The regulation, which redefined Special Consumption Tax (SCT) rates for motor vehicles, was published in the Official Gazette and entered into force. The amendment, made under the “Law on Amending the Law on the Protection of the Value of the Turkish Currency and Certain Laws and Legislative Decree No. 635,” significantly reshaped the tax structure in the automotive sector.
SCT hike could reduce the current account deficit
In accordance with the Presidential Decree, SCT rates for domestically produced passenger cars were reduced by 5 to 10 percentage points. Conversely, taxes on imported luxury passenger cars were increased by 10 to 20 percentage points. Tax thresholds for electric cars were raised, and SCT rates were also increased by 15 percentage points.
Following the enactment of the changes, the Ministry of Treasury and Finance released a statement regarding the regulation. The Ministry stated that the primary purpose of the regulation is to contribute to reducing Turkey’s current account deficit. The statement emphasized that the new Special Consumption Tax (SCT) base and rates were determined by taking into account technical criteria such as engine displacement, battery capacity, and electric range.
According to the Ministry’s statement, taxes were reduced for some vehicle groups with high sales volumes. While existing tax rates were maintained for some models, others were increased by 10 to 20 percentage points. It is anticipated that the tax increase on electric vehicles could particularly affect higher-end models.
It was stated that because the regulation has both discounting and increasing effects, the net inflation impact on an annual basis will be quite limited. The Ministry estimated that this impact would be only 0.0019 percentage points.
The new Special Consumption Tax (SCT) structure is expected to shift the balance of power in the Turkish automotive market. This step, aimed at encouraging domestic production and reducing import-based consumption, could directly influence prices and consumer preferences in the automotive sector.
