Turkey Bill Offers Amnesty for Repatriation of Assets

Turkey’s government submitted a bill to parliament offering an amnesty for repatriation of assets held by Turks abroad.

The bill proposes a reduced tax rate of 2 percent, with no questions to be asked about how the money was earned and no penalties to be applied, according to the draft submitted to the parliament in Ankara yesterday.

Turkish citizens and companies have $130 billion of portfolio investments abroad, including more than $50 billion in U.S. Treasuries, Milliyet newspaper reported on April 17, citing Deputy Prime Minister Ali Babacan. The Turkish private sector invested a record $4.5 billion abroad in 2012, Babacan said, according to Milliyet.

“We will not chase the money that will be repatriated,” Finance Minister Mehmet Simsek told a televised news conference in Istanbul today, adding that no amnesty is foreseen for domestic holdings. “However, we will review who is bringing their money from abroad as loans; we might have specific inspections.”

2 Percent Tax

Turkish citizens and companies can declare money, gold, securities and other capital markets instruments held abroad to tax offices by July 31 and pay a 2 percent tax on them within three months of the declaration, the draft says. The holdings can then be repatriated in installments.

Profits earned by overseas units of Turkish companies and proceeds from sales of unit stakes outside Turkey before Oct. 31 will also be exempt from corporate and income tax should the funds be repatriated by the end of the year for investment purposes, the draft says. The Cabinet may extend repatriation periods and a higher rate would be charged should the owners of the assets fail to pay the 2 percent tax after declaring them.

Babacan said the move could be more effective than a previous amnesty announced in late 2008 and in force until the end of 2009, when there was a global economic crisis, according to Milliyet. Turkey was affected by that crisis and today officials say it is a safer place to keep money.

Turkish citizens and companies declared 48 billion liras ($26.6 billion) under that law, which covered assets both abroad and in Turkey. A total of 27 billion liras was repatriated while 5 billion liras in domestically held assets also returned to the financial system, Osman Arioglu, former head of the tax authority, said today. The new legislation is restricted to assets held abroad.

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