Finance Minister Mehmet Şimşek speaks at MESKOM: “Honest industrialists will be able to enjoy tax incentives”

• 17.06.2014
• News

Speaking at the Professional Committees Joint Meeting at the Istanbul Chamber of Industry (ICI), Finance Minister Mehmet Şimşek had some important messages to reveal to the gathering. Referring particularly to the “tax pardon” that has caused some serious ripples among the tax-payers who pay their taxes on time, Şimşek said, “This is not a pardon. The government is not giving up on the principal that is owed to it.” Commenting that the government was on the verge of another important initiative regarding tax-payers who paid their taxes on time, Finance Minister Şimşek said that this group of tax-payers was right in asking to be rewarded for their promptness.

Pointing out that honest industrialists would be given certain incentives, Finance Minister Şimşek continued by saying, “We at the Ministry of Finance are working on each tax-payer’s report card. We will start the system of keeping tax-payer current accounts. Every tax-payer will be given a credit grade. Thus, those with very good report cards, those with good relations with the Finance Ministry, will be given substantial incentives. This subject has been on our Parliamentary agenda for some time now and when the work on it is completed, we will share the incentives with you.”

With regard to the demands of the industrialists, Şimşek continued, “The government is in support of the industrialists. We will be supporting production from a wide range perspective that includes investments and R&D incentives. At the same time, even if the demands are justified, it is impossible for us to fulfill all the demands of industry without having the appropriate finances. We are acting with great care so that we do not take any step that would increase the deficit. ”

In answer to the criticism of industrialists on the subject of the tax pardon, Minister Şimşek added that this was not a pardon but only a convenience offered to artisans and industrialists who had trouble meeting payments. Şimşek said, “In what the public believes is a pardon, the government is updating principal amounts through inflation and collecting the debt in full together with delayed interest. So we have to get the terminology right. There is no pardon here. The government is only waiving penalty and default interest rates.”

BSMV (Banking and Insurance Transaction Tax) and Stamp Tax will not be abolished anytime soon

Minister Şimşek said that the demands of industrialists to abolish Banking and Insurance Transaction Tax and Stamp Tax would mean giving up close to TL 16 billion in revenues. Şimşek continued by pointing out the following:

“We cannot take a step in this unless we can create additional financial resources. This is a difficult task in terms of our industry and our general stability on a macro level. Abolishing these taxes under the present conditions would be equal to increasing perceptions of risk about Türkiye and adding a burden to the investment climate, the industrialist and the ordinary citizen.”

Şimşek said that he would talk with the other ministers about abolishing the KKDF (Resource Utilization Support Fund) and that there was a trend in the world to increase consumption taxes such as Special Consumption Tax (ÖTV) and VAT, remarking that demands in this context would be evaluated despite this. 

Underlining that he found the desire of the industrialist to seek tax reforms justified, Şimşek said that the work that had been done in this area was waiting in Parliament for a time when the economic climate would make this possible. Said Şimşek, “Our objective is to spread out taxes and do away with privileges. We are trying to establish a fair taxation system but it is also important where we channel our resources. In the past, TL 86 of every TL 100 used to be paid on interest; today TL 15 is spent on interest. This year we will spend 23 percent of taxes on education.”