Erdoğan lures investors with tax exemption

Turkey wants to attract international investors with far-reaching tax incentives. On April 24, President Recep Tayyip Erdoğan presented a package that would grant foreign investors and wealthy individuals a tax exemption of up to 20 years when relocating to Turkey under certain conditions. The Turkish government is thus attempting to position the country more strongly as a regional location for capital, trade and skilled workers. The focus is particularly on investors who may be looking for alternative locations in view of the uncertainty in the Middle East. At the same time, Turkey itself remains confronted with structural challenges: The confidence of many international investors in the rule of law, judiciary and economic stability is still considered limited. Erdoğan presented the program at the Dolmabahçe working office in Istanbul under the title "Türkiye Century Strong Center for Investment Program". He promised to make Turkey a global center of attraction for international capital, trade and talent. Tax exemption for new residents The core of the package is a new regulation for people moving to Turkey. Anyone who has not been resident in Turkey for tax purposes in the past three years will not have to pay Turkish taxes on foreign income and capital gains for 20 years after moving to Turkey. Only income earned within Turkey would be taxed. The government is also planning significant reductions in inheritance and gift tax. The rate is to be limited to 1 percent for this group. In addition, the program should enable Turkish citizens and companies to repatriate assets held abroad to Turkey at a reduced tax rate. Erdoğan explained that Turkey today is more than a classic bridge between East and West. Rather, the country is a central base for energy and trade corridors in the region. Ankara wants to use this position to score more economic points. Advantages for exporters and transit business The package also provides relief for companies. Exporting production companies are to pay significantly less corporation tax in future. The rate would fall from 25 percent to 9 percent. Other exporting companies would be taxed at 14%. Currently, exporters only receive a reduction of 5 percentage points and manufacturers an additional percentage point. The government is also planning stronger incentives for transit business. Profits from transit traffic and cross-border trade brokerage are to be completely exempt from corporation tax in the Istanbul financial center. Until now, a deduction of 50 percent has applied there. For companies outside the financial center, 95 percent of profits from transit transactions are to remain tax-free. The Istanbul Financial Center on the Asian side of the city was opened in 2023. It is home to the central bank, the Borsa Istanbul stock exchange and several supervisory authorities, among others. The government wants to establish the IFC as a long-term competitor to financial centers such as Dubai, London and other international locations. Turkey is also banking on its geographical location. The country is located at a central point between Europe, the South Caucasus, Central Asia and China. At the same time, Ankara is investing in the expansion of its rail infrastructure in order to significantly increase freight transport capacity across the Bosphorus. It remains to be seen whether the new tax incentives will be sufficient to attract major international investors on a large scale. The financial benefits are considerable. However, the decisive factor will be whether Turkey can also impress in terms of legal certainty, currency stability and institutional trust. The post Erdoğan lures investors with tax exemption appeared first on ostwirtschaft.de.