Global Government Venturing Award: Tax and regulations

Winner: Turkey

Turkey has taken note of venture capital (VC) best practices to encourage its domestic industry. Since July last year, it is possible to establish VC investment funds in Turkey. These are investment vehicles regulated by the Capital Markets Board with a lighter requirement for portfolio management companies and are exempt from corporate tax and with no withholding tax.

In August, Turkey’s Treasury set out the eligibility criteria for its funds of funds. This followed the Communiqué on Principles of Venture Capital Investment Company, which became effective in October 2013 offering corporate and withholding tax exemptions.

Since February 2013, granting angel investor licences for “high-income” or “experienced” individuals and offering them tax credits if they make investments through accredited business angel networks, such as BIC, Etohum, GBA, Keiretsu and SirketOrtagim. Ten investments of total value close to L3m ($1.25m) have applied for these tax credit out of a community of 253 accredited angels, as of September this year.

Turkey first introduced VC regulations in 1993 under the authority of the Capital Market Board. Regulatory updates affecting the VC ecosystem over the past two years have included measures covering angels and investment companies, as well as moves to encourage corporate venturing through making dividends exempt from tax, according to Yonca Fatma Yücel at Turkey’s Banking Regulation and Supervision Agency in a presentation to the International Association of Lawyers last month.


 

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