Erdoğan lures investors with tax exemption

Foreign investors who relocate to Turkey are to receive a tax exemption of up to 20 years as part of a new incentive package. President Recep Tayyip Erdoğan presented the program in Istanbul on 24 April. The Turkish government wants to make the country more attractive for international capital. The focus is particularly on investors, wealthy private individuals and skilled workers who could be looking for alternative locations in view of the tense situation in the Gulf region. At the same time, Turkey itself remains confronted with challenges: The confidence of many investors in the rule of law, the judiciary and economic stability is still considered limited. At the "Türkiye Century Strong Center for Investment Program" event at the Dolmabahçe Working Office, Erdoğan promised to make Turkey a global attraction for capital, trade and talent. The announced package is to be presented to parliament shortly. "All sectors of the economy are trying to find their way in a dense fog," Turkiye Today quoted Erdoğan as saying. He was referring to the impact of regional uncertainties on energy, production, trade, tourism and transportation. Tax exemption for new residents Erdoğan emphasized that the classic description of Turkey as a bridge between East and West falls short today. The country is not just a corridor, but a central base for energy and trade routes in the region. The core of the package is a far-reaching tax 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. Only income earned within Turkey would be taxed. Relief is also planned for inheritance and gift tax. The tax rate for this group is to be limited to 1 percent. The program should also enable Turkish citizens and companies to repatriate assets held abroad to Turkey at a reduced tax rate. Advantages for exporters and transit businesses Erdoğan's financial package also provides for a significant reduction in corporation tax for exporting manufacturing companies. The rate is to fall from 25 percent to 9 percent. Other exporting companies would be taxed at 14 percent. Currently, exporters only receive a reduction of 5 percentage points. Manufacturers receive an additional percentage point discount. The government is also planning stronger incentives in the transit business. Profits from transit traffic and cross-border trade brokerage are to be completely exempt from corporation tax in Istanbul's 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, Borsa Istanbul 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 an important point between Europe, the South Caucasus, Central Asia and China. At the same time, Ankara is investing heavily in the expansion of its rail network in order to significantly increase freight transport capacity across the Bosphorus. Whether the new tax incentives will actually attract major international investors on a larger scale remains to be seen. The financial benefits are considerable. However, the decisive factor is likely to 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.