is substantial. Before the change, the annual cost to taxpayers was approximately 54 percent. With the new rate in place, the annualized burden falls to about 44.4 percent. This reduction is expected to ease financial stress for individuals and businesses who have outstanding obligations but have been unable to pay on time due to economic difficulties.

Installment Interest Also Lowered to Support Debt Restructuring

Another key component of the decision involves the interest used when taxpayers request to restructure their public debts through installments, a process known as deferment or rescheduling. The Treasury and Finance Ministry revised the relevant regulation in its Collection General Communiqué, adjusting the annual deferment interest rate from 48 percent to 39 percent. This update directly impacts taxpayers who have large debts that may have reached the stage of enforcement or seizure. Under the new terms, those who apply to their respective tax offices can restructure their debts at a significantly lower cost, making repayment more manageable and reducing the overall financial burden.

Lower Rates Expected to Increase Compliance and Encourage Early Application

Experts suggest that lowering both the late payment interest and the deferment interest could improve compliance by encouraging taxpayers to resolve their debts sooner. High penalty rates have often been cited as a barrier that discourages individuals and businesses from approaching tax offices to restructure or settle long-standing obligations. With the new rates in effect, taxpayers may be more willing to negotiate repayment plans that previously seemed financially unfeasible. Authorities believe this will not only ease the burden on taxpayers but also support the government’s broader goal of strengthening public revenue collection without resorting to harsher enforcement measures.

Potential Impact on Individuals, Businesses, and Public Finances

The decision is expected to have multiple economic implications. For individuals, the reduction in interest rates could prevent minor debts from escalating into much larger financial problems. Businesses facing liquidity challenges may also benefit from the opportunity to restructure their liabilities under more favorable conditions. From the perspective of public administration, improved repayment behavior could help reduce the volume of nonperforming public receivables over the long term. The government emphasizes that the goal is not merely to collect overdue debts but to provide taxpayers with a more realistic pathway to compliance.

A Significant Financial Relief for Struggling Taxpayers

Overall, the revised interest rates represent one of the most meaningful adjustments in recent years to the cost of overdue public debts in Turkey. The reduction is particularly important at a time when many taxpayers are dealing with rising expenses and tighter financial conditions. Citizens with outstanding tax or social security liabilities can now visit their local tax offices to apply for restructuring under the new, more favorable interest framework. Officials expect the regulation to significantly ease repayment pressure, thereby supporting both financial stability for taxpayers and the efficient functioning of public finances.