Georgia’s tax law change hurts Artvin
Güncelleme Tarihi:
by Özgül Öztürk
Oluşturulma Tarihi: Haziran 27, 2009 00:00
ISTANBUL - Kemalpaşa, a small town of Artvin, which has been a rising star with its commercial activity during the global crisis, now faces significant stagnation. Georgia’s decision to remove the tax exemption it provided for border trade distresses the town’s residents.
Kemalpaşa, a small town of Artvin at Turkey’s Georgian border, has drawn attention for its commercial activity amid the global crisis, but is now facing tough times due to changes in Georgia's tax regulations.
Shuttle trade in the town, which is often compared to Istanbul’s Laleli district, normally totals $100,000 a day. However, Georgia, which exempted border trade from tax for about one-and-a half years in accordance to a mutual agreement with Turkey, has introduced a limitation to the exemption as of June 18, wounding the trade in the region. The craftsmen that do not want to lose the large trade volume in the region plan to form a market similar to Kemalpaşa in Georgia.
The tax exemption imposed on the Sarp Border Gate within the scope of border trade has been removed, reducing the region’s trade volume significantly, said Engin Koyuncu, chairman of the Hopa Chamber of Industry and Commerce.
The new implementation imposes 18 percent tax for goods worth over 1,000 Laris, or approximately 1,000 Turkish Liras, a month per person. With the launch of the decision, life has almost ceased in Kemalpaşa, referred as the base of shuttle trade in the region. The number of arrivals has dropped dramatically in the town, which normally draws 5,000 Georgians in ordinary days and 12,000 to 13,000 Georgians on Tuesdays and Fridays, when open markets are set up, and where 100 new stores were opened within the last six months.
Kemalpaşa’s craftsmen claim that lobbying by the partners of a new shopping center in Georgia has played a role in the removal of tax exemption. The new shopping center, which is named "Fuar," by the region’s craftsmen, is said to have made pressure on the government as it faced profitability problems due to Kemalpaşa.
"Turkish businessmen from Trabzon opened a shopping center similar to Kemalpaşa in a tent on a land of 3,000 square meters a few months ago with their Georgian partners; therefore, Kemalpaşa was abolished," said a craftsman who spoke on the condition of anonymity. The recent decision has dragged down around 600 craftsmen that rented shops and opened stores for border trade in Kemalpaşa.
"Only 4,200 people visited the open market in Kemalpaşa Tuesday, although the expected number was around 13,000 people. In the last Tuesday prior to the implementation, the market drew 14,000 people," Koyuncu said. "Georgian government has made such a decision to revive its economy. As Kemalpaşa craftsmen, we will unite and rent a place in Georgia. We aim to form a covered market place similar to Kemalpaşa." Rifat Hisarcıklıoğlu, chairman of the Union of Chambers and Commodity Exchanges of Turkey, or TOBB, supports the idea, according to Koyuncu.
The investors from cities, such as Denizli, Istanbul, Ankara, Bursa, Trabzon and Rize that opened around 600 textile stores in the town within the last one year are shocked due to the sudden stagnation.
"I came here six months ago to assess the trade volume in Kemalpaşa and rented land for three years," said Engin Bayraktar, an investor from Istanbul. "I built 38 shops for 350,000 liras. But if things keep their recent course, the shops will be left empty. I do not know what to do. There are some people that invested 800,000 liras. We expect the government to take measures urgently. If necessary, we will apply to the prime minister."
Meanwhile, Georgians that buy goods from Turkey have also protested in Adjara reacting to the Georgian government’s tax decision, said Kemalpaşa Mayor Yalçın Emiralioğlu. "This is a very unfair implementation," ha said.
Shuttle trade in the town, which is often compared to Istanbul’s Laleli district, normally totals $100,000 a day. However, Georgia, which exempted border trade from tax for about one-and-a half years in accordance to a mutual agreement with Turkey, has introduced a limitation to the exemption as of June 18, wounding the trade in the region. The craftsmen that do not want to lose the large trade volume in the region plan to form a market similar to Kemalpaşa in Georgia.
The tax exemption imposed on the Sarp Border Gate within the scope of border trade has been removed, reducing the region’s trade volume significantly, said Engin Koyuncu, chairman of the Hopa Chamber of Industry and Commerce.
The new implementation imposes 18 percent tax for goods worth over 1,000 Laris, or approximately 1,000 Turkish Liras, a month per person. With the launch of the decision, life has almost ceased in Kemalpaşa, referred as the base of shuttle trade in the region. The number of arrivals has dropped dramatically in the town, which normally draws 5,000 Georgians in ordinary days and 12,000 to 13,000 Georgians on Tuesdays and Fridays, when open markets are set up, and where 100 new stores were opened within the last six months.
Kemalpaşa’s craftsmen claim that lobbying by the partners of a new shopping center in Georgia has played a role in the removal of tax exemption. The new shopping center, which is named "Fuar," by the region’s craftsmen, is said to have made pressure on the government as it faced profitability problems due to Kemalpaşa.
"Turkish businessmen from Trabzon opened a shopping center similar to Kemalpaşa in a tent on a land of 3,000 square meters a few months ago with their Georgian partners; therefore, Kemalpaşa was abolished," said a craftsman who spoke on the condition of anonymity. The recent decision has dragged down around 600 craftsmen that rented shops and opened stores for border trade in Kemalpaşa.
"Only 4,200 people visited the open market in Kemalpaşa Tuesday, although the expected number was around 13,000 people. In the last Tuesday prior to the implementation, the market drew 14,000 people," Koyuncu said. "Georgian government has made such a decision to revive its economy. As Kemalpaşa craftsmen, we will unite and rent a place in Georgia. We aim to form a covered market place similar to Kemalpaşa." Rifat Hisarcıklıoğlu, chairman of the Union of Chambers and Commodity Exchanges of Turkey, or TOBB, supports the idea, according to Koyuncu.
The investors from cities, such as Denizli, Istanbul, Ankara, Bursa, Trabzon and Rize that opened around 600 textile stores in the town within the last one year are shocked due to the sudden stagnation.
"I came here six months ago to assess the trade volume in Kemalpaşa and rented land for three years," said Engin Bayraktar, an investor from Istanbul. "I built 38 shops for 350,000 liras. But if things keep their recent course, the shops will be left empty. I do not know what to do. There are some people that invested 800,000 liras. We expect the government to take measures urgently. If necessary, we will apply to the prime minister."
Meanwhile, Georgians that buy goods from Turkey have also protested in Adjara reacting to the Georgian government’s tax decision, said Kemalpaşa Mayor Yalçın Emiralioğlu. "This is a very unfair implementation," ha said.