Prime Minister Announces New Economic Package

Prime Minister Recep Tayyip Erdoğan has announced the new government package aimed at dealing with the effects of the global economic crisis.

Some of the policies are:

Incentives

Investors will be offered a reduction in corporate tax which they have to pay on profits made from new investments. Instead of paying 20 percent, they will pay between 2 and 10 percent, depending on which of the four designated regions in Turkey they invest in.

Furthermore, if the investments create employment, then the employers will be exempt from paying the employer's contribution towards social security for between two and seven years, again depending on the region they invest in.

For investors applying for Turkish Lira credit to use in investments in the third and fourth region, the treasury will pay three or five percent respectively of the credit interest. Any companies moving their textile, clothing, or leather production from the first and second to the third or fourth region by the end of 2010 will not have to pay social security contributions for five years, provided they employ at least 50 people. Furthermore, they will pay five instead of 20 percent corporate tax and will be offered financial support with the move.

Job creation schemes

The Prime Minister further announced the creation of "socially beneficial" jobs to be created for the unemployed. Around 120,000 unemployed would be used to work at repair and care work in schools and health institutions, as well as planting trees, erosion control and landscape redesign.

A further 200,000 will be enrolled in courses to develop professional skills.

10,000 unemployed will be offered training in entrepreneurship or educational counselling, and the unemployed will be supported in founding their own businesses.

100,000 young people who are unemployed despite having a high school diploma or higher will be offered placements for work experience and possible later employment.

The Prime Minister announced that the package, over two years, would cost around 1 billion Turkish Lira, that is around 457 million Euros.

Tax reductions

Erdoğan further said that the reductions in Value Added Tax (KDV) and Consumption Tax (ÖTV) may continue in some areas.

He also promised small and middle-sized enterprises, referred to as KOBİ in Turkey, a credit guarantee system.

Businesses with fewer than 250 employees and a revenue of under 25 million TL would be allowed to benefit.

The Prime Minister added, "As a government, we are keeping Turkey's economy in an extremely protected harbour. After the storm is over, we will continue on our course." (TK/AGÜ)