Gezi Park protests affect cash repatriation: Firms

Hülya Güler ISTANBUL / Hürriyet

The cash repatriation law that aims to bring Turks’ money back from abroad, is being blocked as investors are ‘worried’ due to the Gezi Park incidents. DAILY NEWS photo, Emrah GÜREL

The Gezi Park protests are affecting cash repatriation legislation that aims to lure back funds held abroad by affluent Turks without punitive taxes and fines, brokerage firm executives have said.

As foreign investors’ hot money outflow is relatively restricted, most Turkish investors have chosen not to send their money abroad due to the Gezi Park incidents, according to executives. However, government officials are reportedly making efforts to convince these investors to benefit from this legislation.

The cash repatriation law, which came into force at the end of May, requires individual and corporate persons to declare the money, gold, exchange, property and other capital market instruments abroad that they own as of April 15, 2013 to the tax offices by July 31, 2013, or to intermediary institutions and banks.

Investors renounce to bring their money

“Many investors we had spoken to were planning to keep their money in Turkey in the first days after the legislation came into force, but now they are worried and renounced. Most investors are keeping their money in bonds abroad, particularly U.S. bonds. Some of them want to register their money and benefit from the wealth amnesty law. But, these investors recently told us that they did not want to keep their money in Turkey and send them abroad with a 2 percent tax [on assets],” an executive said.

An executive from another brokerage firm said inflow of at least $5 billion to the country was at risk, adding that they should wait until the deadline. “When we consider that Turks wait until the last minute, money inflow may accelerate through June 31. We have determined so far that the investors are scared. Regarding this, from the second week of July, the ‘Gezi Parkı protests’ and the environment of confidence created by the positive messages about economic stability are important.”

Turks have an unregistered $130 billion abroad, said Deputy Prime Minister Ali Babacan in April. He also noted that more than $50 billion of the total registered assets abroad are traded on U.S. Treasury securities.

Turkey last used such a program in 2008 and 2009 to help mitigate the effects of the global financial crisis, drawing the return of about 50 billion liras ($26.5 billion at current exchange rates).