Turkey's wealth amnesty code attracts only $2.5 billion

ANKARA - Hürriyet

Turkey last used such a program in 2008 and 2009 to help mitigate the effects of the global financial crisis, drawing backing of about $28 billion. REUTERS photo

The government’s much anticipated cash repatriation law has only been able to lure the return of 5 billion Turkish Liras ($2.5 billion) held by affluent Turks abroad, which is far from initial expectations of $130 billion.

Parliament passed a series of laws late on May 21, one of the most significant of which, in terms of the economy, was a law on cash repatriation, also known as the wealth amnesty law. The move was an attempt to lure back funds held abroad by affluent Turks without punitive taxes and fines.

Under the legislation, Turks pay just 2 percent on eligible funds, avoiding taxes that could otherwise reach 30-40 percent. They will also avoid an investigation into whether the wealth was generated in Turkey and improperly kept overseas.

$50 billion liras came before

In order to benefit from the amnesty, Turkish individuals or companies will be obliged to declare their wealth before the end of July. The code says individual and corporate persons will declare their money, gold, exchange, property and other capital market instruments abroad, which they own as of April 15, 2013, to the tax offices by July 31, 2013, or to the intermediary institutions and banks.

The Finance Ministry said on Aug. 1 they collected 991 million liras in tax from the declared assets from abroad that are worth 49.55 billion liras. Also, the government extended the deadline of cash repatriation legislation to October.

Finance Minister Mehmet Şimşek said the tax paid within the framework of the cash repatriation law was around 100 million liras, during the mid-term economic program meeting on Oct. 8. This would mean that the amount of assets declared from abroad was around 5 billion liras. However, the government had expected to retrieve $130 billion from Turks living abroad, with Deputy Prime Minister Ali Babacan saying in April that they had an eye on the unregistered $130 billion being held by Turks abroad.

Turkey last used such a program in 2008 and 2009 to help mitigate the effects of the global financial crisis, drawing backing of about 50 billion lira ($28 billion at current exchange rates). That previous cash repatriation law applied a 2 percent tax on assets coming in from abroad, together with a 5 percent tax on assets in the country, but the new code does not offer any regulations on domestic assets.