Page 12 - VG_Mart_2021

Vergide Gündem
English Translation

Covid-19 and tax reforms

“Tax Policy Reforms – 2020” Report of OECD has been published on August 3,
2020. Tax reforms in jurisdictions are comparatively discussed in the report and
trends are as follows:
Are wealth taxes reviving?

According to OECD Report, changes have arisen in terms of taxation of “net wealth”
and “wealth transfers” in recent years:

• Net wealth tax implementation is extended until the end of 2020 in Spain,
• Tax rates applicable for individuals have been increased through making
significant amendments in Argentine in terms of wealth tax. As a final step,
levying a tax between 2% and 3.5% based on wealth of persons whose wealth
exceeds 200 million Argentine Peso (approximately USD 2,5 million) has been
legalized.
• Norway has repealed decreasing of taxable assets of unlisted companies with
simple amendments in company structures by expanding net wealth tax basis
through repealing special valuation provisions in terms of shares of newly
established companies,
• Denmark has abolished succession tax reduction granted to company owners in
terms of succession and inheritance tax practices.

In addition, Wealth Tax Commission of United Kingdom has been established in
2020 and published 9 reports until December 2020.

It is explained in the Report that a tax amounting to £260 billion can be collected
with the application of a threshold amounting to £500 thousand while a tax
amounting to £80 billion can be collected with the application of a threshold
amounting to £2 million through applying 1% single time wealth tax annually for
five years from the individual wealth. It is mentioned that this one-time tax is “fair,
effective and difficult to avoid” tax. It is also discussed in the Report that £250
billion tax can be collected through alternatives such as income tax, corporate tax
and VAT rate hike other than “wealth tax”.

New wealth tax for Turkey?

There are people suggesting immediate legalization of additional wealth taxes in
Turkey and wealth tax is deemed as obligatory in order to eliminate the income
inequality and financial burden of Covid-19. A concrete proposal has already been
made in terms of one-time taxation of deposits exceeding a certain threshold.

If a wealth tax suggestion shall be made, it should be taken into account with wealth
tax and other tax policy alternatives such as in UK. Otherwise, a taxation based on
gross product such as “net asset tax” implementation can be cancelled through
being considered in contradiction with the Constitution (Decision dated 13/7/1995
and numbered E.:94/85, K.:95/32).

Moreover, problem of Turkey is not taxation of wealth but income tax due to tax
expenditures.

12 March 2021