In the last quarter of 2016, the Turkish government changed the Special Consumption Tax on vehicle prices. The change resulted in higher prices, which has negatively affected vehicle sales – predicted to be around 10% lower in 2017 than in the previous year. But this fiscal cloud has a silver lining for the fleet industry.
Turkey has two types of vehicle taxes. The first type are indirect taxes, paid as part of the purchase process. They include the Value-Added Tax and the Special Consumption Tax (SCT). The second type is an annual circulation tax, also known as the motor vehicle tax, and payable by the owner.
The SCT, levied by the government on certain expensive goods, is payable only before the first registration of the vehicle. A change in ownership does therefore not lead to another SCT. The SCT is payable by the seller, who of course passes on the cost to the buyer of the vehicle.
The amount of the SCT depends on the type, engine size and sales price of the vehicle in question. As of 25 November 2016, the Turkish government has adapted the SCT rates, leading to higher vehicle prices.
→ For cars with an engine capacity below 1600 cc, the tax rate is 45% (for cars with a sales price up to TRY 40,000), 50% (from TRY 40,001 to TRY 70,000) and 60% (higher than TRY 70,000).
→ For cars with an engine capacity between 1600 cc and 2000 cc, the tax rate is 100% (for cars with a sales price up to TRY 100,000) and 110% (higher than TRY 100,000).
→ For cars with an engine capacity over 2000 cc, the tax rate is 160%
Broadly similar SCT rates apply to hybrid vehicles, and lower ones to other categories, including:
→ Electric cars pay 3% under 85 kW, 7% up to 120 kW and 15% over 120 kW.
→ LCVs pay 15%, unless they're electric, in which case it's 10%.
→ Motorcycles pay 8% under 250 cc, and 37% over it. Unless they're electric, in which case it's 3% under 20kW and 37% over it.
→ The rates are in the single digits for trucks, buses and golf-carts.
In a separate measure, the Turkish government exempted a number of categories from the SCT until mid-2019: i.e. the replacements of taxis, mini and midi buses, shuttles and coaches used in urban transport; and trucks, pickups and rigs used in commercial cargo transport. Also: the sale of motor vehicles to the children or spouses of martyrs, or their parents if they were not married or had children.
The SCT can make it very expensive to purchase a car. For example, a car with a sales price of TRY 90,000 and an engine of 1800 cc will cost, after the addition of the Value Added Tax and the Special Consumption Tax, no less than TRY 212,400. For comparison: that is the difference between a sticker price of €22,550 and a final price of €53,215.
The two main effects of this law are therefore: that consumers and companies tend to prefer vehicles with less than 1600 cc – and especially less than 2000 cc, and that more and more consumers and companies are considering leasing as an option to avoid the higher purchasing total of cars above 1600 cc and 2000 cc.
Hybrids are a bit cheaper in some cases. Pure electric vehicles may get a boost from their lower SCT rates, but the lack of infrastructure could delay any positive effects.
It is no coincidence that the country's most popular car, the Fiat Aegea (pictured), produced in Turkey, has an engine capacity of just under 1600 cc.
| 24/05/2017 | Frank Jacobs