By Simon Cameron-Moore and Asli Kandemir
ANKARA, Nov 24 (Reuters) - The Turkish government will wait to see the full text of a court decision that removed an exemption on withholding tax for foreign investors before taking any remedial action, the finance minister said on Tuesday.
The Constitutional Court removed last month the tax break on foreign investors in Turkish bonds, mutual funds and foreign exchange futures contracts on grounds that it was unfair that local investors paid the 10 percent withholding tax.
Turkish bond prices surged on news of the ruling and investors have been waiting for details of the government's response.
Finance Minister Mehmet Simsek told Reuters that the government needs to see all the reasoning behind the ruling before deciding what to do next.
"We're still waiting for the court decision to be published in the official Gazette. We need to develop our solutions and strategy on the basis of that," Simsek said in an interview.
He stressed that he did not want to prejudge what steps would be taken, and added that the government wants to avoid springing any surprises.
"We are market friendly, we don't want to surprise anybody -- markets, investors or taxpayers," Simsek said.
"We want to be a predictable country."
AMBITIOUS REVENUE FORECASTS? Turning to the government's revenue projection for 2010, Simsek said it was understandable that some people would think forecasts of 18 percent growth in revenues for an economy struggling to bounce back from recession was over-optimistic, but he said the underlying assumptions were sound.
Of the 30 billion lira projected increase in revenues next year, 17 billion could be accounted for by four factors, Simsek said.
Firstly, some tax breaks were being discontinued, and these should be added to the tax base for next year.
Secondly, there were several taxes increased in mid-2009 that would yield revenues for a full 12 months in 2010.
Thirdly, some important lump sum taxes would be adjusted for inflation, and price adjustments would help some state-run enterprises who have not been paying their tax bills, like the natural gas pipeline company, Botas, not only meet their obligations for next year, but start making back-payments.
Taking these four factors out of the equation, Simsek said the projected revenue growth would be just 7.9 percent, which would be below the 8.7 percent deflator-adjusted GDP growth projected.
GDP is forecast to grow 3.5 percent next year, after a 6 percent contraction this year.
(Editing by Patrick Graham)
((cameron.moore@reuters.com; Telephone: +90 212 350 7062; Reuters Messaging: cameron.moore.reuters.com@reuters.net))