That amount is more than the combined annual gross domestic product (GDP) of the world's two largest economies, the United States and China, and does not include non-liquid assets often owned through offshore means including real estate, yachts, racing horses and other high-expense possessions. Taxing just 3 percent -- equivalent to the interest earned off many such accounts -- of the $21 trillion at 30 percent would, estimated one UK daily on Tuesday, garner “roughly $189bn a year, more than rich economies spend on aid to the rest of the world.”
Turkey's $158 billion share of the tax-free pie is likely to make Ankara despair no less than other governments over lost tax revenue, given that the $158 billion in assets overshadows both Turkey's entire foreign reserves, estimated at $110 billion, and the country's central bank funds, which are said to total $97 billion.
Speaking to Today's Zaman on Tuesday, the former vice president of the Prime Ministry's Privatization Administration (ÖİB), Süleyman Yaşar, explained that, despite numerous national and international regulations which attempt to prevent funds leaking into offshore accounts, Turkish businesses have developed clever ways to slowly transfer funds abroad. “Most commonly, a Turkish company sends a sizeable transfer of money to a front company registered in a tax haven,” he explains.
“The
next step is for that company to give the money back in the form of a
modest loan to the original Turkish company. The money is loaned at an
unusually high rate of interest, and the steep interest payments to the
front company, which are then deposited in the bank, are how the company
transfers money abroad.”Though the extent to which Turkish companies were participating in offshore banking remained fuzzy before Monday's report, which was one of the most comprehensive yet on assets stored in tax havens, Ankara in recent years has launched campaigns to crack down on off-shoring in recent years. Starting in 2010, Ankara has signed various financial information exchange agreements with tax havens, including the UK's Channel Islands, Bermuda and the Guernsey islands, agreements which have allowed Ankara to track and tax some of the revenues earned in Turkey but later moved to those locations.
Nevertheless the campaign to increase scrutiny and enforce taxation of potential off-shorers, says former ÖİB Vice President Yaşar, has been limited by the reach of business interests. Earlier this year, he says, revisions in the Turkish Commercial Code (TTK) related to corporate transparency were hastily amended at Parliament when powerful businesses feared their assets overseas might otherwise be discovered. Those TTK articles have been amended with the support of all four parties -- both ruling and opposition -- represented in the legislative branch. “Transparency is difficult because, while the government has an interest in increasing its revenue, businesses who want to avoid the measure still have power in Parliament,” Yaşar argues.
Despite being shrugged off Ankara's agenda earlier this year, however, Bahçeşehir University economics professor Seyfettin Gürsel says that offshore banking remains a pressing issue for the government, and must be addressed as part of a wider culture of tax evasion in Turkey. “The problem of offshore accounts cannot be separated from the wider problem of regulation and proper taxation in Turkey,” he says. “The government loses tens of billions of dollars annually because of offshore accounts, but even more because of smaller scale underground economies. Large corporations can't hide entirely from paying taxes, but many medium and smaller companies do. All of these issues have to be solved by higher levels of auditing and transparency.” A report by the Turkish Statistics Institute (TurkStat) released in early July reported that 37.5 percent of Turkey's GDP escapes any form of taxation.
Though Turkey's efforts to increase transparency has been weakened by political resistance from the tax-adverse business community, at least on the issue of tax havens Turkey may not be particularly far behind Europe or the United States. The US saw its first indictment of a Swiss bank only in 2009, when it forced UBS to pay a fine of $780 million for facilitating tax evasion, and forced the bank to hand over information regarding over 4,000 accounts. Earlier this year, the US opened a similar case against the Swiss bank Wegelin. Outside of these measures, says Yaşar, “international steps against offshore banking -- not just Turkish steps -- haven't been very engaged or successful. It remains a global problem.”
Source: http://www.todayszaman.com/news-287531-.html - July 24, 2012
