September 29, 2017 / 10:03 AM / a year ago

Turkish tax hike on banks a surprise, chairman of major lender says

ANKARA, Sept 29 (Reuters) - Turkey’s proposed increase in the corporate tax rate for financial institutions caught the banking industry off guard, the chairman of Finansbank said.

The government this week said it planned to increase the tax rate on the financial sector by 2 percentage points to 22 percent, part a of a series of tax measures designed to add as much as 28 billion lira ($7.9 billion) in new revenue next year.

While Ankara is trying to boost economic growth through stimulus, some analysts have said the higher taxes may undermine its attempts to bolster the economy.

“The tax hike was a surprise for us, as previous statements indicated that the tax for banks would be decreased,” Omer Aras, Finansbank’s chairman, said at a reception late on Thursday.

News of the tax hike sent the index of Turkish banking stocks down 5 percent on Wednesday, although it has since recovered some of its losses.

The government also plans to raise the motor vehicle tax on passenger cars by 40 percent.

Economy Minister Nihat Zeybekci on Friday said that the tax measures would not serve to boost the economy.

“It would be wrong to say that the tax revenues would have an exhilarating effect on the economy,” he told reporters. “That’s all I want to say about this.”

$1 = 3.5549 liras Reporting by Ebru Tuncay; Writing by Ece Toksabay; Editing by David Dolan

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