On 27 September 2017, Naci Ağbal, the Ministry of Finance, announced the following tax increases during the Medium Term Program meeting (2018-2020):
- A new legislative proposal increasing corporate income tax from 20% to 22% for the finance sector will be submitted to the Turkish Parliament.
- Undistributed dividends will be subject to 1% withholding tax.
- The corporate income tax exemption for income derived from the transfer of immovables held by legal entities for more than two years will decrease from 75% to 50%.
- The third bracket in the personal income tax tariff will increase from 27% to 30% as of 2018.
- The motor vehicle tax for passenger cars will increase by 40%. As of 1 January 2018, a new motor vehicle tax variable will be introduced to the tax calculation. The current calculation considers only the engine capacity, wherein the new calculation will also consider the passenger cars’ values. Accordingly, the tax will increase by 10% to 20% depending on the car’s value.
- The tax imposed on income derived from chance games and drawings will increase from 10% to 20%.
We expect that new legislative and regulatory amendments concerning the Ministry of Economy’s announcements will be introduced shortly.
