Recently, the Turkish government released a draft law to amend and/or supplement, among other things, the existing taxation regime, entitled the “Draft Law on the Amendment of Certain Tax Laws, Laws and Decree Laws” (the “Draft Law”). The Draft Law is currently under review by the Turkish Parliament. It covers a variety of topics from a potential increase of the corporate tax rate to motor vehicle taxes. This article shall focus only on the proposed amendments that relate to the financing of public-private partnership projects in Turkey (“PPP Projects”).
Who will benefit?
The Draft Law foresees certain new tax exemptions for entities established to offer securities to the public outside of Turkey in order to provide funds to the project companies of PPP Projects (“Qualifying Entities”). However, the Qualifying Entities will be able to benefit from such exemptions only if they use such funds to finance PPP Projects.
Stamp duty exemption
The first exemption applicable to PPP Projects introduced by the Draft Law is an exemption from stamp duty. Unless the applicable legislation provides an exemption (such as the exemption granted to banks and financial institutions in relation to the loan agreements and security documents and repayment or assignment thereof), any document signed in Turkey, or signed abroad where the beneficial interest of the parties lies in Turkey, shall be subject to stamp duty. Stamp duty is applied either as a fixed duty or based on a percentage, and the amount will vary depending on the type of document.
If the Turkish Parliament ratifies the amendments introduced by the Draft Law, Qualifying Entities shall not pay stamp duty with respect to documents relating to the financing of the project companies for PPP Projects through funds earned from the sale of securities abroad, repayment thereof and provision of security thereunder.
Exemption from administrative fees and expenses
The second exemption applicable to PPP Projects introduced by the Draft Law is an exemption from certain administrative fees and expenses (except for court charges). Accordingly, a Qualifying Entity shall be exempt from certain administrative fees and expenses with respect to transactions relating to the financing of the project companies for PPP Projects through funds earned from the sale of securities abroad, repayment thereof and provision of security thereunder.