The Turkish government has recently announced that it will not impose taxes on profits from cryptocurrency and stock trading. This decision was confirmed by Vice President Cevdet Yilmaz, who stated that there are no plans for a new tax package this year.
Earlier discussions about taxing these profits have been dropped from the government’s agenda. Instead, the focus will be on narrowing existing tax breaks as part of a broader economic strategy.
This move is seen as a way to reassure investors, especially since trading volumes on Turkey’s stock exchange have significantly decreased. The government aims to stabilize the economy while reducing inflation, which currently stands at around 52%. By not taxing crypto gains, Turkey hopes to foster a more attractive environment for investors in the digital asset market.
Previously, there were proposals to tax cryptocurrency earnings as part of efforts to increase government revenue, but these plans have now been shelved. This decision aligns with Turkey’s ongoing efforts to create a supportive regulatory framework for cryptocurrencies while encouraging investment in the sector.
Globally, the taxation of cryptocurrencies has varied widely from country to country. Many governments are starting to introduce rules to tax crypto transactions, but the level of enforcement and compliance differs significantly.
Crypto tax reporting varies by country. In Finland, many investors report earnings, while few in the Philippines do. India and France impose a flat 30% tax on crypto earnings. Japan taxes crypto profits between 5% and 45%, plus a 10% local tax.
Malta and Portugal are appealing, with Malta offering tax breaks and Portugal imposing a 28% tax on short-term gains. Switzerland treats cryptocurrencies as assets for better tax treatment, and Germany has no capital gains tax for holdings over a year.
In the U.S., the IRS views cryptocurrencies as property, subjecting them to capital gains tax, but only about 1.62% of investors reported their earnings in 2022.
Countries are also adapting their tax rules to account for new types of digital assets and practices, such as tokenized real-world assets. As regulations evolve, more countries are likely to implement clearer guidelines for taxing cryptocurrencies, which could lead to increased compliance among investors.
At the beginning of January, Mehmet Şimşek, the Minister of Treasury and Finance, announced the Turkish government’s intention to introduce new legislation aimed at defining crucial terms in the crypto sector, licensing trading platforms, and ensuring adherence to FATF guidelines.
During a January 10 interview, Minister Şimşek disclosed that Turkey is nearing completion of its crypto regulatory framework, with the team fine-tuning the technicalities of implementation. He stressed that the primary focus is on safeguarding investors and curbing risks in crypto transactions, all while aligning with international norms.
“Therefore, we are taking steps to reduce the risks of parties trading with crypto assets in our country, similar to international practices. This is also within the scope of FATF to get out of the gray list”, he added.
