Turkish Finance Minister announces tax restructuring package

Turkey’s Finance Minister Nureddin Nebati detailed on Tuesday a new plan to restructure all debts and taxes to the state, as part of a government campaign to increase stimulus four months before a crucial presidential parliamentary and presidential elections.

Nebati said all debts to the state, including unpaid taxes and insurance premiums will be paid in 48 installments, until the end of 2027.

“No matter what kind of debt to be paid to the tax office, it will be restructured,” Nebati said, adding that debt of persons less than TL2.000 will completely be written off.

If the restructured debts are paid in advance, 90 percent of the inflation increase rates will be given up.

If the restructured debt is an administrative fine, a 25% discount will be made from the original receivable.

Diken reported that all judicial and administrative fines, property tax and utilities debts to municipalities and education loan debts will all be covered in the package.

The tax amnesty comes as the latest in a series of public spending programs in Turkey, including a significant increase in the minimum wage and an early retirement scheme that is expected to cost the budget more than $13 billion.

The public spending will boost economic activity in the first quarter, but in the longer term the government's unconventional economic measures are "unsustainable" and will exacerbate inflation, potentially plunging the country into a recession in the third quarter after the elections, JP Morgan said recently.