WEEKLY INFORMATION TECHNOLOGY AND ECONOMY NEWSPAPER
The incentive system in Turkey is undergoing changes over the years depending on the requirements of the time we live in and application disadvantages. Deloitte Turkey Tax Services Leader Ahmet Cangöz reminded that they haven’t mastered the details of the new stimulus package, announced on June 13 for the moment as the Parliament has not yet started working on the commission. He stated that; “However, we can have an idea about the new package when we evaluate the statements made by the Minister and the 65th Government Program.” The new package is expected to offer the best stamp tax and fee expenses along with many other advantages. Another distinctive feature is expected to be the incentives upon granting residential permits and citizenships to the foreigners buying houses from a certain value in order to become a regional management center. In this context, especially stamp tax changes draw attention of the IT world such as the stamp tax to be issued on only a single copy of a contract, no stamp tax for high and mediumhigh technology products production, no stamp tax or fees for the investment papers regarding technologically advanced company buying which allows technology transfer from overseas companies, no stamp tax in the capital goods purchases, the purchase of machinery, the construction of a factory, the leasing or purchasing regarding the intangible rights of investment periods, consulting and technical consultancy. Opportunity of becoming a regional management center and a regional hub According to KPMG Turkey Tax Partner Emrah Akın, the new stimulus package announced on June 13 primarily concerns with the revolutionary steps regarding Turkey’s position as a “regional management center and regional service center”. The first step is to become a Regional Management Center. In order to attract investment and to increase foreign income, becoming a regional
Everything is for innovation, regional center status and foreign investors... The new stimulus package announced in June 13 contains many advantages such as the promotion of foreign investment and innovation, a significant reduction in stamp tax and many others. The package offers the opportunity for Turkey to become a regional center; it should be supported by some plug-ins. But even the realization of its current version will bring important opportunities.
hub has a key importance. Turkey is located within a fourhour flight for approximately 60 countries and 2 billion people and this makes us a very important center of attraction for international investors. The biggest trump of Turkey on becoming a regional center is its geographical position; however as Emrah Akın noted, this is not enough by itself. The latest foreign direct investment inflows already prove the point. A prominent issue in the new stimulus package is the stamp tax revision that is a serious cost for the investors. According to Akın, the steps
to be taken are very precious. However, the “stamp tax levied on contracts” rate (9.48 per thousand) being reduced by time and the maximum stamp tax over a paper (approximately 1.8 million TL) reduction would be very helpful, as well. Turkey can be the service center When international companies open a “regional headquarters” in Turkey and want to manage units in various parts of the world from Turkey, they face some gray areas of tax. Emrah Akın detailed this phrase as the following:
“As the practices and opinions of Revenue Administration (GİB) on the regional administration centers forming a “business center” and are subject to taxes were not clear enough to attract enough investors for regional headquarters area. According to the package, a corporate income tax exemption is on the road for the regional management centers. Currently, the regional management centers can benefit from the exemption from tax on all wages paid. After the corporate income tax exemption, the regional headquarters will be more
appealing in the future. This step can provide gains in production and exports on the medium and long terms.” According to Akın, the second revolutionary step is becoming a Regional Service Center. These centers can be described as being under a global organization or company with international capital and has businesses operating in several countries and providing services of architecture, engineering, call center, accountancy record keeping and many others. In this regard, some legal steps are taken as Emrah Akın remarked: “Turkey already took one of the most important steps in June 2012 in the Corporate Tax Law with an addition to Article 10 on the road to becoming a service center. Accordingly, the 50% of the cost of some exclusive services given to non-residents in Turkey and citizens who have business or and business centers abroad can be deducted from the income statement of the institution. These services, except for some controversial points, are not subject to VAT, an important step was taken in terms of becoming a service export center. The services which could benefit from the tax support are architecture, engineering, design, software, medical reporting, accountancy record keeping, call center, data storage, and education and health services. The fruits of the steps taken in this regard in 2012 could not be collected due to the absence of incentives for the reduction of operational costs such as service centers fee and social security contributions. But the new package is understood to be taken important steps in the reduction of costs related to the personnel employed. Accordingly, there will be no withholding income tax on the wages of employees of companies which provide at least 80% of their income abroad. Either the income tax exemption will be 100% or applied at a certain percentage, it is not yet clear. However, we can say that this step in the context of Turkey’s service export is revolutionary.”