Turkey is planning a major fiscal overhaul that includes implementing a 0.03% transaction tax on cryptocurrency trading in order to address budget deficits exacerbated by the 2023 earthquakes. The proposed tax reforms are expected to generate significant revenue and mark the largest change to Turkey’s tax system in decades. This tax is estimated to yield approximately 3.7 billion TRY annually, directly boosting the nation’s economy amid challenging fiscal circumstances. The broader tax reform aims to generate 226 billion liras ($7 billion), which is equivalent to roughly 0.7% of Turkey’s gross domestic product, and is considered crucial for reinvigorating the nation’s economic recovery following the devastating earthquakes.
Despite initial denials of plans to tax gains from crypto and stock trading, the Turkish government is now shifting its stance to include targeted transaction taxes in an effort to enforce strict fiscal discipline and improve price stability. Finance Minister Mehmet Simsek stated that Turkey would “leave no area untaxed to provide justice and effectiveness in taxation.” The ruling party, led by President Recep Tayyip Erdogan, holds a parliamentary majority and is expected to pass the proposed legislation, despite potential backlash and political contention. Previous attempts to implement transaction taxes have faced strong opposition, but the government sees this as a critical step in regulating Turkey’s rapidly growing cryptocurrency market.
The introduction of a transaction tax on crypto trading is part of a broader effort to regulate Turkey’s digital assets market, which has seen significant growth due to persistent TRY weakness and high inflation. Many Turks have turned to digital assets as a hedge against currency depreciation, and the government aims to capitalize on this trend through taxation. The Central Bank of the Republic of Turkey (CBRT) has also been testing its digital Turkish lira, aiming to position Turkey as a regional hub for digital asset custody and tokenization services. Various financial institutions, including Misyon Bank and HSBC, have initiated digital asset initiatives, indicating a growing interest and investment in the digital asset sector among Turkish investors.
Officials are preparing new tax legislation to be debated in parliament later in the month, which would mark the most sweeping overhaul of Turkey’s tax code since levies were raised across the board after the 1999 earthquake to fund recovery efforts. The decision to implement taxes on gains from crypto and stock trading is part of Turkey’s strategic move to ensure fiscal discipline and improve price stability in the face of inflation challenges. The revision of tax laws is crucial for the country’s economic recovery following the earthquakes, and the proposed transaction tax on crypto trading is a key component of the broader tax reform. As Turkey looks to regulate its rapidly growing cryptocurrency market, the government aims to generate revenue through targeted transaction taxes while also positioning the country as a regional hub for digital asset services.
