Turkey to lift minimum retirement pay, impose corporate tax

Turkey to lift minimum retirement pay, impose corporate tax

By Nevzat Devranoglu

Turkey's ruling party sent a bill to parliament on Monday that would lift the minimum pension by 2,500 lira to 12,500 ($378) per month and, as expected, impose a minimum corporate tax on large multi-nationals.

The government had earlier said it had no plan to increase this year's minimum monthly payment from 10,000 lira per retiree, citing its policy tightening and savings plans meant to curb soaring inflation.

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But with annual inflation above 71% last month, extending a years-long cost-of-living crisis for Turks, the main opposition party had been calling for rises in both pension payments and the minimum wage, which has held steady since January.

Under the draft law proposed by President Tayyip Erdogan's AK Party, only the minimum pension payment would rise to 12,500 lira with no increase for retirees earning more.

Some 3.7 million of Turkey's 15.8 million pensioners receive the minimum monthly pension, AK Party parliamentary group chair Abdullah Guler said in presenting the latest savings plan.

The rise will bring an additional cost of some 33 billion lira ($997.4 million) to Turkey's 2024 budget, Guler said.

Annual inflation dropped to 71.6% in June from a peak above 75% in May, beginning what is expected to be a sustained drop toward about 42% by year-end. The central bank has kept its policy rate at 50% in recent months after an aggressive tightening campaign.

The draft law also includes new savings plans aiming to strengthen fair taxation, including a minimum corporate tax.

A minimum 15% corporate tax will be imposed on multi-national companies that have more than 750 million euro ($817.58 million) annual consolidated revenue, according to the draft bill, confirming earlier comments by the finance minister.

The bill also imposes a 10% minimum corporate tax for local companies.

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A new income tax model will be introduced for commercial and self-employment earnings in which their declarations and incomes will be compared, according to the draft.

If the earnings of the taxpayers exceed 20% of their declarations, they'll be questioned by tax authorities. "This regulation aims to ensure tax security and reduce informality," the draft bill said.

The draft increases tax penalties for informality.

The plan also raises corporate tax for companies that run public-private partnership projects, including new bridges and highways, to 30% from 25%.