by Kadife Şahin - Milliyet
Oluşturulma Tarihi: Ocak 13, 2009 00:00
ISTANBUL - Turkey’s attempt to encourage offshore investors to repatriate their savings has begun to pay off.
Turkish businessmen are using a government amnesty on returning offshore capital to help strengthen their companies’ finances, said chief executive officer of lender Finansbank. Late last year the government introduced an initiative to allow investments to be transferred to Turkey with only minimal tax and limited investigation of their origin.
Some businessmen are bringing cash back to Turkey and using it to increase the capital of their companies, Sinan Şahinbaş, said: "We do not know exactly how much money has been repatriated. The government should know the exact amount. However, we have heard that some money has been lured back into the country."
Following the 2001 economic crisis that Turkey endured, Turkish citizens' money re-entered the country in form of loans acquired by companies, said Şahinbaş and added that this time it was in the form of capital. "Money is coming in, however, it is a tough call to guess exactly how much. Some businessmen are using offshore money as capital for their companies," Şahinbaş said. Finansbank is working to provide further information on the topic to customers, said Şahinbaş.
There is also a serious decline in demand for mortgage and automotive loans due to the global financial crisis, he said. People are concerned about losing their jobs and that fear affects their actions, he added. "They are not taking risks. They do not want to be in debt."
Since the beginning of the financial turmoil, some 300,000 people have lost their jobs, he said. Some of those would have trouble paying back loans they had obtained from banks, Şahinbaş added. "We assume 50 percent of those people who lost their jobs will have a hard time paying off their debts."
Tax troubles
The government provided businessmen with a great opportunity, said Mustafa Uysal, head of Turkey’s tax council. "No one will be questioned about earnings obtained during the last five years. This is a great opportunity for those seeking to clear out tax troubles.
By the time the term ends to repatriate savings on March 2, the government foresees that it will have lured $20 billion back to Turkey.
"Offshore money that has been repatriated so far has been below my expectations. Those who kept their money offshore and tried to invest there have actually bore some losses. Since there are no earnings the tax they would have to pay is relatively small. I expect more money to be lured back by the time the period ends," said Fikret Önder, deputy director responsible of private banking in Akbank.