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Turkey brings itself into global tax battle with Last Exit amnesty

Turkey tax

Turkey's finance minister Naci Agbal claims that the proposed 'Last Exit' amnesty will provide citizens a final chance to repatriate money held overseas amid ongoing efforts by the G20 to close tax loopholes across the globe.

Mr Agbal said in an interview with Bloomberg last week that his government will offer the chance for nationals to take advantage of "the last exit before the bridge", adding that the decision to allow nationals the chance of bringing back money tax-free was in line with regulations introduced by other nations.

But he insisted that Turkey would close any loopholes after 2018, bringing it in line with other nations, many of which have pledged to crackdown on global tax avoidance with new rules by 2018, at which point all G20 nations will have to commit to sharing information on individuals and corporations.

But the planned legislation allowing nationals to repatriate cash held abroad tax free until the 2018 measures come into place.

Turkey's economy is largely drive by foreign capital, which helps it to ease the burden of a current account deficit.

But recent political unrest, which culminated in last month's failed military coup to overthrow president Recep Tayyip Erdogan, means many foreign investors have needed reassurances from the country's officials.

An exact figure on the amount of money being held abroad by Turkish nationals for the purpose of avoiding tax has not yet been established, which Mr Agbal claims is largely due to difficulties in linking funds to specific companies or individuals.

However, figures from the OECD estimate that tax avoidance could cost governments around the world as much as $240 billion a year.

He added that he expects a better response than when the government last tried to issue an amnesty in 2013, which saw nationals repatriate 10.5 billion liras, which at the time equalled $5.1 billion, with the government collecting two per cent of tax.

This time around the government has pledged not to collect any tax on money declared before December 31st.

However, Mr Agbal insists there will be measures taken to combat possible money laundering and terrorism funding, with regulators now having the authority to freeze any transactions that are believed to be linked to criminal activity.

Cracking down on avoidance and closing loopholes has been at the top of the agenda for many governments, particularly on the back of the recent Panama Papers leak, which exposed billions of dollars in assets that were hidden in tax havens around the world.