Turkish lawmakers have drafted new tax proposals aimed mostly at companies, seeking to repair a budget buffeted by last year’s earthquakes, in what would be the biggest overhaul in a generation, the Toronto-based BNN Bloomberg reported.
The plans would imply additional revenue of 226 billion liras ($7 billion), equal to about 0.7 percent of gross domestic product, according to a person with direct knowledge of the matter, who asked not to be identified because the matter is private. New legislation is now being drawn up for discussion in parliament toward the end of this month, the person told Bloomberg.
President Recep Tayyip Erdoğan’s ruling party and its allies have enough of a majority to push through laws. Still, the proposal might prove politically contentious, and authorities already backed down from an earlier plan to introduce a transaction tax on stock trading.
Treasury and Finance Minister Mehmet Şimşek said in a post on X that new tax regulations would soon be presented to the nation’s parliament. His office and that of Erdoğan declined to comment on the specifics of the plan.
The Ministry of Treasury and Finance drafted the latest blueprint after two earthquakes last year — alongside generous pre-election outlays — obliged the government to spend more than it had originally planned. As a result, Turkey is on track to run a budget deficit estimated at 6.4 percent of GDP this year, which would be among the widest over Erdoğan’s two decades in power.
The plan makes up the latest attempt at fiscal consolidation and is part of a policy shift overseen by Şimşek since he took over the nation’s finances following an election last year. The shift toward more mainstream economics has resonated with foreign investors who’ve flocked back to Turkey’s debt market, though some criticized an earlier effort to cut back spending as insufficient at a time when inflation exceeds 75 percent.
The proposal calls for one of the biggest overhauls of Turkey’s tax code since authorities raised levies across the board two decades ago to pay for the damages from earthquakes that struck in 1999.
Multinational, Turkish companies
Turkey expects 40 billion liras in additional annual income next year from the planned imposition of a minimum 15 percent tax on multinational corporates for profits accrued in the country, according to the study. The move would be in line with a Group of 20-led effort that seeks to deter exploitation of gaps between countries’ tax rules around the world.
The Ministry of Treasury and Finance expects another 90 billion liras annually from a new minimum tax base to be applied to Turkish corporates.
Real estate trusts
Real estate investment trusts will be required to pay a minimum corporate tax on profits made from property sales or rentals. The rule would result in additional revenue of 7.2 billion liras, according to the Treasury’s estimates.
Cryptocurrency trading
The ministry is considering a 0.03 percent transaction tax on crypto trading, which has become popular among retail Turkish investors seeking a hedge against lira weakness and rampant inflation. The move would bring in 3.7 billion liras a year, according to official projections.