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Turkey Set To Cut Corporate And Personal Income Taxes

by Lorys Charalambous, Tax-News.com, Cyprus

24 December 2004


The Turkish government has stated its intention to cut a series of taxes next year in a bid to boost foreign investment.

In an announcement made on Tuesday, Prime Minister Recep Tayyip Erdogan revealed that the corporate tax rate will be cut to 30% from 33%, whilst indirect taxes on food, health products and education will be slashed to 8% from 18%.

The programme of tax reform, designed to simplify the tax system and increase compliance, will also see the top rate of personal income tax fall to 35% from 40%.

These changes will go into effect from January 1, 2005.

In addition, further reforms will see a much simplified system for the taxation of financial instruments put into place from 2006. At present, taxes on bank deposits, shares and investment funds are levied at various rates from 7% to 24%.

"Our purpose is to establish a tax system to reduce the unregistered economy and to collect taxes more efficiently," declared Erdogan.

"Our government is confident it would not lose any tax revenue as a result of the cuts because lower rates would push down tax evasion," he added.


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