A new bill, signed by AK Party MPs and submitted to the Turkish Grand National Assembly, aims to completely reshape the taxation regime for crypto assets. The bill introduces both a transaction-based tax and a withholding tax on gains from crypto assets. According to AA, the most striking aspect of the regulation is the introduction of a "crypto asset transaction tax." Accordingly, crypto asset sales and transfer transactions carried out or brokered by crypto asset service providers will be subject to a new tax. The taxable event will occur at the time of the sale or transfer of the crypto asset; the taxpayer will be the platforms themselves.
A 0.0003% tax on crypto transactions
The transaction tax will be calculated at a rate of 0.0003% of the market value at the time of sale or transfer. No deductions or expenses will be allowed from the tax base. The transaction tax for one month must be declared to the relevant tax office by the evening of the 15th day of the following month and paid within the same period. In practice, the definitions of crypto assets, wallets, and platforms will be based on the Capital Markets Law. The President will have the authority to reduce the determined rate to zero or increase it up to five times, separately or jointly, according to transaction types. The authority to determine the procedures and principles of the regulation will be given to the Ministry of Treasury and Finance. These provisions will enter into force at the beginning of the second month following the publication of the regulation in the Official Gazette. The proposal is not limited only to transaction tax. With the article titled "Taxation of Crypto Assets" to be added to the Income Tax Law, it is foreseen that a 10% tax withholding will be applied to the gains and income obtained from transactions carried out on platforms subject to the Capital Markets Law. This withholding will be applied by the platforms on a quarterly basis. Whether the investor is a real or legal person, whether they are a full or limited taxpayer, or whether they are exempt from tax will not change the withholding application. In cases where purchases of the same crypto asset are made on different dates and some are sold, the cost basis will be determined using the "first in, first out" method. Commissions paid during buying and selling, as well as transaction tax, will also be taken into account in calculating the withholding tax base. If multiple transactions are made for the same type of crypto asset within the withholding period, these transactions will be considered as a single transaction. Losses can be offset against the withholding tax base of subsequent periods, provided that the calendar year is not exceeded. In inter-platform transfers, the purchase price and purchase date information will be reported to the new platform; if the asset is transferred to a platform for the first time, the investor's declaration will be taken as the basis, provided that it is substantiated. Individuals will not be required to file separate annual or individual tax returns for income subject to withholding tax. These incomes will also not be included in the annual tax return filed for other incomes. However, income obtained within the scope of commercial activity will be evaluated according to the provisions of commercial income, and taxes paid through withholding can be offset against the tax calculated in the annual tax return.
Declaration Obligation for Foreign Platforms
Income from transactions conducted outside of platforms subject to the Capital Markets Law will be declared with the annual income tax return. Losses arising from crypto asset transactions can only be offset against gains from these assets.
The proposal also includes provisions to include gains from the disposal of crypto assets within the scope of capital gains; and to consider gains from the sale of crypto assets included in a commercial enterprise as commercial income. On the other hand, with another amendment to the Income Tax Law, advertising and promotional expenses related to all kinds of games of chance and betting will not be accepted as deductible expenses in determining commercial income.
The new regulation establishes a framework that will directly affect both transaction costs and tax compliance processes in the crypto ecosystem. The proposal is expected to be finalized and the legislative process completed after discussions in the parliamentary committees.
