Government plans change in tax regime

Government plans change in tax regime

Government plans change in tax regime

Turkey’s government aims for higher revenues by making changes into the existing tax regime, ruling Justice and Development Party (AKP) Party Group Deputy Chairman Mehmet Muş announced on Oct. 24.

Turkey’s ruling Justice and Development Party (AKP) submitted on Oct. 24 a new draft law to the parliament, which proposes regulations on the tax system.

As part of the 45-article draft legislation, the income tax for high earners will be increased to 40 percent from the current 30 percent, Muş said, adding that the new regulation will apply to people making over 500,000 Turkish Liras (around $86,500) also removing exemptions granted to athletes.

“The purpose of the legislation is higher tax for higher income, lower tax [for] lower income [groups],” he added.

The legislation, which is expected to be submitted to parliament shortly, will also increase the number of income tax brackets from four to seven, Muş said.

The draft also authorizes the Turkish president to reduce the corporate tax for publicly traded companies, which is designed to encourage public offerings.

The new regulation also introduces a hotel accommodation tax.

“The hotel accommodation tax rate will be 1 percent for 2020 and 2 percent beyond [that]. The new tax will come into force in April next year,” Muş explained.

The draft also foresees the introduction of a new tax on high-value properties.

According to the proposal, owners of homes with a value between 5 million liras and 7.5 million liras will annually pay a 0.3 tax while the tax rate for houses worth up to 10 million and above 10 million will be 0.6 percent and 1 percent, respectively.

The draft also introduces a tax for digital services and sales such as games, music, social media services and advertising,

The proposed plan will also raise a sales tax on foreign exchange and give the president the authority to raise it further.