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Turkey Proposes Corporate Tax Increase to Aid Post-Earthquake Recovery

President Tayyip Erdogan’s ruling AK Party has presented a draft law to parliament, revealing Turkey’s plans to raise corporate taxes in an effort to finance the country’s recovery from the devastating earthquakes that struck in February.

Turkey Proposes Corporate Tax Hike

Turkey

The earthquakes, which hit southern Turkey, resulted in a tragic loss of over 50,000 lives and rendered millions of people homeless. To facilitate the extensive rebuilding process, experts estimate that Turkey may need to allocate more than $100 billion towards reconstruction.

As part of the government’s commitment to assisting those affected by the quakes, they have pledged to rebuild over 600,000 homes for displaced individuals and families.

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The draft law encompasses various proposed tax hikes, primarily targeting corporate taxes. Presently, the corporate tax rate stands at 20%, but the new legislation proposes an increase to 25%. Moreover, banks and financial institutions would face an even higher corporate tax rate of 30%, up from the current 25%.

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In an effort to boost foreign trade, the bill includes a provision for a five-percentage-point corporate tax reduction specifically aimed at companies’ export income, according to the draft text shared with the parliament.

Furthermore, the proposed legislation outlines the transfer of the treasury-run portion of the forex-protected lira deposit accounts scheme to the central bank. Under this scheme, the government and central bank provide compensation to lira depositors to cover losses resulting from depreciation.

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By implementing these measures, Turkey aims to generate the necessary resources to facilitate post-earthquake recovery and stimulate foreign trade, while also ensuring the financial stability of its citizens.