Turkey raises tax thresholds for some vehicles

Turkey raises tax thresholds for some vehicles

Turkey raises tax thresholds for some vehicles

Turkey has increased the price thresholds at which special consumption tax is imposed on some vehicles, according to the country’s official gazette, a move that will boost sales.

“The annual sales could exceed our forecast of 775,000-825,000 with the amendment,” Hayri Erce, the head of the Automotive Distributors’ Association (ODD) said, adding that prices could fall in some models and brands.

He added that any depreciation in the value of the Turkish Lira against foreign currencies could affect pricing of vehicles.

According to the presidential decree the price threshold for vehicles was raised in some lower tier tax brackets. The special consumption tax rates were kept unchanged.

Prices of vehicles worth below 320,000 liras ($37,455) could decrease between 40,000 liras ($4,680) and 53,000 liras ($6,200), the head of the Authorized Automotive Dealers Association (OYDER) said.

Shares in Turkish auto manufacturer Tofaş, Ford Otosan and automotive importer and distributor Doğuş Otomotiv were up around 1 percent at market opening while the bluechip Borsa Istanbul index (BIST 100) traded flat.

The combined sales of passenger cars and light commercial vehicles declined by 45.3 percent on an annual basis to 47,850 units in July, according to ODD data.

On the back of the July data, total automotive sales in Turkey amounted to 442,550 units in the first seven months of 2021, pointing to a 29.6 percent rise from the same period of 2020.

On a related note, the automotive industry’s shipments to foreign markets stood at nearly $2 billion in July, capturing more than 12 percent share in Turkey’s overall export revenues, the latest foreign trade figures showed.

The industry’s exports, however, declined by 9.3 percent on an annual basis from last July’s $2.2 billion, according to data from the Turkish Exporters’ Assembly (TİM).

From January to July, automotive exports amounted to $16.4 billion, accounting for 13.5 percent of the country’s exports.

In January-July last year, the sector’s export revenues stood at around $13 billion, according to data from TİM.