Turkey is planning to introduce a new tax reform, including a 0.03% transaction tax on cryptocurrency trading, as part of a broader fiscal overhaul aimed at addressing the country’s budget deficit exacerbated by the earthquakes in 2023.
The new tax measures, including the cryptocurrency transaction tax, are outlined in legislation that is set to be discussed in parliament by the end of June.
The proposed tax reforms will affect financial transactions within Turkey, targeting the increasing volume of cryptocurrency trading among Turkish investors.
The proposed 0.03% transaction tax on cryptocurrency trading is expected to generate significant revenue, with projections estimating an annual income of 3.7 billion liras ($7 billion). This tax is part of a larger fiscal strategy designed to raise approximately 226 billion liras, equivalent to about 0.7% of Turkey’s GDP. The reforms aim to tap into the burgeoning crypto market in Turkey, where investors increasingly turn to digital currencies as a hedge against the Turkish lira’s weakness and high inflation.
This move marks a significant shift in Turkey’s taxation policy, particularly as the government had previously denied plans to tax gains from crypto and stock transactions. The introduction of targeted transaction taxes represents a strategic pivot to ensure comprehensive financial regulation and effective taxation. The tax reforms are the most extensive the country has seen in two decades and are critical for stabilizing the national economy post-disaster. Despite the government’s majority in parliament, which likely ensures the passage of the proposed legislation, similar initiatives have historically faced strong opposition and controversy. The implementation of these tax measures will be a crucial test of the government’s ability to navigate economic challenges through fiscal policy adjustments, amidst political and public scrutiny.
