The Turkish government is contemplating the introduction of several new tax cuts designed to maximize the economy-boosting measures included in their new stimulus package.
It was confirmed in November that the government had agreed to accept a loan from the International Monetary Fund (IMF) as a protective measure against, as the economy has been in decline for much of 2008.
At present, the loan amount has not been negotiated, but the Turkish government have assured that it will be enough to stimulate a surge in economic growth of 3-4% by encouraging investment to resume and boosting consumer confidence.
In light of this, the government have since announced that they have designed a set of tax cuts which, if approved, would greatly enhance the overall effect of the loan.
If the proposals gain approval, then the rate of Special Consumption Tax (SCT) on natural gas prices for businesses could be cut by 15%. A cut in SCT could also be followed by a reduction in value-added tax.
In addition to this, the government have also hinted that lowering the tax rates on long-term deposits would be another beneficial option. As with the SCT reduction, the withholding tax on bank deposit interest would be cut by 15%, encouraging individuals to save larger amounts of money for longer periods of time.
Finally, the government would also give new companies an exemption from paying corporate tax on mergers and acquisitions until 2010.
However, the Turkish government will have to get IMF approval on all of these proposals, and cannot implement the measures without their backing. Final negotiations between Turkey and the IMF are expected to take place over the next few weeks.
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