Turkey to introduce tax changes within 1-2 weeks: Minister

Turkey to introduce tax changes within 1-2 weeks: Minister

ISTANBUL - Reuters
Turkey to introduce tax changes within 1-2 weeks: Minister

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Turkey wants uniform tax measures for companies across the financial sector, and the government will announce tax changes within one or two weeks, Finance Minister Naci Ağbal said on April 13.

“There are some uncertain areas in the banking system just as the Banks’ Association of Turkey [TBB] has mentioned earlier…We have now been working on this,” he said after a meeting in Istanbul. 

“There are banks, Islamic lenders, dubbed participation banks in Turkey, and financial institutions in the finance sector. We have seen different practices based on different laws. It might be stamp taxes or banking insurance transaction taxes. We want to make all tax laws in the sector to be the same. In this vein, we have been removing the differences so as to enable all sector players to compete under the same tax regulations,” Ağbal noted. 

He said there are some common complaints about the stamp tax so they are trying to figure out how to reduce such kind of tax obligations especially in the context of contracts. 

Ağbal noted that these works will be discussed in the coordination board for the improvement of the investment climate, adding that new regulations will be revealed in the next 1-2 weeks. 

The TBB has repeatedly voiced its demands to see new regulations in taxing financial instruments. In this vein, the association wants the reduction in intermediary burdens, the removal of several “gray areas” in the taxation of the financial instruments and the lowering of some burdens resulting from the public sector over financial intermediary services. 

Eyeing ‘predictable’ taxes in financial sector

“We want to make the financial taxes predictable. Some of the regulations in some tax laws have some uncertain areas and this has caused several delays in investment decisions,” Ağbal said. 

He noted that one of the strongest sides of the Turkish economy is robust banking system on one side, and a strong fiscal policy on the other, adding that the government would continue to adopt its prudent fiscal policies. 

“Economy is a field that gives no room to adventurous moves…Our fiscal policy makes a crucial contribution to the economy and we need to embrace it,” he said. 

Ağbal noted that the structural reform agenda must be maintained and all necessary measures will be taken to reach the budget targets. 

“We expect our economy will show better performance this year with a lower inflation rate compared to the previous year. Despite this, we are also aware of what the risks are,” he added. 

Ağbal said the reform program will mainly enable the labor market to become rationalized, and added that some revision may be needed for the existing severance pay system’s irrational points. 

Severance pay refers to compensation employers are required to provide employees whose job contract is ended due to reasons listed under Turkish Labor Law. Severance pay approximately amounts to a month of gross salary for every year that the employee was with the company.

The government has been examining a number of models in a bid to update the severance pay system, according to officials.