Reaction is growing to the provision of the 53-article tax package, which will be discussed by the Parliament’s Plan and Budget Commission today, that limits the tax exemption applied to free zones to exports. Dr. Faruk Güler, Chairman of the High Advisory Board of the Free Zones Founders and Operators Association (SEBKİDER), said that the 10 percent tax on sales to Turkey would not increase public tax revenues.
Güler also stated that the practice scared off foreign capital and said, “Existing foreign capital will leave and new ones will not come.”
Stating that a certain amount of fund is currently deducted from the invoice for sales to Turkey, Güler argued that with the planned regulation, the tax revenue to be collected from the profit of the enterprise will be less than the income from this fund. Underlining that this regulation has caused great uneasiness among free zone investors, Faruk Güler stated that especially companies with foreign capital will review their current investment decisions.
Stating that they could not make sense of taking steps that would drive away foreign capital at a time when foreign capital is so much needed, Güler said, “Especially the representatives of foreign companies cannot make sense of the frequent legislative changes in Turkey. As they cannot make sense of it, they also have difficulty in explaining these to their company headquarters.” Many companies have informed SEBKİDER that they “cannot stay here anymore”. “Trust is like a soul, it does not return to the body it left. Legislation is constantly changing. The state once made a commitment when these investments were made, but now it does not fulfill it”, Güler warned.
Stating that with the implementation of the regulation, the value-added production in the free zone will also be hit, Güler said that the unit export value in free zones is 8 dollars and 77 cents, while the average export value in Turkey is 1 dollar, and that if the companies that provide this value leave the zone, the added value will also disappear.
