Turkish PM Announces CIT Concessions And Tax Holidays To Support Enterprises

by Lorys Charalambous, Tax-News.com, Cyprus

17 June 2009

Turkish Prime Minister Tayyip Erdogan has announced that tax incentives and subsidies will be included within Turkey's forthcoming budget to reduce companies’ tax burden in the hopes of kickstarting the nation’s economy. Unemployment currently stands at 16%.

Erdogan told a news conference that corporate taxes would be cut on a regional basis by between 2-10% depending on the locality of the business. The sliding scale is designed to entice companies to poorer regions. Turkish corporation tax currently stands at 20%.

The Prime Minister also announced the creation of a TRY1bn (USD647m) fund to provide credit guarantees on loans to Small- and Medium-sized Enterprises (SMEs), to encourage economic growth as well as job creation. The Turkish government is also proposing to reduce the tax burden on small enterprises that merge during the recession. The proposals would see the companies’ corporate income tax slashed by 75% for three years provided that the merging companies have less than 250 employees. The government has also announced that it will provide subsidies for investment including providing land for new ventures.

In an effort to boost revenues, as announced in late May, the government is to encourage Turkish citizens living overseas who have not declared their taxes to do so under a reduced rate. It is also increasing efforts to tackle domestic tax evasion, by increasing the manpower behind its investigations and imposing greater penalties.

Erdogan has also disclosed that the government’s March stimulus package, which is due to be rescinded after being in force for the prescribed three months, may be extended. The measure slashed sales tax rates on cars, products for household use and electronics.

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