Legislative Proposal for Amendments to Income Tax Law and Some Other Laws

We would like to share our initial assessments in regards to the “Legislative Proposal for Amendments to Income Tax Law and Some Other Laws”, which is called as an Omnibus Bill on which the discussions are mostly completed in the Turkey Grand National Assembly, after being discussed at the Plan and Budget Committee of the TGNA.

We will continue to share our studies and evaluations on the subject.

Articles of the proposal, concerning the financial markets are as follows:

Asset repatriation: According to the provisional article 90 that will be added to the Income Tax Law [no. 193], assets and capital market instruments to be brought via domestic and foreign intermediary firms and banks, will be included in the system with implementation of 1% tax, that will be implemented by the relevant bank / intermediary firms (Article 2 of the Proposal).

According to the amendment in Turkish Central Bank Law [no. 1211], the banks will be responsible for reserve and liquidity requirements due to their derivatives transactions. This amendment provides regulatory arbitrage for intermediary firms (Article 3 of the Proposal).

Regarding financial restructuring, with the amendment added to the Banking Law [no. 5411], investment funds will be included among “creditor institutions” too. In this case, this amendment will need to be adapted to financial structuring contracts (Article 17 of the Proposal).

The amendment to be made in the Capital Markets Law [no. 6362], envisages the acceleration of the execution process in case of the issuers’ default in terms of private sector bonds (Article 27 of the Proposal).