TURKEY is hoping to become a base for offshore holding companies making investments in the Balkans, central Asia and the Middle East.
The government proposed to parliament in June that dividends received by such holding companies would not be taxed in Turkey. There are conditions. This would be true only for dividends from investments held for at least two years. The holding company would have to own at least 25% of the project outside Turkey.
The project earnings would have to be subject to tax in the project country at least at a 20% rate. At least 75% of the earnings would have to come from an active business rather than from bank deposits or other passive investments.
Turkey would collect only a 5% withholding tax at the border to lift the earnings from Turkey back to the US or a tax haven.