Turkish Textile Tycoon Opens Israeli Company Amid Tax Authority Investigation Over Customs Fraud
In February 2024, just before Turkey imposed a trade embargo on Israel, Turkish textile magnate Mustafa Denizer established an Israeli company named AE DKT TEL AVIV LTD. Denizer, a prominent figure in Turkey’s textile industry and president of the Turkey-Egypt Chamber of Commerce, holds 990 of the company’s shares, while his Israeli partner holds 10. This move is surprising given the strained economic relations following the embargo announced by Turkish President Recep Tayyip Erdogan.
The Israeli Tax Authority has launched a significant investigation into several Israeli textile companies, including AE DKT Tel Aviv and three others located in the Barkan industrial zone. Authorities suspect these companies exploited the 2004 QIZ (Qualified Industrial Zone) agreement between Israel, Egypt, and the United States to illegally bypass U.S. customs duties. The QIZ agreement allows Egyptian products containing at least 10.5% Israeli content to enter the U.S. duty-free, aiming to promote trilateral economic cooperation.
The investigation alleges that the Israeli companies served merely as transit points, shipping fabrics and threads to Egypt without any processing in Israel. They reportedly submitted false export declarations, presenting foreign goods as Israeli-made to qualify for customs exemptions. The suspected customs fraud involves approximately 27 million shekels and includes potential violations of customs, import-export, VAT, anti-money laundering, and criminal laws. The probe became public in January 2024, with company owners detained and searches conducted at company facilities.
Mustafa Denizer, 51, is the president of Diktash, a major Turkish textile company with operations in Egypt, employing thousands and heavily involved in cotton production. He holds leadership roles in textile associations in Turkey and globally and has publicly discussed growing trade between Turkey and Egypt, which reached around $10 billion following a 2007 free trade agreement. Denizer defended the Israeli company’s operations, stating the fabrics were Chinese and that value addition occurred in Israel per QIZ rules, pledging to address the matter in court if necessary.
The Tax Authority described the case as complex and serious, with potential harm to Israel’s international relations and domestic industry competition. No official response was given by the Tax Authority regarding Denizer’s involvement. The suspects maintain their presumption of innocence as investigations continue.
