Ali Bahçuvan/ Economist With new laws being made as part of Istanbul Financial Center Project, various tax incentives are also offered. Among these incentives, those intended for venture capital and foreign funds have been met with excitement in the world of finance.
Ali Bahçuvan/ Economist
With new laws being made as part of Istanbul Financial Center Project, various tax incentives are also offered. Among these incentives, those intended for venture capital and foreign funds have been met with excitement in the world of finance.
While the crisis in Europe evolves every passing day and leads to problems with different characters, Turkey has accelerated its efforts toward creating an alternative financial center.With new laws being made as part of Istanbul Financial Center Project, various tax incentives are also offered. Among these incentives, those intended for venture capital and foreign funds have attracted attention.
In early June, a draft lawregarding the Amendment of the Law on the Collection of Public Receivables and Certain Other Lawswas passed into law at the plenary session of Turkish Grand National Assembly. Under the new law,for the improvement of entrepreneurship in Turkey,corporation tax exemption will be granted to the following: shares of venture capital investment funds that are subject to full obligation,and profit shares that venture capital investment trusts obtained from stocks.
The law also contains arrangements for making Istanbul a financial center. Tax arrangements that have been considered so far as preventing fund management firms from opening offices in Turkey were changed. Management of foreign funds from Turkey is encouraged in order to turn the situation into an advantage, and to develop and expand financial markets. This arrangement also aims to take an important step toward making Istanbul an international financial center while offering tax incentives for attracting large-scale funds to Turkey.
Tax arrangements that have been considered so far as preventing fund management firms from opening offices in Turkey were changed for the purpose ofturning the situation into an advantage for Turkey.
For this purpose, persons acting as portfolio manager by means of fully responsiblecompanies possessing portfolio management authorization certificates distributed by the Capital Markets Board and generating income from the following transactions will not be considered as permanent representatives for these funds and their offices will not be considered as these funds’ offices or business premises:regardless of being traded on an organized stock market, every kind of security and capital market instruments,futures and option contracts, warrant, foreign currency, commodity-based futures and option contracts, credit and other similar financial assets, and commodity transactions on precious metals exchanges. No tax declaration will be submitted for these incomes and in the event of submitting tax declaration for other incomes, these incomes will not be included in the declaration.
It’s very difficult for the owners of publicly-traded companies now.Various rumors about them circulate on different occasions: When share prices rise, “manipulation suspect”, when they go down “the boss sold shares and brought down the price”, when the share prices remain flat “the boss collects shares and doesn’t allow the share price to rise.”The rumor machine in the stock exchange put company managements into great trouble.
By allowing the deduction of some incomes from those included in tax declarations, entrepreneurship and foreign service exports which are of vital importance in terms of international economic competition are promoted. In order to promote entrepreneurship, a new incentive is offered to businesses that invest capital in those venture capitaltrusts or funds that have been or will be established in Turkey, that have development potential and need resources. According to this, amounts allocated as venture capital fund can be deducted fromincome tax assessment on the basis of declaration, provided that the amount does not exceed 10 percent of the declared income.
In theupcoming period, it’s highly likely that venture capital funds and trusts, and foreign funds in Turkey will undergo accelerated growth. And we will all observe the contributions of this process to the economy.
If gamblers run the show…
You know thatNasreddin Hodja story, in which Hodja and his son set off on a journey with a donkey… When Hodja’s son rides the donkey and Hodja himself goes on foot, those who see them criticize the boy saying, “Why do you ride the donkey and make your poor father walk!” When Hodja rides the donkey he is criticized as well, “Well, look at that! That poor little boy has to walk while his father rides the donkey.” When the father and son ride the donkey together, people criticize them again saying, “Have pity onpoor little donkey!” So both of them continue their journey on foot, and this time people say “Just take a look at those fools. Both of them are walking under this hot sun and neither rides the donkey!” The father and son end up getting bewildered. Owners of companies trading at our stock exchange are in a difficult situation. Various rumors about them circulate on different occasions. When share prices rise, “manipulation suspect”, when they go down, “the boss sold shares and brought down the price”, when the share prices remain flat “the boss collects shares and doesn’t allow the share price to rise.” The rumor machine in the stock exchange put company managements into great trouble.At the general meetings we participated and in our conversations, we have received many complaints about this. I attribute this partly to the development of internet environment and to those investors who make news and post comments on forums in an uncontrolled manner, free from sanctions. Groups of investors searching for profits in the short-term and following the manipulator are bound to lose money while creating a market in which both the innocent and guilty are done for.
Unfortunately, the concept of market has become totally distorted now. It seems as if the market is composed only of manipulators and bosses. Although not even 1 percent of all transactions can be classified as suspicious, the dominant perception is as such. We can only say “Thanks to media!” Investors can in no way become long-term, genuine investors. While 9 percent yield on bank deposits is enough for them, whatever they earn at stock exchange is insufficient. This system cannot get anywhere with this type of investor. We should understand this now. If the state causes real investors to escape by seizing their shares, and lets them suffer instead of protecting them, then gamblers run the show…