By International Tax Review
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Changes to corporate tax rules aim to make country more attractive to foreign investment. |
Changes to the country's corporate tax rules will leave "no room for grey areas", a top government official says.
The country is planning wide-ranging reforms to make Istanbul more attractive to foreign investors.
Ali Babacan, the minister responsible for the economy, defended the system from attack by Mustafa Koc, the chairman of the country's biggest company, who said a $3.2 billion tax fine imposed on the Dogan media group raised fears the tax office was becoming politicised.
International observers have criticised the penalty as harmful to freedom of expression.
"Our number one project will be the tax issue," Babacan said. "We have to have foreseeable, predictable, fair implementation - which we believe we have and we certainly have to establish."
The minister denied that his statement was a direct response to the recent criticism. "This is not just about a certain media corporation", he said.
The corporate tax base had broadened in the last year due to tougher enforcement, and "no sector and no company . . . should feel they are exempt from tax inspection", he continued.
Babacan plans to cut taxes on financial transactions and intermediation, as well as simplify the rules and step up enforcement, with the aim of turning Istanbul into a regional financial centre.
But this year's strains on public finances mean the government cannot yet afford the changes Istanbul banks and brokerages in Istanbul have long been asking for. Babacan announced there would be no tax cuts in 2010, and macroeconomic stability would come first, but that he would review the situation in 2011 -, which is an election year.
The strategy published in Turkey's official gazette also includes establishing a new, autonomous arbitration centre in Istanbul, as well as a mediation system that would allow investors to resolve disputes without risking long and uncertain judicial procedures.
Trained judges would instead staff a specialist court in the country's commercial centre. Babacan also promised measures to create new markets in derivatives, specialised exchanges for commodities and carbon emissions and incentives for companies to list.
