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Turkey U-turns on taxing crypto and stock market earnings

By William Sellars
Turkey's Vice President Cevdet Yilmaz said 'The stock market tax is not on our agenda' Reuters
Turkey's Vice President Cevdet Yilmaz said: 'The stock market tax is not on our agenda'
  • Levy on trading profits ‘shelved’
  • Stock exchange spikes on news
  • ‘Additional measures’ signalled

Turkey’s government has scrapped plans to tax profits from trading in cryptocurrency and on the stock market.

Vice President Cevdet Yılmaz said on September 24 that the proposal to impose a levy on stock market and crypto trading profits had been shelved. 

“The stock market tax is not on our agenda. It was discussed for a time but now it has fallen off the agenda,” he told a gathering of ruling Justice and Development Party officials in the western city of Izmir. 

The same applied to any taxing of crypto currency earnings, Yılmaz said. 

News that the tax on stock trade profits had been shelved brought a spike on the Istanbul exchange, with the blue-chip BIST 100 index up 1.44 percent on the day, and further gains on most of Borsa Istanbul’s boards on September 25. 

Turkey’s treasury and finance minister, Mehmet Şimşek, had announced in June that the government was looking at plans to tax crypto and stock earnings, though he said any such proposal would only be implemented after extensive consultations.

The country had previously taxed stock trade earnings at a rate of 10 percent, though this was abolished in 2008, part of measures to attract foreign investors into the market. 

It is the same target audience that the decision to sidetrack the proposed taxes is aimed at today, according to economist Mustafa Sönmez.

With the state struggling to boost revenue through traditional measures such as value added and special taxes, the government is trying to tap into other areas, he told AGBI. 

Step back

“However, when they announced they would tax previously untouched areas such as the stock exchange or crypto, they had to take a step back, especially as they are trying to attract overseas investment on the exchange and do not want to scare foreigners away with new taxes,” Sönmez said. 

Efforts to broaden the tax base to close the budget deficit are part of the equation, but Sönmez said proposed cuts to state expenditure had also been tabled. The impact of these spending reductions is yet to be seen, suggesting other tax rises could be enacted to bridge the gap. 

Additional tax measures were indeed flagged by the vice-president in his address. Yılmaz said the government was looking to a “narrowing” of tax exemptions, without giving any clues to which areas would be targeted. 

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