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Turkey revises the special consumption tax on certain vehicles

The official gazette revealed that Turkey had revised the special consumption taxes on certain cars. According to the Finance Ministry, this was done primarily to reduce the current-account deficit.

This change was made in accordance with a new law protecting the value and stability of the Turkish currency. It revised the tax rates and thresholds for certain fossil-fuel powered passenger cars, and hybrid vehicles, which use both fossil fuels as well as electric engines.

The ministry announced that the special consumption tax rates for certain vehicles were reduced by between 5 and 10 percentage points. For other models, however, rates increased from 10 to 20 percent.

Turkey is a major auto-producing country, but it also imports a lot of cars.

The ministry estimated that the overall impact on inflation of the changes will be minimal. It estimates a net effect annually of only 0.0019 percent points. The ministry did not provide any details about the projected impact on the current-account deficit.

The announcement stated that the rates for combustion engine vehicles will range between 70 and 220%, depending on the engine size, and the minimum rate for electric cars and hybrids will be 25 and 45% respectively. Reporting by Mehmet Devranoglu and Nevzat Dinar; Writing by Tuvan Gumrukcu, Ezgi Erkoyun and Clarence Fernandez; Editing and proofreading by Alison Williams and Clarence Fernandez)

(source: Reuters)