Newsletter Regarding the Law on Istanbul Finance Center
The Law on İstanbul Finance Center (“Law”) is enacted and entered into force and effect as of June 28, 2022 by being published in the Official Gazette dated June 28, 2022 and numbered 31880. You may find below the highlights of the provisions of the said Law:
- Financial institutions that wish to be situated in and use the benefits attached to İstanbul Finance Center will need to procure a license from the Finance Office of the Turkish Presidency. The necessary conditions, qualifications and procedures applicable for the grant of such license will be further determined in detail under secondary legislation. According to the law, if the relevant license is cancelled for any reason, the lease agreement of such financial institution with İstanbul Finance Center will also automatically terminate.
- All required licensing and procedures and similar transactions required by other pieces of the applicable legislation (e.g. labor, environment, finance, banking, capital markets, etc.) in relation to the activities of the respective financial institutions who will take place in İstanbul Finance Center will conducted through and from a single office that will be established within İstanbul Finance Center.
- The tax exemptions introduced by the Law are as follows:
- 75% reduction in Corporate Tax for financial services export activities. Financial services export is defined as qualified institutions’ services provided to non-residents and benefited by non-residents outside of Turkey. The prop derivative, asset sale and purchase and transfer of non-resident person’s assets outside of Turkey is not deemed as financial services export. The deduction rate is 100% for the years 2022 through 2031.
- Banking and Insurance Transaction Tax (“BITT”) exemption on transactions carried out
- Stamp Tax and Fee exemption on transactions and documents related to transactions carried out
- The income tax exemptions for personnel employed in IFC with overseas experience and have not worked in Turkey in previous 3 years. The exemptions rates vary. Accordingly if the overseas experience is at least
- 5 years 60%
- 10 years 80%
income tax exemptions are applicable.
- Leasing of immovables in IFC are exempt from Stamp Tax and Fees
- The above provisions are applicable for IFC members’ regional treasury and financial management centers if they operate actively in three different countries.
- The respective financial institutions who will take place in İstanbul Finance Center may keep and maintain their books and records in foreign exchange currency under certain circumstances that will be introduces by the secondary legislation.
- The respective financial institutions who will take place in İstanbul Finance Center will not be obliged to use Turkish language in their official communications and agreements between themselves and İstanbul Finance Center and may freely elect application of the laws of any jurisdiction to their dealings and agreements between each other; to the extent permitted under the special laws that their activities are subject to.