Money laundering facilitated yet again

In the run-up to the elections, the AKP is mooting yet another of the “asset peaces” that have attracted much criticism for facilitating money laundering. In the past, AKP governments have enacted regulations on bringing foreign assets into Turkey. The new arrangement being drawn up greatly eases the task of those who bring their funds from abroad. Tax at the rate of 2% was levied on funds brought under the Asset Peace regulations made in 2008 and 2013. In 2016, assets came from abroad at zero tax. According to Finance Minister Naci Ağbal, the tax rate was to be increased somewhat to 3% but this has allegedly been abandoned.

 With tax havens being brought under control and means being sought to prevent tax evasion globally, the precise opposite applies in Turkey. Under the regulation, if assets kept abroad are brought into Turkey, no questions will be asked as to their origin.

 Whose funds are involved?

Under the new regulation, as with its predecessors, those who bring assets from abroad will be subjected to no tax investigation. As the regulation is framed, memories flood back of the Panama Papers, Paradise Papers and Isle of Man documents. The said documents shed light on the secret foreign accounts of Turkey’s prominent rich people and figures close to the government. These figures included people closely tied to President Tayyip Erdoğan and Prime Minister Binali Yıldırım.

It emerged in the Paradise Papers documents, which our paper investigated, that Prime Minister Binali Yıldırım’s sons had companies in Malta that received preferential tax treatment. According to the documents, in Malta, Binali Yıldırım’s sons have five companies, his uncle two and his nephew four of which he is director. Yıldırım’s sons Bülent and Erkam’s companies in Malta are Hawke Bay Marine Co Ltd., Black Eagle Marine Co Ltd., South Seas Shipping N.V., Dertel Shipping Limited and Nova Warrior Limited. Binali Yıldırım has consented to the existence of the said companies. In the Isle of Man documents that the CHP revealed, by contrast, President Tayyip Erdoğan’s son, brother, son’s father-in-law and brother-in-law were alleged to have connections with offshore accounts.

Can be spirited back out

With investigations into the Panama Papers and Paradise Papers creating a huge stir globally, they also prompted the taking of steps to bring tax havens under control. A new regulation on tax havens was mooted in recent weeks in the UK. Accordingly, those having off-shore companies in Great Britain’s overseas territories will be registered. Prominent wealthy people from around the world deposit their money in the tax havens in question. It is planned by this means to prevent money laundering. Turkey has remained immune to this debate. Far from collecting tax from those who evade tax through opening offshore companies in such places with tax havens not disclosing their names, those who bring funds from abroad will not even be asked as to their origin. Moreover, according to the minister’s statement, if the money, gold, foreign exchange and securities covered by the regulation are invested in enterprises, no tax will be paid on this and the funds can even be withdrawn and taken abroad again. That is, there will be no arrangement such as in Italy whereby the funds cannot be taken back abroad.

 PEACE FOREVER BROKERED OVER UNRECORDED ASSETS

 * The funds brought from abroad under the 2008 Assets Peace was subjected to tax at 2%. A total of 48.2 billion lira in assets were declared, 20.4 billion lira at home and 27.8 billion lira abroad. The amount of tax imposed was 1.6 billion lira. 1.069 billion lira in tax was paid.

 * The funds brought from abroad under the 2013 Assets Peace was subjected to tax at 2%. Declaration was made of 69.8 billion lira. On this, 1.4 billion lira in tax was imposed and 209.2 million lira of this was collected. The amount that was declared, brought to Turkey and had tax paid on it did not exceed 10.5 billion.

 * The Law on Restructuring Certain Receivables Number 6736 on the bringing of foreign assets to Turkey came out in December 2016. However, since the funds brought in were subject to no tax arrangement, this statute does not qualify as an “asset peace.” There was no requirement to make a declaration registering the assets brought in under this law with the Finance Ministry. Those bringing in assets could deposit them directly into banks without citing their origin.

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