Turkey has announced a package of new decisions aimed at enhancing investments and attracting foreign capital, as part of the government's efforts to support the national economy and bolster its position as a global financial center.
In this context, Turkish President Recep Tayyip Erdoğan confirmed that the government will allow Turkish citizens and companies to transfer their funds, gold, and financial securities held abroad back to Turkey through a low tax system for a specified period, encouraging the reintegration of foreign assets into the economy.
Details of the New Measures
Erdoğan added that the decisions include significant facilitation for Turkish residents abroad, as no taxes will be imposed on individuals who have not been subject to taxation in Turkey over the past three years on their income and profits from foreign sources for up to 20 years if they return to settle in Turkey. Additionally, taxes will be limited to domestic income only.
He noted that the government will implement substantial reductions in corporate tax, lowering it to 9% for industrial exporters and 14% for other exporters, as part of efforts to support the competitiveness of Turkish exports in global markets.
The announcement also included an expansion of tax incentives in the Istanbul Financial Center, including raising the deduction rate on profits from transit trade and foreign trade mediation to 100%, meaning no corporate tax will be levied on these activities within the center, alongside exemptions of up to 95% outside of it.
Background & Context
These decisions come at a time when the global economy is experiencing instability, affecting energy, trade, and transportation. Erdoğan considers Turkey to be a "island of stability" in the region, as the government seeks to enhance its economic and financial infrastructure to keep pace with global transformations.
The Turkish economy has witnessed significant growth over recent years, with its size increasing from $238 billion to $1.6 trillion, reflecting the government's success in implementing reforms aimed at boosting production, investment, and exports.
Impact & Consequences
This package of decisions is expected to attract more foreign direct investments, enhancing Turkey's ability to face global economic challenges. Furthermore, these steps may lead to an improved business environment in the country, making it a preferred destination for investors.
At the same time, the Turkish Banking Regulation and Supervision Agency has decided to postpone a proposed new regulation concerning significant changes to credit card limits and debt restructuring mechanisms, thereby maintaining the current purchasing power level of consumers.
Regional Significance
These decisions hold particular importance for Arab countries, as they could enhance economic cooperation between Turkey and Arab nations, contributing to sustainable development in the region. Additionally, Turkey's success in attracting investments may serve as a model for other Arab countries seeking to strengthen their economies.
In conclusion, this package of decisions represents an important step towards enhancing the Turkish economy and attracting investments, reflecting the government's commitment to achieving sustainable economic development.