Turkey raises taxes to discourage car imports amid virus slump

ISTANBUL: Turkey increased taxes on most imported cars, a step that aims to ease the deterioration in foreign trade caused by the Covid-19 pandemic.

For most cars with engine capacity of 1,600 cubic centimetres — the majority of automobiles Turkey imports — the so-called special consumption tax was raised to 80% from 60%, according to a presidential decree published in the Official Gazette on Sunday.

For electric cars with capacity of more than 2,000 cubic centimetres, the rate was raised to 130% from 100%, and high segment cars will jump to 220% from 160%.

“Turkey has once again the highest automobile taxes in the world,” according to Erol Sahin, general manager of automotive consultancy firm EBS here.

Although the hikes don’t apply to locally produced cars, domestic producers may find it difficult to benefit as they also rely on imported goods for much of their supplies, Sahin said.

The measures follow a series of tax increase that Turkey announced since the beginning of the pandemic to discourage imports while supporting domestic industries.

The global economic slump has hit Turkey’s main export destinations like the European Union, while a slowdown in tourism amplified the deterioration in the government accounts. Turkey posted its seventh straight current-account deficit in June, when year-to-date car imports totalled US$5.2 billion, up 16% from 2019.