Statement from TÜBİSAD on "Additional Tax": "It is evident that it will harm the investment ecosystem."
The Informatics Industry Association (TÜBİSAD) shared their views on the new tax introduced by the "Law on Restructuring Some Debts and Making Amendments to Some Laws," published in the Official Gazette. The statement emphasized the potential harm this new tax would have on the investment ecosystem.
Under this law, corporate income taxpayers are required to make an additional tax payment to provide financing for development and reconstruction projects in earthquake-prone regions. The statement pointed out that this regulation would particularly harm investment initiatives and the broader investment ecosystem in Türkiye.
The statement, supported by the Turkey Informatics Foundation and Entrepreneurship Foundation, included the following remarks:
"After the devastating earthquake that occurred in our country on February 6th, the efforts of our society to help the earthquake victims, while being hopeful and commendable, have been ongoing with unwavering dedication from all actors, both small and large, in the country's economy. All companies, from their corporate structures to their international subsidiaries, have contributed and continue to contribute to the earthquake-stricken region from their own funds and resources. However, it is evident that the obligation of this additional tax will have a detrimental impact, especially on investment initiatives and the broader investment ecosystem in Turkey.
In a period when our country especially needs foreign investment, this tax decision will have negative effects on both startups and investors individually. The success of our entrepreneurship ecosystem, which represents the country's development, employment, and investments in the future, is clear. In 2022 alone, technology startups in Turkey received $670 million in investments, a significant portion of which came from abroad. This tax, which is likely to deter foreign investors from showing interest in our country, will also make it more difficult to convince successful startups to stay in Turkey. Due to this regulation, investors will be reluctant to invest for an extended period, and small businesses, in particular, will be at risk of disappearing during a period when Türkiye needs investment.
With the new law, startups, angel investors, or venture capital investment funds are now subject to a tax obligation of 10% of the investments they receive. Many startups, often operating at a loss, allocate the funds they receive from investments to critical areas such as research, technology development, and employment. Since these investments enter the company's treasury as issuance premiums, with this new law, startups will be required to pay 10% of the investment as tax. Therefore, a significant portion of the investment will be allocated to the additional tax burden, causing companies to halt their activities and deterring potential investors from considering Turkey.
The imposition of tax obligations on technology startups, which produce technology with small investments and teams, will create an irreversible obstacle to the growth of the startup ecosystem. Therefore, it is crucial, especially in this period when we need more production and foreign investment, to exempt companies that have played a leading role in the development of our country in the fields of technology and innovation, including future unicorn candidates, from tax liability.
We believe that, taking all these factors into account, the application should be re-evaluated, and amendments should be made to the regulation.
Respectfully presented to public information."