Opposition mayors in Istanbul and Ankara claimed victory in Turkey's local elections on Sunday, delivering a surprise election defeat to President Recep Tayyip Erdogan.
He later accepted their gains, calling the vote a “turning point”, as his ruling Justice and Development Party (AKP) lost in key battlegrounds Ankara and Istanbul.
With 96 per cent of ballot boxes opened, Istanbul's Republican People's Party (CHP) mayor Ekrem Imamoglu said he had seen off the challenge of Mr Erdogan's candidate by more than one million votes.
“We have won the election,” Mr Imamoglu declared. “Tomorrow is a new spring day for our country.”
Large crowds filled the square outside the Istanbul city headquarters waving Turkish flags and lighting torches to celebrate the result.
The CHP also retained the capital with Mayor Mansur Yavas saying “the elections are over, we will continue to serve Ankara”.
Mr Yavas was leading with 58.6 per cent of the vote against 33.5 per cent for his AKP opponent from 46.4 per cent of ballot boxes opened. The CHP was also ahead in Izmir, Turkey's third city and a party stronghold.
Both Mr Imamoglu and Mr Yavas are members of the pro-secular nationalist Republican People's Party or CHP. Mr Erdogan's AKP lost control of both cities in a surprise victory for the country’s embattled opposition in 2019, which ushered in fresh crackdowns on his opponents, and was followed by Mr Erdogan's re-election as president in 2023.
Sixty-one million people were eligible to vote in the local elections across the country.
The vote was taking place after years of economic gloom, with the country having suffered 70 per cent inflation and a fall in industrial output. But in recent months, the economy has returned to modest growth and youth unemployment dipped around a percentage point to nine per cent last year, significantly below a lot of European countries, but still near double digits.
There were reports of violence in separate incidents across the country, despite the Interior Minister Ali Yerlikaya earlier announcing that 594,000 security personnel had been posted to ensure the vote goes smoothly.
The state-owned Anadolu reported that armed groups clashed in south-eastern Turkey, with at least one person killed and 11 more injured. It added that another 16 were injured in a clash in Sanliurfa, also in Turkey's restive south-east, where Kurdish separatist groups have a strong presence.
The election was seen as crucial for Mr Erdogan's plans to usher in a new national constitution that would allow him to rule beyond 2028, analysts say.
Observers say many governing party supporters could have chosen not to go to the polls in protest of the economic downturn that has left many struggling to pay for food, utilities and rent.
Mr Imamoglu ran in the poll without the support of some of the parties that helped him to victory in 2019.
Both the pro-Kurdish Peoples’ Equality and Democracy Party and the nationalist IYI Party fielded their own candidates in the race, which risked siphoning away votes from Mr Imamoglu.
A six-party opposition alliance led by CHP disintegrated after it failed to oust Mr Erdogan in last year's election, unable to capitalise on the economic crisis and the government's initially poor response to last year's devastating earthquake that killed more than 53,000 people.
Meanwhile, a new religious-conservative party, the New Welfare Party, or YRP, was appealing to voters who have been disillusioned with Mr Erdogan’s handling of the economy and was expected to draw some votes away from his candidates.
In Turkey's mainly Kurdish-populated south-east, the DEM Party was expected to win many of the municipalities but it's unclear whether it would be allowed to retain them. In previous years, Mr Erdogan’s government removed elected pro-Kurdish mayors from office for alleged links to Kurdish militants and replaced them with state-appointed trustees.
Agencies contributed to this report
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
