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Turkey To Overhaul Income Tax Structure In Bid To Boost Economy

Wednesday, 23 October 2013   (0 Comments)
Posted by: Author: Ali Berat Meric
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Author: Ali Berat Meric (Bloomberg)

A new income tax law being drafted in Turkey’s parliament would expand the tax base by encouraging investment and manufacturing and bringing more undeclared income out into the open, Finance Minister Mehmet Simsek said in an interview.

The bill strives to achieve those aims through measures including narrower exemptions, incentives for farmers and new taxes on income from real estate. It is also would tighten oversight on tax collection in manufacturing.

"We took an important step by submitting this bill to the parliament, it amounts to a reform,” Simsek said in an interview at parliament. He didn’t have a specific timetable for its approval.

Simsek said the bill strives to improve transparency, leaving "no room for gray areas” in tax regulation. Savings will be encouraged and tax deductions will be offered on education and health spending, he said.

The bill was submitted to parliament in June and must be approved by two parliamentary panels before it is returned to the full legislature for a vote.

"The most noteworthy regulation in the bill is that it narrows exemptions on capital gains and profits from real estate in cities,” Osman Arioglu, a former head of Turkey’s tax authority, said in a telephone interview today. "That would increase tax revenue.”

Arioglu predicted the government would defer a vote on the bill until after local elections in March 2014.

"I don’t think the government will push for such a drastic change in tax structure before local elections,” Arioglu said.

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