Türkiye Says Aims to Rein in Tax Breaks, Target Avoidance in Reform Plan

A woman takes pictures as a ferry sails on the Bosphorus in Istanbul, Türkiye, 29 June 2024. EPA/ERDEM SAHIN
A woman takes pictures as a ferry sails on the Bosphorus in Istanbul, Türkiye, 29 June 2024. EPA/ERDEM SAHIN
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Türkiye Says Aims to Rein in Tax Breaks, Target Avoidance in Reform Plan

A woman takes pictures as a ferry sails on the Bosphorus in Istanbul, Türkiye, 29 June 2024. EPA/ERDEM SAHIN
A woman takes pictures as a ferry sails on the Bosphorus in Istanbul, Türkiye, 29 June 2024. EPA/ERDEM SAHIN

A drive by Türkiye 's government to modernize the country's tax system will seek to boost revenue by tackling tax avoidance and scrapping incentives that are no longer needed rather than raising the overall burden, the finance minister said on Monday.

Mehmet Simsek said, however, that preliminary draft proposals being discussed within the government envisioned a minimum 15% corporate tax on multinational companies, confirming a report last month by state-owned Anadolu Agency.

According to Reuters, he did not give further details about the proposal. At present, multinational companies face varying levies depending on numerous factors.

Speaking to local broadcaster BloombergHT, Simsek said the government's plans - which would need to be approved by parliament - also included raising the corporate tax on public-private partnerships (PPPs) to 30% from 25% at present.

Simsek, who has spearheaded a year-long policy-tightening program to tackle soaring inflation, said in Monday's interview that the tax plan being discussed by government officials was in the early stages and could be subject to changes before being presented to parliament.

He said there were no plans to introduce a transaction tax on the purchase and sale of stocks, but the government could propose taxes on stock market gains sometime in the future.

Earlier this month, an economy official said Türkiye had almost finalized work on imposing a transaction tax on the purchase and sale of stocks and crypto assets.
The plans are part of broader efforts to boost government savings, fiscal discipline and price stability after years of turmoil that fueled soaring inflation.

As part of the tightening program, the central bank has aggressively hiked interest rates to 50% from 8.5% since June last year. Annual inflation hit 75% in May but was expected to have dipped in June.



How Will Gulf Stock Markets Perform this Summer?

Saudi Stock Market (Tadawul) (AFP)
Saudi Stock Market (Tadawul) (AFP)
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How Will Gulf Stock Markets Perform this Summer?

Saudi Stock Market (Tadawul) (AFP)
Saudi Stock Market (Tadawul) (AFP)

Financial analysts and market experts predict a downturn for Gulf stock markets this summer. They foresee lower stock values, reduced trading volumes, sectoral stagnation, delayed investment decisions, and a focus on holding strong positions in high-performing large-cap stocks.

This trend is driven by the majority of traders taking their annual vacations during this period. Typically, sectors like travel, tourism, aviation, and hospitality see seasonal growth in summer.

From the start of 2024 to mid-year, Gulf markets have shown mixed results. Muscat Securities Market rose by 3.8%, Bahrain Bourse by 3.5%, and Kuwait Stock Exchange by 1.33%. However, Qatar Stock Exchange dropped by 8.02%, Abu Dhabi Securities Exchange by 5.4%, Saudi Arabia’s main index by 1.99%, and Dubai Financial Market slightly by 0.7%.

Tareq Al-Ateeq, a financial analyst, told Asharq Al-Awsat that investor behavior across Gulf markets tends to align during summer due to holiday seasons and high temperatures, leading to lower liquidity and fluctuating market indices.

Investors are delaying decisions until summer ends, focusing on robust positions in large-cap and defensive stocks, which is expected to dampen market liquidity and activity in July and August 2024.

Certain sectors like travel, tourism, aviation, and hospitality are anticipated to see increased trading during the summer. Some investors aim to capitalize on market downturns by adjusting their sector allocations.

In 2023, markets like Dubai saw a 6% monthly increase, with Saudi Arabia's market index rising by 4%. Oman also experienced a 3.1% increase, while Qatar and Bahrain markets declined by 0.8% and 0.3% respectively.

Key sectors such as consumer goods, utilities, tourism, hospitality, and energy are showing increased trading activity and interest during the summer season.