Turkey Joins Global Tax Crackdown With ‘Last Exit’ Amnestyby , , and
Finance Minister Naci Agbal offers deal ahead of G-20 deadline
Proposal allows investors to repatriate funds without taxes
A proposed amnesty will provide Turks with a final tax-free opportunity to repatriate money held overseas ahead of the culmination of a G-20 effort to shut global loopholes, according to Finance Minister Naci Agbal.
“All countries are now passing regulations to bring back money held by their own nationals before 2018,” Agbal said in an interview on Thursday, referring to the year in which Group of 20 leaders have pledged to introduce a mechanism for countries to share intelligence on tax avoidance. “This is the last exit before the bridge.”
The planned law, which is under consideration in Turkey’s parliament, will allow Turkish and non-Turkish nationals to bring funds held abroad into Turkey without having to pay any taxes, Agbal said at his office near the parliament in Ankara. “After 2018, all countries will exchange information” on individuals and corporations, he said.
Turkey’s economy relies largely on foreign capital to finance a current-account deficit, and since this month’s failed military effort to topple President Recep Tayyip Erdogan -- and the government’s retaliatory purges -- officials have been striving to reassure investors concerned over political uncertainty.
His ministry hasn’t commissioned any study into the size of assets Turks hold abroad to avoid paying taxes, Agbal said, citing difficulties in linking funds to specific individuals.
The leak earlier this year of offshore financial records, known as the Panama Papers, exposing billions of dollars in assets hidden in tax havens around the world, set off a global furor. Seeking to contain the fallout from the scandal -- implicating everyone from world leaders to prominent business people -- some governments vowed to redouble work to crack down on tax evasion and money laundering to help regain public trust. The OECD estimates that tax-avoidance strategies which shift profits to low- or no-tax locations deny governments as much as $240 billion annually.
He said the government expects a better response than when it last tried an amnesty in 2013. Back then, Turks repatriated 10.5 billion liras, which at the time equaled $5.1 billion, while the government collected a 2 percent tax on the total amount. This time, there will be no tax due if overseas holdings are declared before Dec. 31, he said.
“We don’t see this as a source of revenue for the budget,” Agbal said.
As the amnesty is rolled out, banks and regulatory bodies will remain vigilant against possible money laundering and terrorism financing, the minister said. Turkey on Friday expanded the authority of regulators to freeze transactions suspected of being linked to either illicit activity, according to the Official Gazette.
The amnesty proposal was cleared by a parliamentary subcommittee on Wednesday, and is expected to come up before lawmakers for a final vote next week.