Transcript Slayt 1 - Izmir VDB

TURKEY
A QUICK VIEW ON TAXATION
PREFACE-I
It is believed that FDI provide an economy capital
accumulation, technology transfer, competitive power
and productivity. With this common belief, in the global
economy, the number of the countries adopting policies
that aim to create attractive investment environment are
increasing day by day.
FDI means transfer of capital and technological
knowledge. In this regard it is more desireable for
underdeveloped and developing countries whose main
economic problems are capital accumulation and
insufficent technology.
PREFACE-II
In Turkey, the program of improving investment
environment was accepted as a government policy in
2001, and since then, sistematical and comprehensive
efforts have been maintained at the governmental level.
Having adopted this programme, some serious
measures were taken in recent years. Correspondingly
Turkey’s FDI statistics performed a great deal of rise.
According to UNCTAD ’s (United Nations Conference on
Trade and Development) preliminary data for 2006,
Turkey seems to be among top 10 FDI attracting
countries.
PREFACE-III
It is commonly said that foreign investors give a great deal of importance
to taxation* for their country selection to invest. There are considerable
amount of academic studies reporting the evidence in favour of this
arguement.
For example in a World Bank’s study, the rate of the firms all over the
world that consider taxation is among the top 5 major constraints for their
investments is %82.
Turkish Revenue Administration, after restructuring in 2005, takes into
account both domestic and foreign investors’ sensibility for taxation, by
adopting the view that focuses on taxpayer satisfaction. In its 2007-2009
Strategic Plan it has the vision of to be an administration that improves
the economy, implying that, the Administraion pledges not to be
constrains for investors.
* I meant with this term both tax rate and revenue administration’s approach
I-TURKISH TAX SYSTEM
TURKISH TAX SYSTEM
• TAXES ON INCOME, PROFITS AND CAPITAL GAINS
-Income Tax
-Corporation Tax
• TAXES ON GOODS AND SERVICES
-Value Added Tax
-Special Consumption Tax
• TAXES ON PROPERTY
-Inheritance and gift taxes
-Motor Vehicle Taxes
• TAXES ON INTERNATIONAL TRADE AND TRANSACTIONS
-Customs Duties
-VAT on imports
I A - TURKISH TAXATION SYSTEM-TAXES ON
INCOME,PROFITS AND CAPITAL GAINS
There are two main taxes on income, profits and
capital gains:
 Income Tax
 Corporation Tax
I B -TURKISH TAXATION SYSTEM-TAXES
ON INCOME,PROFITS AND CAPITAL
GAINS
INCOME TAX
The subject of income tax is individual’s profits and
earnings. Turkish income tax regime is the progresive
one, and consists of 4 income tax brackets. Tax rates for
the the lowest bracket is %15 and, %35 for the highest.
CORPORATION TAX
The subject of corporation tax is earnings and profits of
corporations. The corporation tax rate is %20, which can
be considered fairly low one.
I C - TURKISH TAXATION SYSTEMTAXES ON GOODS AND SERVICES
There are two main taxes on goods and
services:
 Value Added Tax
 Special Consumption Tax
I D - TURKISH TAXATION SYSTEMTAXES ON GOODS AND SERVICES
VALUE ADDED TAX
The Turkish Tax System levies VAT on the supply and the
importation of goods and services.
Currently the general rate is %18. Reduced rates are
avaliable for some certain goods and services which are listed
in two categories. Those rates are 1%, 8%.
SPECIAL CONSUMPTION TAX
Goods in the lists attached to the Special Consumption Tax
Code are the subject of the tax. There are mainly 4 different
product groups listed in the code.
I D - TURKISH TAXATION SYSTEMTAXES ON GOODS AND SERVICES-II
SPECİAL CONSUMPTION TAX
Goods in the lists attached to the Special Consumption Tax
Code are the subject of the tax. There are mainly 4 different
product groups listed in the code:
1) Petroleum products, naturalgas, lubricating oil, solvents
and derivatives of solvents
2) Automobiles and other vehicles, motorcycles, planes,
helicopters, yachts
3) Tobacco and tobacco products, alcholic beverages
4) Other products such as caviar, perfumes, furs, electronical
devices, magazines, home appliances..
I E - TURKISH TAXATION SYSTEMTAXES ON PROPERTY
There are two main taxes on property:
 Inheritance and gift taxes
 Motor Vehicle Taxes
I F - TURKISH TAXATION SYSTEMTAXES ON PROPERTY
INHERITANCE AND GIFT TAXES
The subject of the tax is the gratuitous devolution of the
assets (such as moveable goods, real properties, rights
and receivables that can be included in estate) of Turkish
citizens and the assets within Turkey by legacy or by any
means among the persons.
MOTOR VEHICLE TAXES
The subject of this tax is motor vehicle such as cars,
tracks, buses, planes, helicopters and naval vessels.
I G - TURKISH TAXATION SYSTEM-TAXES
ON INTERNATIONAL TRADE AND
TRANSACTIONS
There are two taxes on international trade and
transactions:
 Customs Duty (Goods imported from abroad is
the subject of the tax.)
 VAT on imports (same rates as the domestics
ones)
I H - TAXES ON INCOME,PROFITS AND
CAPITAL GAINS
In 2006, the ratio of taxes on income, profits and
capital gains to tax revenues :
%29,2
Taxes on incomes,
profits and capital gains
Other
%70,8
I I - TAXES ON GOODS AND SERVICES
In 2006, the ratio of taxes on goods and services to
tax revenues:
43,21
56,79
Taxes on goods and
services
Other
I J - TAXES ON PROPERTY
In 2006, the ratio of taxes on property to tax
revenues:
%2,27
Taxes on property
Other
%97,73
I K - TAXES ON INTERNATIONAL TRADE AND
TRANSACTIONS
In 2006, the ratio of taxes on international trade
and transactions to tax revenues:
%20,05
Taxes on international
trade and transactions
Other
%79,95
III-TAX INCENTIVES
III A - TAX INCENTIVES
In our current tax regime, İnvestors enjoy some tax
exemptions, which can be called tax incentives, to be
applied one or whole types of taxes. Below listed some
of them.







Research and development allowances,
Tax exemptions in industrial zones
Tax exemptions in technology development zones,
Tax exemptions in free zones,
Tax exemptions for priority regions for development,
Tax exemptions in organized industrial zones
Tax exemptions for cultural investments and enterprises.
III B - TAXATION IN FREE ZONES

According to The Free Zones Law No. 3218, free zones are regarded as outside
Turkish custom area.

Operating in free zones requires a licensing process.

The income of taxpayers, who licensed before 06.02.2004, exempted from
Income and Corporate tax, until the expire date of their current operating
license.

According to the temporary article 3 in the Law No. 3218, added by the Law
No.5084, the wages of employees of taxpayers operating in free zones
exempted from income tax until 31.12.2008. Only taxpayers who was licensed
before 06.02.2004 can benefit from this exemption.

Taxpayers’ income obtained from manufacturing goods in free zones are
exempted from Income and Corporate tax until the end of financial year of
Turkey’s full membership to Europian Union.

All transactions concerning taxpayers’ operations in free zones are exempted
from all kind of tax and fees until 31.12.2008.

Goods and services delivered within and to free zones are also excluded from
VAT. (Value Added Tax Law a.16/1-c)
III C – TAX INCENTIVES
Due to tax incentives, the effective corporate
income tax rate is lower than statutory corporate
income tax rate.
For example for the years 2004 and 2005,
although the statutory corporate income tax rate
was %30, the effective corporate income tax rate
can be calculated as low as %16.
BIBLIOGRAPHY
 BULUT, Mustafa
“The Role of Tax Policies on Improvement of
Investment Climate: The Case of Turkey”, 2007
 Revenue Administration Brochure of Taxation in
Turkey
 YASED’s FDI Report, June 2007
 General Directorate of Public Accounts’ web site
 The Law of Free Zones
 Head of Tax Administration of İzmir, Directorate
of Strategy
HEAD OF TAX
ADMINISTRATION OF
İZMİR
THANK YOU ALL FOR
YOUR KIND
ATTENTION