There is one particular issue in Turkey which has been subject to never-ending discussions for years: “Who have offshore accounts? How much money do they stash?”
Government’s finance department has been making great efforts for years now to place taxes on the income of Turkish citizens who have offshore accounts.
In 1998, the “fiscal milestone” idea was born, designed to have citizens declare their assets they haven’t declared before. The call had sadly failed to meet its intended audience as people did not have trust in government. My late father, Professor Alkin had once said, “We should have had a successful project first and then we should have called it ‘milestone’”, highlighting the flaw of the government’s policy. The fact that then-Finance Minister had been quite insistent about making citizens declare all of their assets had immensely boosted the lack of confidence in government.
As you may remember, Fiscal Milestone had ordered citizens tie up their money to banks and have their movable and immovable assets registered. The Ministry of Finance had promised that older assets would not be retrospectively investigated. However, the “fiscal milestone movement” had caused huge panic in financial markets, leading large sums of money to move abroad. The effective date of the Act had been postponed to 2002 even before it had been properly implemented.
“Money will come, eventually….”
This incident was followed by numerous fiscal peace attempts like tax amnesty, and other types of fiscal amnesties. But, the government had never been able to achieve its intended tax revenue amount. The clock was ticking for those who kept offshore accounts because those so-called “tax paradises” had all been undergoing thorough and careful scrutiny. Consequently, Developed and Developing countries started to enter double taxation agreements, and from that day on, everyone is strictly required to bring their assets to their own country or they must declare whatever asset they have here or in offshore accounts.
Turkish Government used to say, “It’s Ok even if you don’t move your assets here. At least declare them”. But now, people are forced by law to declare their assets and move them to Turkey. In short, there’s no escape from the government, which is, by the way, expected by everyone to keep its promise; because everyone seems to be hugely concerned about what will happen next, what will happen to their assets. People are scared because of overstated and exaggerated rhetoric involving the fact that Turkey seems to be moving away from the market economy in the midst of all this pandemic-led chaos, along with recently imposed taxes on foreign exchange transactions and other banking-related measures.
Nevertheless, a lot of people will have to declare their assets or bring them here in Turkey. I think Ministers of Finance around the world will be quite busy writing letters to each other about this issue over the summer period. Maybe that’s what they meant when they said, “We are paddling our own canoe”. Apparently, Turkish Government relies on the money people and enterprises will bring to the country, not to mention its SWAP deal, efforts to search for foreign funds.
I believe that, under the circumstance, the government will quite probably deposit the most of this money into public bank accounts.