Highlights from President Erdoğan’s statements:
Our region and the world economy are experiencing the most turbulent and uncertain days of recent times. Almost everyone, especially our business and economic circles, is trying to find their way and direction among the dense fog cloud, while following the changing atmosphere every other day.
The negative impact of conflicts is felt deeply in many sectors such as production, trade, tourism and transportation, as well as energy. We see this in a wide range of areas, from fuel prices changing several times a week to restrictions reminiscent of the coronavirus days. Although the heat of the fire has died down, neither our region nor the world can be one hundred percent sure about the future of the tension.
NEITHER OUR REGION NOR THE WORLD CAN RETURN TO THE BAD ANYMORE
Despite forces like Israel trying to reignite the war, we are following the processes together with cautious optimism. Not only that, we are doing our best to make the ceasefire permanent and pave the way for a just peace. Myself, on the one hand, and our ministers, on the other hand, continue our meetings. Hopefully, we will continue our efforts in cooperation with our friendly and brother countries until we achieve results.
It is a fact that neither our region nor the world can return to the past. The reflections of the fractures caused by such a great earthquake will be seen more clearly as time goes by. By successfully managing the biggest security crisis of recent years, Türkiye has once again confirmed and registered that its region is an island of stability.
OUR COUNTRY IS THE INDISPENSABLE BASE OF THE ENERGY AND TRADE CORRIDORS IN THE REGION
This war, which reshaped the global economic order and value chains, has made our country the keystone of global economic stability. The inadequacy of the definitions that have been describing Türkiye as a bridge between east-west and north-south for years has been demonstrated again in this process. It turned out that our country is not just a bridge or energy corridor, but the indispensable base of energy and trade corridors in the region.
I would like to underline again a fact that I have stated before on different occasions. Türkiye is the strongest candidate to become one of the new polar caps of the world that is changing its shell and evolving towards multipolarity. Both we and our friends, neighbors and competitors see this. We are already planning strategies that will prepare our country for the new era, establishing its infrastructure, and not leaving the slightest gap.
Very dear friends; In this regard, we are taking legal, administrative, financial and institutional steps to support international direct investments by strengthening the investment environment that will increase our competitiveness and ensure sustainable high growth. We are determined to make Türkiye a global center of attraction. We will take our country’s attractiveness even further with the comprehensive regulation that we will soon submit to our Parliament.
WE ARE EXPANDING THE TAX ADVANTAGE
As you know, we started the work of our Istanbul Financial Center in 2009, where we aimed to create a financial sector that is compatible with global markets and capable of exporting services internationally. At this point, Istanbul Financial Center is taking firm steps towards the goals we envisaged 17 years ago. Now we are taking a new step in this regard. With the regulations we will make, we are expanding the tax advantage provided to institutions operating in the Istanbul Financial Center.
We are increasing the current 50 percent discount rate to 100 percent on earnings obtained from transit trade or intermediary activities for the purchase and sale of goods abroad. Thus, we will not collect corporate tax on the profits earned from the activities in question. We are extending this incentive outside the Istanbul Financial Center for the first time. We exclude 95 percent of the earnings of those who engage in transit trade activities outside the Istanbul Financial Center from tax.
Another priority is to encourage global companies to move their regional headquarters to Türkiye. We provide a strong tax advantage to the profits these companies generate by managing their foreign operations from Türkiye. Thus, for the next 20 years, 100 percent of the earnings earned within the Istanbul Financial Center and 95 percent of the earnings earned outside of it will be deductible from the corporate income. Likewise, we offer wage exemptions to qualified employees working here, under certain conditions.
‘ONE STOP OFFICE’ APPLICATION
Another important step of ours is to carry out large-scale and qualified international direct investment processes from a single center; i.e. ‘One Stop Office’. With this application, we are establishing a fast and digitally supported investor-friendly structure where investment processes are simplified. Under the coordination of the Presidential Investment and Finance Office, officials from our relevant institutions and organizations will work at the One Stop Office. Thanks to this structure, all transactions from company establishment to work and residence permits, from tax and SSI transactions to İŞKUR processes, land, incentives and EIA permits can be easily followed from a single center. I wish you good luck in advance.
WE ARE REDUCING THIS TAX TO 9 PERCENT ON OUR MANUFACTURERS AND EXPORTERS
Dear friends, you all know very well the importance we attach to exports. During our governments, we made numerous regulations to support investment, production, employment and exports. Our main goal is to expand exports strongly throughout our country. We also diversify our markets and products with the motto of high added value and competitive exports. For this purpose, we were applying our general corporate tax rate of 25 percent with a 5 point discount to exporters and an additional 1 point discount to manufacturers. Now, we are taking a more radical step and reducing this tax to 9 percent, especially for our manufacturing exporters. We are also reducing it to 14 percent for our other exporting institutions.
Another issue that is as critical as exports is the incentives that bring foreign currency to our country. At this point, there are many regulations in our tax laws; Now we will hopefully add new ones to these. If people living abroad and who have not been taxpayers in our country in the last 3 years come to our country, we will not be taxed in Türkiye for their foreign income and earnings for 20 years. We will only tax their domestic income, if any. In Türkiye, we will apply the inheritance tax for these people as 1 percent.
We are also implementing regulations that will bring the assets of our citizens and companies abroad to our economy. In this context, we enable money, gold and securities located abroad to be brought to Türkiye with a low tax within a certain period of time. I wish them good luck in advance.
WE ARE TRYING TO PAVE THE WAY FOR OUR YOUTH IN EVERY FIELD.
We are trying to pave the way for our young people, who are the guarantee of our future, in every field and to prepare them for the world of tomorrow in the most qualified way. The world is rapidly moving towards a new production model driven by artificial intelligence and advanced technologies. We are proud of the achievements of our young people in the emerging sectors of the new era such as architecture, engineering and software.
We did not collect taxes on 80 percent of the foreign earnings of our entrepreneur taxpayers working in these fields and serving customers abroad. Now we allow all of these earnings to be deducted from the income and corporate tax base. In this way, we encourage our entrepreneurs who have established a company abroad or become partners in an established company to bring their earnings to our country. Another strategic step we will take is to transform Türkiye into a regional center of attraction in the start-up and venture capital ecosystem.
With the digital company application, we make company establishment and management processes fast and flexible. We make share option incentives more effective and attractive for employees. We facilitate access to finance by simplifying convertible debt mechanisms. We are also creating a strong entrepreneurship infrastructure by commissioning the first phase of the Terminal Istanbul project. Finally, we are taking steps to reinforce predictability for large-scale and qualified investments that are strategically important for our country.
NO ONE SHOULD HAVE THE SMALLEST HESITATION
We will provide assurance on a project basis to minimize the impact of tax regulations made after investment decisions and to define reasonable transition periods. I wish them good luck, too. Hopefully, our economic management will share the details of the legal, administrative, financial and institutional regulations that we have outlined with our business world and investors. Then, work at the Parliament level will begin quickly. I want you and all our citizens to know this very well. Nobody should have the slightest hesitation.
With God’s permission, Türkiye’s future, horizon and path are open. Of course, there may be periodic problems and fluctuations due to external conditions. It is quite natural that the winds of the storms affecting the global economy should also come to us. However, compared to its predecessors, the Turkish economy has thankfully gained the power, capacity and resilience to absorb larger shocks.
In the last 23 years, we have emerged from global and regional crises with flying colors. We have successfully overcome many challenges, including coup attempts. Despite all the pessimistic scenarios and all the smear campaigns, we have reached a 1.6 trillion dollar economy today from a 238 billion dollar economy.
Everyone who follows the global economy and politics sees this very clearly: Just as the world is not the same world and our region is not the same region, Turkey is no longer the same Turkey. With its economy, defense industry, military capacity; with transportation, energy and health infrastructure; Today, there is a very different, very powerful Türkiye with its human capital and diplomatic opportunities.
Today, those who speak out without hesitation and implement their own national policies without asking for permission from anyone; There is a reputable, mighty and powerful Türkiye. Today, there is a reality of Türkiye that is becoming more and more popular in its region and in the world.
Hopefully, we will be much better in every field and reach better places. From now on, we will reap more of the fruits of our 23 years of labor, our 23 years of struggle. I pray that God will help us.
