Turkey is poised to introduce a transaction tax on the buying and selling of stocks as well as cryptocurrencies. This was announced by an official. The move is part of Finance Minister Mehmet Simsek’s comprehensive plan to enforce stricter fiscal discipline and improve price stability after a tumultuous period marked by high inflation.
Finance Minister Simsek has previously emphasized the government’s dedication to establishing a fairer tax system. This includes the introduction of a minimum corporate tax. Additionally, President Tayyip Erdogan’s ruling party submitted a draft law to parliament last month. It requires cryptocurrency service providers to obtain licenses and registrations. This new regulation marks a significant departure from the previous policy, which reduced the tax on stock gains from 10% to 0% in 2008.
Also Read: BRICS: Turkey to Join Alliance at 2024 Summit?
Economic Objectives of the Transaction Tax
The transaction tax aims to meet several economic goals. Burak Cetinceker, a money manager at Strategy Portfoy in Istanbul, noted that while the tax might initially have a negative impact on the stock market, it is expected to yield long-term benefits. He believes that the new tax could help decrease market volatility, foster a healthier investment environment, and limit speculative behavior. He further said,
“In the short term, this sounds like pain for the equity market, but in the long term, it means a huge gain.”
Stabilizing Turkey’s Economy
These planned tax reforms are part of a broader effort to stabilize Turkey’s economy. In recent years, Turkey has faced significant economic challenges. This includes the sharp depreciation of the lira and soaring inflation rates. These issues have undermined public confidence in financial markets and led to economic instability. The government hopes that these new taxes will restore trust, attract more sustainable investments, and promote balanced economic growth.
Also Read: Turkey Officially Halts All Trade With Israel