A supporter of Turkish president Recep Tayyip Erdogan waits before his speech at a rally for the upcoming referendum in Istanbul, Turkey on April 15, 2017. Alkis Konstantinidis/Reuters
A supporter of Turkish president Recep Tayyip Erdogan waits before his speech at a rally for the upcoming referendum in Istanbul, Turkey on April 15, 2017. Alkis Konstantinidis/Reuters
A supporter of Turkish president Recep Tayyip Erdogan waits before his speech at a rally for the upcoming referendum in Istanbul, Turkey on April 15, 2017. Alkis Konstantinidis/Reuters
A supporter of Turkish president Recep Tayyip Erdogan waits before his speech at a rally for the upcoming referendum in Istanbul, Turkey on April 15, 2017. Alkis Konstantinidis/Reuters

Turkey referendum: Erdogan pledges lasting stability amid fears of a power grab


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Istanbul // Turkey’s referendum on Sunday is the most consequential poll of the Recep Tayyip Erdogan era, and possibly of the country’s modern history.

President Erdogan and his Justice and Development Party (AKP) government are urging voters to back a series of constitutional reforms that would dramatically enhance the power of the presidency at the expense of the other branches of state.

In a country long wracked by political turmoil – in which the military has toppled four governments, and which only last year suffered a failed coup – supporters claim the changes will bring lasting stability and administrative efficiency.

However, the proposed reforms would in fact further entrench a principal cause of that instability: a domineering state that has always sought to shut large sections of the country’s diverse society out of the political process.

The rigidly-enforced secularism of Turkey’s former Kemalist elite was a means of stymying the country’s conservative majority. The existing ten per cent electoral threshold has been a means of suppressing Kurdish representation in parliament.

The unprecedented stability and prosperity of the AKP’s first decade in power was to a large degree due the government’s inclusivity — even if that inclusivity masked a deeper and more ugly power struggle.

Mr Erdogan gave a sense of empowerment to religious conservatives who had previously been marginalised; he reached out to the Kurds, and at the same time did not move to curtail the freedoms of the country’s secular middle class.

A decade ago, almost every section of Turkey’s society (except perhaps for the Kemalist elite whose grip on power was slipping) could believe it had a stake in the country’s future.

The past five years, however, have seen a dramatic and disastrous shift as Mr Erdogan has reacted to a series of challenges to his authority by tightening his grip on power and governing with an ever-narrowing circle of sycophantic advisers.

The nadir of this process has been marked by the breathtakingly broad crackdown on dissent that followed the July 15 coup attempt last year. Ruling by decree through a state of emergency that has now lasted nine months, the government has fired about 130,000 civil servants, detained 71,000 people, fired 6,000 academics, 4,000 judges and prosecutors, and 24,000 police officers.

The targets of these purges go far beyond the members of the Fethullah Gulen network, the Islamic movement that the government blames for the coup attempt, but have also targeted liberals, leftists, and Kurdish nationalists.

The proposed changes would do much to formalise this state of affairs. Under the new powers, the president could pass decrees with the force of law independently of parliament. He could declare a state of emergency without the currently required cabinet approval.

There are various judicial restraints on presidential power: if the president is suspected of a crime, parliament can order an investigation with a simple majority vote and refer him to the constitutional court with a two-thirds majority vote.

However, the president will appoint a majority of the constitutional court’s members, raising doubts about the future judiciary’s impartiality. In theory the president is subject to a two-term limit, but would also have the power to dissolve parliament, in the event of which the incumbent would be able to run again.

If the proposals pass, the effect would be to consolidate control of the state in the hands of Turkey’s political right. The left, which has never won an outright majority in any Turkish election, as well as smaller groups such as the Kurdish movement, would find themselves with even fewer tools with which to influence Turkey’s political trajectory than before.

This marginalisation is only likely to increase the instability that the system seeks to dispel.

Is it likely to pass? The contest appears finely balanced. A rolling average of the recent polls conducted by election monitoring website James In Turkey shows the two campaigns neck-and-neck, with Yes on 50.6 per cent and No on 49.4 per cent.

The range of results is also very broad, with some pollsters giving the Yes campaign a 20-point lead, and others putting No ahead by a similar margin.

Another complicating factor is the atmosphere of intimation under which the vote is taking place, in which government rhetoric has branded No voters terrorist supporters and traitors to the nation.

Some observers believe that No voters are unwilling to disclose their preference to pollsters due to fear of possible government retribution.

Conversely, the government’s stranglehold on media and public campaigning, as well as its exploitation of the current state of emergency may be enough to push Yes across the line in the event of a close contest.

Campaigners for No have routinely been harassed by police and even arrested. One of the government’s emergency decrees abolished sanctions against media organisations producing biased coverage in the lead up to the election, to the obvious benefit of the government, which now indirectly controls the bulk of Turkey’s media.

Two issues that might animate voters against the government are the economy, which has been ailing for the past two years, and the large number of Syrian refugees in the country — a source of increasing frustration and resentment for many Turks.

Mr Erdogan has tried to frame the poll within his long-running and robustly successful narrative, in which he casts himself as the champion of the Turkish people against an array of internal and external enemies: the Gulenists, Kurdish separatist rebels, ISIL terrorists, and also the West — especially Turkey’s European neighbours, with whom he has cultivated rows in the lead-up to the vote.

Many Turks appear to hope that granting him more power will end the instability, terrorism, and atmosphere of crisis that have riven Turkey over the past four years.

In fact, a Yes vote is only likely to intensify the frustrations driving that instability, and entrench Mr Erdogan’s reliance on the tools of repression that increasingly characterise his rule.

foreign.desk@thenational.ae

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

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