Changes in Several Laws and Other Regulations
cover significant steps on;
Istanbul Finance Center
Increasing Domestic Savings
Diversifying financing instruments and extending
In this regards, draft regulations on the following issues are
Private pension system,
Sukuk issuance by Turkish Treasury,
Setting the framework of «Business Angels» system,
Supporting «private equity»,
Extending the maturity of financing
Participant’s Individual Pension Participant’s State
Participant Monitoring Center State
Calculation of the
◦ State contribution will not be deducted from the tax base.
◦ Instead, 25% of the participant’s contribution will be paid by the State to the Participant’s
State Contribution Subaccount. (subject to the vesting rules mentioned below)
◦ Max. State Contribution for each participant is limited by 25% of the annual gross minimum
◦ Like the current system, the invesment income from the pension funds and state
contribution will not be taxed at this phase.
◦ Taxation will be applied only on the investment income.
◦ The State contribution and the invesment income related to these contributions will be
subject to vesting rules in order to encourage longer contribution periods in the system.
(Vesting rules based on the years of participation within the system : 0-3 yrs 15% vesting;
3-6 yrs: 35% vesting; 10+ yrs 60% vesting; retirement 100% vesting.)
REGULATIONS ON INSURANCE
Regulations aim to strenghten the financial structure of insurance companies
and increase the effectiveness of risk management.
The task and functions of the «Güvence Hesabı – Guarantee Fund» will be
redefined to cover mandatory insurance inspection and contribution to the
Insurance Training Center.
Insurance Data and Monitoring Center will be reorganized through
strenghtening its structure.
Some measures will be taken to increase the effectiveness of Agricultural
Association of Turkish Insurance and Reinsurance Companies will be
reorganized to include pension companies and its name will be changed to
«Association of Turkish Insurance, Reassurance and Pension Companies»
Support services related to insurance are defined and included in the law.
Some concepts which lead to confusion in practice will be clarified. (Certain
technical reserves, minimum guarantee fund, internal control etc. )
Sukuk is an increasing market. As of 2012 the total issuance volume in the global
markets increased to 170 billion dollars.
Main issuing countries are Malesia, Saudi Arabia, United Arab Emirates, Indonesia,
Qatar, Bahrein, Kuwait.
In addition to these countries, some western countries and compaines also issued in
this market. (Ex: In 2004 Saxony-Anhalt State of Germany, General Electric in 2009,
HSBC Bank in 2011).
England and France are preparing regulations for sukuk.
It is of great importance for Turkey to be in this market especially in terms of
diversifying financing instruments.
Sukuk issuance by Turkish Treasury will be an indicator for private companies as well
contributing to deeping of such a market.
When considered from the perspective of Istanbul Finance Center, deepening of sukuk
market will also positively contribute to the process.
BUSINESS ANGEL INVESTMENTS
(Private Venture Capital )
• Private Venture Investor (Business Angel) means those transfering his/her
private assets and expertise to entrepreneurs at their early or developing
stages; Private Venture Capital (Business Angel Capital) means the capital
transferred to such companies by Private Venture Investors.
Draft Law proposes;
• A new instrument for those companies at their early venture development
stages and having funding difficulties,
• Increasing professionalism and improving business culture and ethics in such
• Making PVCs an institutionalized and trustworthy financial market,
• Making PVC investments attractive by state supports
Lifecycle of a Venture
1-3 years 2-3 years 2-5 years 5 years-
Shareholder of PVIs in the Companies
and Exit Phase
Equity Resale PVIs Exit
Draft law proposes deduction of the %75 of the capital by PVIs which has license
from Turkish Treasury from the annual tax base, which is to be practiced till 2017.
This deduction ratio will be applied as %100 for those PVIs investing on the
companies whose projects are supported by Ministry of Science, Industry and
Technology and The Scientific and Technological Research Council of Turkey
(TUBITAK) in the last 5 years.
Capital gains as a result of sale of shares will be exempted from income tax.
Inorder to be exempted from tax , the following conditions will be required;
The requirements of the PVC laws and regulations,
Acquired stocks to be held at least by 2 years,
The maximum annual amount to be deducted from tax base will be 1 million
LICENCING AND ELIGIBILITY FOR TAX EXEMPTION PHASE
State support Eligibility Letter to Ministry of
TREASURY OF FINANCE
Eligibility of Tax
REGULATIONS ON VENTURE CAPITAL FUNDS
Investments allocated as Venture Capital Funds will be exempted from
the income and corporate tax bases (Not more than %10 of the
Allocation of investments in the form of venture capital funds from the
relevant period revenues is allowed for venture capital participation
and for buying of such fund shares (Not more than %10 of corporate
revenues and declared revenues and %20 of capital)
The profits from venture capital fund investments and participation to
such investments will be included in the participation revenue
The Council of Ministers will be given the right to diversify the income
tax ratio applied to deposits.
Income tax ratio applied for the trade of investment funds which have
more than %75 of its portfolio in the form of stocks will be %0.
Activity fee applied for insurance and private pension companies
operating in more than one sector will be consolidated and will be
taken from only the highest one.