June 01, 2004 | By Keith Martin in Washington, DC

Turkey is considering new tax holidays as an inducement to foreigners to invest in the country.

A committee with representatives from the Ministry of Finance and the Tax Council (which is an independent panel of tax experts) is working on a proposal to present to parliament. The proposal is that there should be a 10-year holiday from income taxes for investments of more than €150 million. In years 11 through 15, earnings from such investments would be taxed at only half the normal income tax rate. The corporate tax rate is currently 33%.

Investments of at least €100 would receive a 7-year tax holiday. The tax holiday for investments of at least €50 would be five years. Companies will be required to hire at least a minimum number of employees. Improvements to existing facilities will benefit from the new tax holidays on 40% of revenues.

Mustafa Uysal, head of the Tax Council, said the government hopes to put the new law through parliament this year, ideally before the parliament leaves on holiday in August.

Keith Martin