Turkey

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4.1. Car Taxation

Looking at the car taxation system, it mostly relates to the engine volume of the car in cc. and net price. Buying cars – especially with cars above 2000cc being taxed above 160% – tends to be quite expensive.

In Turkey, there are mainly two types of taxes for cars. The first type includes the indirect taxes paid during the purchase of the cars. These taxes are the special consumption tax and the value added tax. The second type is some sort of a circulation tax, known as the motor vehicle tax and are paid annually by the owner of the car.

Special consumption tax

The special consumption tax is an indirect tax due for a number of goods including passenger cars. For passenger cars, the special consumption tax is accrued during the sale of the car to the end user, before the first registration of the car and only then.

The special consumption tax needs to be paid by the seller of the passenger car. It is included in on the invoice for the sale of the car. The amount due depends on the type of the vehicle and the engine type and also net price. It is calculated by applying the pre-determined rates on the sales price of the cars. ) it’s little bit complex,  based on both engine power and net price. Please find it in the below table

VAT

The sale of passenger cars in Turkey is subject to the general  VAT rate of 18%. The sale of second-hand passenger cars, on the other hand, is subject to VAT at the rate of 1%.

The VAT payment liability for the sale of the passenger cars lies with the seller. As with the special consumption tax, VAT is charged to the end user within the invoice.

The tax burden

 As a summary of the above-stated explanations,the tax burden on the purchase of a passengercarwill be calculated as follows:

A - The type of the car: engine with 2000cc

B - The net sales price: 114.000 TRY

C - The specialconsumption tax (B × 100%):114.000 TRY

D - The value added tax ([B +C] ×18%]: 41.040 TRY

E - Total tax burden (C +D): 155.040 TRY

F - The total sales price (E + B):269.040 TRY

G - The ratio ofthe tax burdenon price (E ÷B): 136%

Annual circulation tax – motor vehicle tax

The motor vehicle tax, which is an annual circulation tax in Turkey, is levied due to the fact that a vehicle is registered in Turkey and is payable by the real or legal persons for whom the car is registered. The annual circulation tax is payable in two installments, one in January and one in July.The figures are revised each year by the revaluation rate announced by the Ministry of Finance. The Council of Ministers also has the authority to revise and differentiate the figures based on the technical facilities and the fuel- oil type of the vehicles.

Rumor has it that Turkey was/is going to change the motor vehicle tax to be linked to CO2 emissions, following the example of the UK and Germany.

4.2. Income tax – Taxable persons

In principle company cars are mainly tool cars, cars necessary for the job.  No lump-sum methods exist to value the benefit in kind due for the private use of a company car. It is up to the discretion of the employer to determine the private part and related benefit in kind, a discretion apparently not often scrutinized by the Turkish tax authorities.

4.3. Company car

The cost of passenger cars that are acquired or leased can be deducted from the tax base on the condition that they are used for business purposes. These costs include the depreciation of the passenger cars in the assets, the leasing expenses and other car-related expenses including the fuel- oil, maintenance and others.

Only the motor vehicle tax paid for passenger cars and motorcycles cannot be considered deductible expense and should be added to the corporate tax base, in accordance with the Motor Vehicle Tax Law.

The general depreciation rate applied for passenger cars is 20% (five years). There is no lump-sum limit or ceiling for the amount of the depreciation expense on passenger cars.

When company cars are used for private purposes as well, in accordance with the Income Tax Law a benefit in kind should be considered as salary and subjected to income taxation.

4.4. Income taxes – drivers’ personal taxation 4.5. Electric vehicles

Electric vehicles can already enjoy a significant lower special consumption tax from 3% up to 15%, compared with 45% to 145% for combustion engines. It is expected that in Turkey this, and the elaboration of the electric charging facilities, will stimulate the sale of electric vehicles in Turkey with a positive outlook for these vehicles in the next 10 years.

4.6. Future developments

The Turkish government is considering changing the annual motor vehicle tax into a CO2 emission-linked tax. When comparing this potential change with lessons learned from Western Europe – and taking into account the relatively low amount of the motor vehicle tax – the question remains whether the impact would be sufficient to change the buying behaviour of consumers.

If the environmental objective is primordial, linking the special consumption tax for vehicles to the CO2 emissions of cars would almost certainly influence the buying behaviour stimulating consumers to purchase environmental friendly cars. Similar changes in countries like Belgium and the Netherlands have clearly proved this effect.

Furthermore, linking the annual tax to CO2 emissions might endanger a social objective of not “punishing” the less fortunate who cannot afford new, less polluting cars.

4.7. Legal background (import taxes)

*Source: http://www.globalfleet.com/analysis_of_turkish_car_taxes_58130-en-524-188088-1853.html and And Yasin Akgun (PricewaterhouseCoopers)