Treasury and Finance Minister Şimşek: It is very clear that the restructuring disrupts tax compliance.

Treasury and Finance Minister Mehmet Şimşek answered MPs' questions following the 2026 budget discussions of his Ministry and its affiliated organizations at the Grand National Assembly of Turkey's Planning and Budget Commission.

Şimşek, stating that the revitalization of the earthquake zone is a top priority, stated that to date, 3.6 trillion lira, or over $90 billion, has been spent on accrual-based budget expenditures at 2025 prices.

Şimşek emphasized that they implemented all necessary precautions in the region immediately following the Kahramanmaraş-centered earthquake, saying, "As you know, the law regarding force majeure was amended and extended last year. We've used all the extension options, so it will expire on November 30th. But I want to emphasize this: first, those affected by the earthquake will be able to benefit from force majeure even after the end of force majeure if they can prove they were affected. Second, we've eased the security deposit requirement, removing the requirement for up to 250,000 lira."

"We do not find it right to provide a reward for those who do not pay their taxes."

Answering MPs’ questions about the tax amnesty, Şimşek said:

"Regulations were made in the past. These regulations generally did not include any reductions or deletions in actual tax bases. Only late payment interest and interest increases were adjusted to reflect inflation. It's clear that the restructuring disrupts tax compliance. If our taxpayer presents their balance sheet and income statement and demonstrates that they are in difficulty, we will gladly offer installment payments. In this sense, the restructuring is open to anyone in need. We don't have any legal regulations on the agenda for this. We don't believe it's appropriate to implement a regulation that rewards those who don't pay their taxes on time."

"We will take additional measures in labor-intensive sectors"

Şimşek emphasized that they are aware of the challenges faced by labor-intensive sectors like textiles, furniture, leather, apparel, and footwear, and that they will not ignore these challenges. Recalling the steps taken, Şimşek said, "We are still working on the challenges faced by labor-intensive sectors. We will take additional measures. We will continue to support our production and employment in the strongest possible way. We have no hesitation in that regard."

Commenting on the economic program, Şimşek said, "The budget deficit fell from 5.1 percent last year to 4.7 percent. This year, it will likely be around 3.5-3.6 percent. Therefore, the budget deficit is decreasing. In this sense, the program is working. The current account deficit is no longer a concern. If the program didn't work and we didn't see results, why would credit rating agencies raise our rating? We faced many shocks this year. Despite this, the program has proven itself, and we've proven resilient. I don't even want to ask what inflation would have been if we hadn't implemented this program."

Şimşek stated that the conditions for disinflation to continue are in place, that disinflation is currently ongoing, that they have established fiscal discipline, that there is a sustainable current account balance, and that they have completed the withdrawal from exchange rate-protected deposits.

"4,567 companies have applied for bankruptcy in 2.5 years"

Şimşek, pointing out that the real sector is experiencing similar difficulties globally and that the program may have side effects, reported that 4,567 companies have filed for bankruptcy in approximately 2.5 years. Şimşek continued:

These companies' share in turnover is 0.89 percent, their share in exports is 0.85 percent, and their share in employment is 0.73 percent. Declaring bankruptcy doesn't mean bankruptcy. Courts should offer this opportunity to companies that otherwise have a chance of survival. Currently, the default rate on commercial loans is 1.8 percent. The 10-year average is around 3 percent. We're currently well below that.

Şimşek stated that as of September 2025, the ratio of bounced checks to total checks drawn will be 2.8 percent, which is above the last 12-year average of 2.5 percent.

Emphasizing that they have taken steps to facilitate access to financing and that this will continue, Şimşek noted that Eximbank will provide $53 billion in loans to exporters this year, with a significant portion of these loans including an interest rate subsidy of almost 50 percent.

"I won't be a capitalist"

Şimşek, noting that they had reduced tax expenditures, underlined that 1 trillion 92 billion lira of tax expenditures in 2026 would come from the exemption of the minimum wage from taxes.

Simsek noted the following:

"Do you want a tax on the minimum wage? One-third of tax expenditures is exempting the minimum wage from taxes. You do these things to encourage investment, production, and exports. You do these things for employment. The total amount of these amounts is 641.5 billion lira. Approximately 265 billion lira is allocated to support disadvantaged groups, especially the disabled, education, healthcare, culture, sports, and environmental activities. The share allocated to support farmers' agricultural activities is 262 billion lira. Should we increase our farmers' taxes? Should we also tax feed and fertilizer? These are the things you're talking about as tax debt cancellations. Because tax debts can't be canceled otherwise; all of these are done by law, and I have no involvement in any of them."

Minister Şimşek said, "You can't make a bourgeois capitalist out of me, friends. It's impossible. Look, I'm the one who raised the corporate tax by 5 points, I'm the one who raised bank taxes from 20 percent to 30 percent, I'm the one who increased bank fees by 50 percent, I'm the one who introduced a minimum domestic corporate tax, I'm the one who introduced a minimum corporate tax for global corporations. I'm the one who removed the 50 percent profit exemption for companies on real estate sales, I'm the one who lowered the profit exemption for sales of affiliated shares. I'm the one who increased withholding tax on dividends from 10 percent to 15 percent. Currently, funds and deposits with a maturity of up to six months constitute 95 percent of the total. We've raised the tax on these to 17.5 percent. If I'm a profiteer, if I represent global capital, then just as I'm raising the interest rate on deposits from 5 percent to 17.5 percent, I'm not the type of capitalist I am. I'm here to provide a public service."

"We are open to providing all kinds of convenience to those who need to stay in a simple manner"

Şimşek also emphasized that he had not previously said anything like that regarding claims that "wages cause inflation" and that in that statement he had meant that the budget deficit would be inflationary.

Responding to claims that a 1 percent Special Consumption Tax (SCT) is levied on spirits, Şimşek noted that the SCT for some products in this group is at 39.8 percent, and that when VAT is added, the taxes reach 56.5 percent.

Şimşek stated that efforts are being made to eliminate unfair competition, that there is no automatic transition from the simple procedure to the real procedure, and that there are rules, and that they are open to making all kinds of conveniences and arrangements for those who need to remain in the real simple procedure.

"I neither have a chronic disease nor a disease that requires close monitoring."

Şimşek pointed out that the income tax amount they will receive in 2025 is 2.8 trillion lira, and stated that this is low compared to international comparisons.

Şimşek, stating that they exempted all wages up to the minimum wage, said, "Now you said, 'Why don't you increase these tax brackets?' We increased them by the revaluation rate, and we will increase them."

Şimşek said they will continue to do their best to ensure that employees are rewarded for their hard work.

Emphasizing the value of the "500,000 social housing" project, Şimşek said, "We will wholeheartedly support it. Because for 500,000 social housing units, the payment will be based on income, not rent. These 500,000 units are truly affordable for our minimum wage earners, retirees, and civil servants."

Şimşek, responding to allegations that he was ill, said, "I currently have neither a chronic disease nor a condition that requires close monitoring. To date, I have never had any consideration other than serving my country."

Following the discussions, the 2026 budget of the Ministry of Treasury and Finance, as well as the budgets, final accounts, and Court of Accounts reports of the Revenue Administration, Turkish Statistical Institute, Privatization Administration, Capital Markets Board, Banking Regulation and Supervision Agency, Public Procurement Agency, Public Oversight, Accounting and Auditing Standards Authority, Insurance and Private Pension Regulation and Supervision Agency, and the Court of Accounts reports of the Central Bank of the Republic of Turkey, Investor Compensation Center, and Interbank Card Center Inc. were accepted.

The Anadolu Agency website publishes a summary of the news presented to subscribers through the AA News Feed System (HAS). Please contact us for subscription information.