The law titled 'Law on Amendments to Certain Laws and Decrees with the Force of Law' was published in the Official Gazette of Turkey. The legislation includes provisions introducing a new regulation for the special consumption tax, known locally as ÖTV, applicable to automobiles.
According to the Turkish Ministry of Treasury and Finance, the law introduces a minimum fixed tax standard for the taxation of passenger cars and other motor vehicles primarily manufactured for carrying passengers. This creates a new lower-bound mechanism for these vehicles.
Under the current system, these vehicles are taxed proportionally based on criteria such as engine cylinder volume, engine power, emission, range, and tax base. The new rule alters this by establishing a floor: if the ÖTV amount calculated via the proportional tax rate falls below the determined minimum fixed tax amount, only the minimum fixed tax amount will be collected.
If the proportional tax amount is higher than the fixed minimum, taxation will continue based on the rate as in the current system. Currently, the proportional tax amounts calculated under existing legislation for vehicles on sale remain above the determined fixed limits.
Scope and Exemptions
The application covers passenger cars, while no changes were made to the taxation of commercial vehicles designated for carrying passengers or cargo, and motorcycles. For (L)-class vehicles, which include some three- and four-wheeled motor vehicles and ATVs, only those with an electric motor power of 4 kilowatts and above were included in the scope.
(L)-class vehicles with electric motor power below 4 kilowatts, those with internal combustion engines, two-wheeled motorcycles, (T)-class agricultural-forestry tractors, and ATVs in this class were exempted from the new application.
Future Adjustments and Rationale
The regulation is not expected to cause a direct change in current vehicle prices and taxes. According to the rationale provisions of the regulation, the application was not designed to create a tax increase in the current period, but to enable rapid administrative decisions against sectoral and commercial changes that may occur in the future.
The application was added to the legislation as an intervention tool against possible competition inequalities and developments that distort the pricing structure in the market. The law grants the President of Turkey the authority to increase the determined fixed amounts, or amounts increased by the revaluation rate, up to 10 times and to reduce them to zero within legal criteria.
Updates
The new regulation introduces vehicle traction systems as a novel criterion for tax calculation, while also granting the President authority to adjust minimum fixed tax amounts based on technical specifications such as battery capacity, range, and emission values. Unverified reports suggest that the base tax amounts of 30,000 and 100,000 Turkish lira will undergo annual increases linked to the revaluation rate, with fractional parts under 100 lira being disregarded. Sector representatives state that the policy aims to protect the tax base of entry-level vehicles, noting that mid- and upper-segment models will remain unaffected as their proportional taxes already exceed these new minimum limits.
The new regulation introduces vehicle traction systems as a criterion for tax calculation for the first time, while granting the President authority to adjust fixed tax amounts based on various technical specifications including engine power, battery capacity, and emission values. Unverified reports suggest that the fixed tax floors of 30,000 and 100,000 Turkish lira will be subject to annual adjustments based on the revaluation rate, with fractional parts under 100 lira being disregarded. Sector representatives state that these measures aim to protect the tax base of entry-level vehicles, noting that the rule is not expected to impact mid- and upper-segment luxury car prices as their proportional taxes already exceed these new minimums.
The newly enacted regulation introduces the vehicle traction system as a novel criterion for tax calculations and grants the President authority to adjust fixed tax amounts based on various technical specifications, including battery capacity, range, and emission values. The determined minimum tax thresholds of 30,000 and 100,000 Turkish lira are expected to be subject to annual adjustments based on revaluation rates, with fractional parts under 100 lira being disregarded. While sector representatives confirm the measure aims to protect the tax base for entry-level vehicles rather than impacting mid- and high-segment prices, the omnibus law marks the first time a minimum fixed special consumption tax has been implemented in the Turkish automotive sector.
The new regulation marks a historic shift by introducing vehicle traction systems as a formal criterion for tax calculations. Furthermore, the legislation grants the President authority to establish differentiated tax brackets based on technical specifications including engine power, battery capacity, and range, while also mandating that the 30,000 and 100,000 Turkish lira minimum fixed tax amounts be adjusted annually according to the revaluation rate. Although industry representatives emphasize that these rules target entry-level vehicles and will not affect luxury or mid-segment pricing, the law allows for fractional amounts under 100 Turkish lira to be disregarded during yearly updates.
The new regulation marks a historic shift by introducing vehicle traction systems as a formal criterion for tax calculations. Furthermore, the legislation grants the President authority to establish distinct tax base groups and adjust minimum fixed tax amounts based on various technical specifications, including engine power, battery capacity, and emission values. While these minimums of 30,000 and 100,000 Turkish lira are expected to be indexed to annual revaluation rates, sector representatives clarify that the rule primarily aims to protect the tax base of entry-level vehicles, with no immediate price impact anticipated for mid- or upper-segment automobiles.
The new regulation introduces vehicle traction systems as a novel tax calculation criterion, alongside a broader presidential mandate to set minimum fixed taxes based on technical factors like engine power, battery capacity, and emission values. The minimum tax amounts, set at 30,000 and 100,000 Turkish lira, will be subject to annual adjustments based on revaluation rates, with fractions under 100 lira disregarded. While the omnibus law marks a historic first for the sector, industry representatives note that the rule primarily aims to protect the tax base for entry-level vehicles rather than impacting mid- or high-segment car prices.
