Turkey is preparing to introduce new taxes, including a 0.03% transaction tax on cryptocurrency trading, as part of a significant fiscal overhaul. The move aims to address the country’s budget deficit caused by 2023’s earthquakes and proposes a shift in approach to financial transaction regulation.
According to a report from Bloomberg, which cited the proposed changes, imposing a transaction tax on crypto trading could provide a significant windfall for tough economic circumstances:
“The ministry is considering a 0.03% transaction tax on crypto trading, which has become popular among retail Turkish investors seeking a hedge against lira weakness and rampant inflation. The move would bring in 3.7 billion liras a year, according to official projections.”
Related: Turkey denies plans to tax crypto, stock gains
Tax reform to generate $7 billion
The Turkish government’s proposed tax reforms are expected to generate 226 billion liras ($7 billion), equivalent to roughly 0.7% of the country’s gross domestic product. The Ministry of Treasury and Finance, led by Mehmet Simsek, drafted legislation for parliamentary discussion by the end of June.
The 0.03% transaction tax move aims to tap into the growing popularity of crypto trading among Turkish investors seeking to hedge against inflation and currency depreciation.
The reforms would mark the largest tax change in Turkey in the last two decades.
Related: Turkey proposes aligning crypto legislation with international standards
Turkey tax U-turn
Despite previously denying it planned to tax crypto and stock gains, the Turkish government is now considering targeted transaction taxes to ensure comprehensive financial regulation. On June 5, Simsek stated that Turkey aimed to “leave no area untaxed in order to provide justice and effectiveness in taxation.”
The previously dismissed plans to impose crypto and stock taxation came with the small caveat of suggested “very limited” transaction levies.
Related: Turkish crypto bill: 5 things to know before it’s introduced
Once more, unto the breach
President Recep Tayyip Erdogan’s ruling party, which holds a parliamentary majority, is expected to pass the proposed legislation and enforce the new 0.03% transaction tax. However, previous attempts to pass transaction taxes have faced substantial backlash, and political contention is anticipated in this current effort.
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