Turkey targets crypto with its new 0.03% transaction tax
Turkey is preparing to introduce new taxes on cryptocurrency transactions, including a 0.03% transaction tax, as part of a significant fiscal reform. The move aims to address the country's earthquake-induced budget deficit by 2023, and aims to bring about changes in the regulation of financial transactions.
Citing the proposed changes, a Bloomberg report suggests that the imposition of a transaction tax on crypto trading would provide a major windfall to strong economic conditions.
“The ministry is considering a 0.03% transaction tax on crypto trading, which has become popular among Turkish retail investors seeking a hedge against lira weakness and rampant inflation. Official projections show the move could bring in 3.7 billion lira a year.
Related: Turkey rejects plan to tax crypto, stock gains
Tax reform to generate 7 billion dollars
The Turkish government's proposed tax reform is expected to generate 226 billion lira ($7 billion), roughly 0.7% of the country's GDP. A parliamentary discussion, chaired by Mehmet Simsek in the Ministry of Treasury and Finance, produced a draft law at the end of June.
The 0.03% transaction tax measure aims to hit the growing popularity of crypto trading among Turkish investors who want to hedge against inflation and currency fluctuations.
The reform marks the biggest tax change in Turkey in the last two decades.
Related: Turkey proposes to align crypto law with international standards.
Turkish tax U-turn
Despite previously denying plans to crack down on crypto and stock profits, the Turkish government is considering targeted transaction taxes to ensure overall financial control. On June 5, Simsek said that Turkey intended to “leave no tax at all in order to achieve justice and tax efficiency.”
The previously scrapped plans to drop the crypto and stock tax came with the caveat of a “very limited” transaction tax.
Related: Turkey's Crypto Bill: 5 Things to Know Before It Is Submitted
Once again, to the breach
President Recep Tayyip Erdogan's ruling party, which has a parliamentary majority, is expected to approve the proposed law and implement the new 0.03% sales tax. However, previous attempts to pass sales taxes have met with widespread condemnation, and political controversy is expected with this current effort.
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