Turkey’s Government Aims to Raise Taxes on Banks and Corporations

The Turkish government intends to increase taxes on banks and companies as part of an effort to offset some of the burden caused by a large budget deficit.

Bloomberg News Agency cited a bill submitted by the ruling Justice and Development Party, which proposes to increase the corporate tax rate by 25 percent instead of the current 20 percent. The law also provides for an increase in the tax on banks, insurance companies, financial brokerage and pension services, and electronic payment companies from 25 percent to 30 percent.

The bill would also allow the government to nearly triple its net borrowing this year, keeping in mind the difference between government borrowing and debt service in local and foreign currencies.

The government can now increase or decrease the borrowing ceiling by 5 percent.

Turkish President Recep Tayyip Erdogan increased spending ahead of the country’s elections last May as wages increased and early retirement was offered to millions of workers.

According to the Turkish Ministry of Finance, the elections took place after two devastating earthquakes that occurred on February 6 last year and caused an economic loss of about 100 billion euros.

Source: Bloomberg + dpa.