Companies in Istanbul Finance Center to be granted tax exemptions

Nuray Babacan-Ankara

The draft law that is expected to be submitted to parliament by June at the latest foresees large tax exemptions for companies that will operate in the Istanbul Finance Center (IFC).

The annual business volume generated in the IFC, which will operate like its peers in London, Singapore and Dubai, is expected to be $15 billion.

Work on the respective legislations, which has been going on for two years and coordinated by the presidency, the Finance Ministry and senior officials from the ruling Justice and Development Party (AKP), is about to be completed soon, and then it will be forwarded to parliament for its approval.

The draft bill includes provisions regarding the exemptions to be granted and the management of the IFC.

Up to 75 percent of the revenues of financial companies, which will operate in the IFC, will be exempted from tax, according to the bill.

Those companies will be allowed to offer financial services to non-resident clients abroad.

Almost all revenues generated by operations conducted by the companies, which are considered service export, will also be exempt from tax.

The bill also includes regulations regarding personnel working in the IFC. Some 60 percent of the salaries of those who have at least five years of work experience abroad and 80 percent of the salaries with 10 years of such experience will be exempted from income tax.

Financial companies operating in the IFC will also enjoy other incentives, including investments to be granted based on the number of people they employ.

Stamp tax and fees will not be applied to the offices rented in the IFC.

The IFC will operate as a subsidiary of the Turkey Wealth Fund (TFV) and a company to be founded by the TFV will oversee the management of the financial center.

The IFC will bring together public and private sector banks, asset management companies, brokerage firms, insurance companies and professional service companies, along with Turkish and international financial institutions.

The Central Bank, the Banking Regulation and Supervision Agency (BDDK), the Capital Markets Board (SPK), Borsa İstanbul, state-owned Ziraat Bank, Halkbank and Vakıfbank will have offices in the financial center.

Located in the district of Ataşehir, the IFC will include 1.4 million square meters of office space and host up to 50,000 employees daily.

It will also include a 100,000-square-meter shopping mall, a congress center with the capacity to hold up to 2,100 people and a 30,000-square-meter five-star hotel, all created within a “smart city” model.