Turkey has presented a large-scale tax reform called “A strong investment center for centuries“ (A Strong Investment Center for Ages in Turkey), which aims to radically attract capital and brighten the economy.
The main highlights of the new package include a full tax amnesty for all previously unregistered individuals and capital, which are now being declared.
Another measure is a reduction in corporate tax to 9% for industrial exporters and 14% for other export companies.
It is planned to reduce the inheritance tax to a symbolic 1%.
The rates for returning assets from abroad to the country will be ultra-low.
There is a move to the principle of taxation only on income generated in Turkey.
Anyone who has not been tax registered in Turkey for the last 3 years can settle there and pay zero taxes on their foreign income and capital gains for 20 years.
Only what is earned in Turkey is taxed. Everything else remains untouched.
Comments following the announcement of the new tax package range from economic optimism to political skepticism.
Analysts have described the package as an “economic offensive”. Turkey is seen as a more attractive destination for digital nomads and wealthy expats than the EU, where the tax burden is significantly higher.
The focus on the Istanbul Financial Center (IFC) is interpreted as a direct attempt to attract companies and banks that are currently seeking stability outside the conflict zones in the Persian Gulf.
The reduction of corporate tax to 9% for exporting manufacturers is seen as a radical move to transform the country into a global manufacturing hub.
The main criticism on social media and among some economists is related to the political environment.
Commentators point out that low taxes would hardly compensate for the lack of legal certainty and strong control over the judicial system in the country. Legislative process: Many experts remind that these are still only proposals from President Erdogan, which require approval by parliament.
Investors are waiting to see the specifics implementing regulations. Inflation: Some analysts are skeptical that these incentives will be enough to break the long-standing inflation crisis that has seriously eroded the savings of the local population.
Bulgarian politicians and economists used the news as an example of an aggressive state policy to attract capital, highlighting the lack of similar incentives in Bulgaria. It is warned that the capital “has no passport“ and can easily flow to neighboring Turkey.