Turkish parliamentary commission approves bill to boost employment

ANKARA

Parliament’s plan and budget commission late Feb. 22 approved a government-sponsored omnibus bill designed to create more jobs and encourage investments.

The bill also aims at boosting exports, production, R&D activities and savings through a number of incentives, including tax cuts.

The total cost of the measures is estimated at 17.3 billion Turkish Liras.

Bureaucrats from the economic management team argue that the incentives will help to create 700,000 additional jobs.

In order to support job creation, the government will provide “minimum wage support” to private companies, but as a result of this provision, tax revenues are expected to decline by around 9 billion liras.

Costly measures

The government will also help private companies pay for social security premiums for workers to be employed between 2018 and 2020. However, this measure, which will cover 687,000 workers, will cost the government another 3.4 billion liras in revenues.

With the bill, a measure previously introduced regarding the additional minimum living allowance on a temporary basis will become permanent. This move, which covers around 6.2 million minimum wage earners, will cost the government an additional 800 million liras.

The bill also introduces income tax and revenue stamp duty exemptions for companies, which will create additional jobs, a measure estimated to cost 430 million liras in tax revenues.

In the manufacturing sector, companies will receive premium and wage support from the government, which will come at the price of 710 million liras.

The companies that have an industrial registry certificate will be exempt from VAT until the end of 2019, when they purchase new machinery and equipment. This measure is also estimated to cost 1 billion liras.

As part of the incentives, the government will provide tax incentives for scrap cars older than 16 years. People who buy new cars under this scheme will enjoy up to 10,000 liras in reduction of a Special Consumption Tax. The government will lose around 500 million liras in tax revenues because of this incentive.

The incentives package also includes tax cuts for R&D related investments. Companies engaged in R&D and innovation and which are located in techno parks, as well as R&D centers and universities’ research labs, will be exempt from VAT until the end of 2019, when they buy machinery and equipment.

Web broadcasting regulation

Besides employment and investment related incentives, the omnibus bill also includes a controversial new internet broadcasting regulation.

If the bill clears parliament, Turkey’s Radio and Television Supreme Council (RTÜK) will be authorized to regulate and monitor every kind of sound and visual broadcast shared online on a regular basis.