half year report - msi global alliance · author: yaşar kemal ÖztÜrer audit and onsultancy...
TRANSCRIPT
2016 Half Year Report—July 2016
1
HALF YEAR REPORT
“There is only one boss.
The customer. And he
can fire everybody in the
company from the chair-
man on down, simply by
spending his money
somewhere else.”
- Sam Walton
1918-1992
Founder of Walmart
Fotoğraf Başlığı
Content
Effect of Failed Coup in Turkish Economy
Audit and Consultancy Partner, Yaşar Kemal ÖZTÜRER has
written an article about the Failed Coup Attempt in Turkey pub
lished in the International Accounting Bulletin.
Tax Amnesty Law
Turkish government have recently introduced the Tax Amnesty
Law. Tax Partner, Murat ŞENYÜZ’s article about this topic.
Economic Issues and Indicators
National and international economic news and indicators
News from Promesa and MSI
ECONOMY I BUSINESS I TAX JULY 2016
2
2016 Half Year Report—July 2016
A Deteriorating Economy before the Coup
Until end of 2013 and mid of 2014, current government and old PM Erdoğan and his political party had steered the Turk-
ish economy impressively for more than a decade. Turkey was one of the few G-20 countries that were not been affected
from global financial crisis and recessions. Compound Annual Growth Rate of GDP was 5,2% between the period of 2002-
2011 whereas it was 2,9% in the period of 1995-2002. However, since end of 2013 and beginning of 2014, economic
growth has slowed down. Main reasons of deteriorating economy can be stated as follows;
Millions of Syrian people have taken refuge in Turkey. The influx of refugees into Turkey has reached over 3,1 million
people, making Turkey the host country with the largest refugee population in the world. Turkish Government spent
over than € 8 billion since the beginning of crisis in 2011.
Isid’s terrorist attacks on Turkey and Turkey's downing of Russian warplane in November 2015 resulted in sharp de-
cline in tourist arrivals. Number of tourist showed a decrease of 40% between the periods of April-June compared to
same period of prior year. Failed Coup’s effects on tourism have been seen yet and will adversely affect July and Au-
gust results.
The collapse of peace talks with Kurdish separatists that led to renewed fighting in some provinces, was another rea-
son of disrupted economic activity.
Key Risks for the Turkish Economy
Please find below key risks they’ll be following closely to see how Erdogan’s and Government’s response will affect the
economy’s long-term outlook;
Replacement of thousands of civil servants with new employees could affect quality of services given by government.
Government services are very important well – functioning economy and crucial from foreign investment to taxation.
Effect of Failed Coup in Turkish Economy The failed coup in Turkey is likely
to have serious effects on politics
and society, including economy.
Arresting of military personnel
have been followed of arrest and
suspension in the judiciary and
government bureaucracy. As of
July 25, almost 50.000 govern-
ment employees have been sus-
pended and 10.000 have been
detained.
Failed Coup Attempt, July 2016
3
2016 Half Year Report—July 2016
There are a lot of big and respective companies
which are affiliated with Gülen. Shareholders of
those companies themselves and their sharehold-
ers will be subject to different type of punishments
which could adversely affect Turkish economy. A
Gülen affiliated financial institution, Bank Asya, was
seized in May and was officially shut down after
the Failed Coup. There will be additional compa-
nies to be seized by Government.
Economy may be harmed by tensions with US
and European Union. Some members of Turkish
Government and a part of Turkish population are
believing that US has somehow supported the
Failed Coup. Government already asked for extra-
dition of Gülen from US. Tension between Turkey
and US will increase in case of any reject from US
side. Problems with European Union is mostly re-
lated violation of human rights of arrested people.
Sound Economic Policies have to be accompanied
Turkish Government is preparing a major economic reform package to further improve the business environment. Addi-
tionally, diplomatic problems and issues with former economic partners (such as Russia, Egypt, and Israel) are almost
solved and this will have material effect on Turkish economy. Current foreign policy is an indicator that Turkey is return-
ing to a business-oriented foreign policy.
These are positive steps that will benefit Turkish economy in the long run although the terrorism risks to tourism and
investor confidence that existed before the coup are likely to continue in the new environment as well.
Please find full text on the below link;
http://www.internationalaccountingbulletin.com/features/comment-impact-of-failed-coup-on-turkish-economy-
4972069/
Author: Yaşar Kemal ÖZTÜRER
Audit and Consultancy Services
2016 Half Year Report—July 2016
4
Tax assessment and tax inspection will not be conducted against these taxpayers in relation to the taxation periods of the
years for which they increase their tax bases. Reduced tax rate to be applied is 15%.
Tax base increase rates and minimum tax base increases are as follows;
Year Tax base increase rate Minimum tax base increase 2011 35% 28.000 TL 2012 30% 29.650 TL 2013 25% 31.490 TL 2014 20% 37.940 TL 2015 15% 37.940 TL
VAT taxpayers can increase their tax bases in the VAT returns they submitted from 2011 to 2015 at the rates specified
in the Law. Tax assessment and tax inspection will not be conducted against these taxpayers related to the taxation peri-
ods of the years for which they increase their VAT bases. VAT paid cannot be considered as an expense in means of corpo-
rate taxation and it is not possible to deduct or refund it.
Tax rates to be used in the increase are as follows;
Year Tax base increase rate 2011 3,5% 2012 3,0% 2013 2,5% 2014 2,0% 2015 1,5% The payable amounts can be paid at once or in 18 equal instalments. If the payable is paid at once, no interest will be ap-
plied. If the payable will be paid in instalments, the following coefficient rates will be applied;
Number of instalments Coefficient rate to be applied 6 1,045 9 1,083 12 1,105 18 1,150
Tax Amnesty Law Turkish government have recently introduced the Tax Amnesty
Law. This law has two targets;
To attract cash and similar movable assets, and immovable
assets which are located outside of the country into Turkey,
To create additional revenue from tax payers who did not
properly report their assets.
Tax Base Increase
Income and corporate taxpayers can increase tax bases in the
annual tax returns they submitted from 2011 to 2015 at the
rates specified in the Law.
2016 Half Year Report—July 2016
5
Inventory and Fixed Asset Declarations
Income and corporate taxpayers can record assets that are physically present in the enterprise but not in the ac-
counting records. A list has to be submitted to the tax office. Value added tax of 10% should be paid over the declared
value of the assets.
Income and corporate taxpayers can transfer their inventories that are not present in the enterprise despite being pre-
sent in the records, to their records and declarations by issuing an invoice and fulfilling all tax liabilities.
Receivable from Shareholders and Cash Balance Corrections
Taxpayers can correct their accounting records related to the cash balance and receivable balances that are not present
in the enterprise but shown in their balance sheets as of 31 December 2015. Taxpayers will pay an additional tax at the
rate of 3% over the declared amounts.
Cash Repatriation
Currency, gold, foreign exchange, securities and other capital market instruments can be transferred to Turkey by 31
December 2016. Those assets can be recorded in legal books. The future profit or loss arising from the sale of these
assets should not be regarded as taxable or deductible. Tax assessment and tax investigation should not be conducted
for those assets.
Author: Murat ŞENYÜZ
Tax Services
2016 Half Year Report—July 2016
6
Economic Issues Turkish Economy
Standard and Poors cut Turkey’s credit rating after failed coup attempt. However, Moody’s placed Turkey’s credit
rating on review for possible downgrade.
Annual consumer price index Inflation surged to 8,79%, which is the highest level in the last six months. Increase in
food and tobacco prices were the main reason of higher consumer price index Inflation. Clothing and footwear prices
continued to decline due to seasonal factors.
Unemployment rate decreased to 9,3% in April, showing a drop of 0,3 point. This rate is the lowest level of last one
year.
Current account balance showed a deficit of 2,9 billion US Dollar in May 2016 compared to 4,3 billion USD in the
same month of prior year. This positive development is related to fall in foreign trade deficit. Weakness in tourism
sector is still a main issue and total loss in tourism revenue reached to 1,9 billion US Dollar in the first five months
compared to prior period. Tourism sector is expecting results in August and September, thanks to improvement in
relations with Russia and Israel.
Exports showed an increase by 8,1% in Year to Year figures as of June end. Import volume, which was in downward
trend, surged by 7,0% in Year to Year figures as of June end.
Industrial production showed an annual increase of 5,6% in May. Motor vehicle production has a contribution of
1,6% and mainly resulted from lower prior year figures due to strikes by automotive workers. Additionally, food pro-
duction contributed to the increase of industrial production due to peak season and high capacity usages before
Ramadan. Capacity utilization ratio in manufacturing industry declined by 0,2 points in Year to Year basis and realized
as 75,7% in July.
US Dollar / Turkish Lira parity rose to 3,1 I international markets on July 15th, declined to a range of 2,90-2,95 in the
last week of July. Istanbul Stock Exchange declined by 7,1% on June 18, which was the sharpest in last 3 years.
Global Economy
US economy showed an annual growth rate of 1,2% during second quarter of 2016. This growth rate is below than
expectations.
IMF decreased its global growth forecast by 0,1 point for 2016 and 2017 due to uncertainty of effects of Brexit. 2016
growth forecast is revised as 3,1% and 2017 as 3,4%.
2016 Half Year Report—July 2016
7
Economic Indicators
Source:
Central Bank of Turkey
Ministry of Finance
Growth 2012 2013 2014 2015 2016 Q1 2016 Q2 2016 Q3
GDP - TL billion 1.417 1.567 1.748 1.954 499
GDP - $billion 786 823 799 720 170
Growth Rate % 2,1% 4,2% 3,0% 4,0% 4,8%
Foreign Trade Balance 2012 2013 2014 2015 Apr-16 May-16 Jun-16
Foreign Trade Balance, $billion -84 -100 -85 -63 -60 -58 -58
Import Coverage Ratio % 64,5% 60,3% 65,1% 69,4% 70,2% 71,0% 71,0%
(12 month cumulative)
Current Account Deficit 2012 2013 2014 2015 Mar-16 Apr-16 May-16
Current Account Balance, $billion -48 -64 -44 -32 -30 -29 -27
(12 month cumulative)
Goverment Budget 2012 2013 2014 2015 Apr-16 May-16 Jun-16
Budget Balance -29 -19 -23 -23 5 9 1
(Year to date cumulative)
FX Rates 2012 2013 2014 2015 May-16 Jun-16 Jul-16
USD / TL, average 1,79 1,90 2,18 2,72 2,93 2,92 2,96
EURO/TL, average 2,30 2,52 2,90 3,01 3,31 3,27 3,27
Inflation 2012 2013 2014 2015 May-16 Jun-16 Jul-16
Consumer Price Index %, annual -6,2% -7,4% -8,2% -8,8% -6,6% -7,6% -8,8%
Producer Price Index %, annual -2,5% -7,0% -6,4% -5,7% -2,8% -3,2% -3,4%
Unemployment 2012 2013 2014 2015 Feb-16 Mar-16 Apr-16
Unemployment Rate % 8,8% 9,1% 10,4% 10,2% 9,9% 9,7% 9,7%
2016 Half Year Report—July 2016
8
News from Promesa and MSI July 2016
MSI Global Alliance is pleased to announce the appointment of accounting firm León, Mora & Co. as its new member firm in
Panama, effective 1 July 2016.
MSI’s presence across the Latin America region has strengthened significantly in 2016 marked by the recent appointments
of five new members in the region including Colón Cuebas & Laguna (Puerto Rico), BolboGroup Audit & Consulting (Costa
Rica), Ugarte, Quiñonez & Asociados (Ecuador), SPCC – Simões, Pellegrino, Coelho, Castro Advogados(Brazil) and its latest
admission of León, Mora & Co. (Panama)
June 2016
MSI Global Alliance has announced the admission of the Brazilian law firm SPCC – Simões, Pellegrino, Coelho, Castro Ad-
vogados (SPCC).
Focussed on strengthening the association’s representation in the Latin America region, the admission of SPCC follows
shortly after MSI’s recent member firm appointments in the region, announced in April 2016, which included Colón Cuebas
& Laguna in Puerto Rico, BolboGroup Audit & Consulting in Costa Rica and Ugarte, Quiñonez & Asociados in Ecuador.
Upcoming Events August: Australia&New Zealand Local Members’ Meeting, Perth
September: Africa Local Members’ Meeting, Johannesburg
October: 2016 International Conference, Paris
