Turkey tar­gets lux­ury cars with hike in spe­cial con­sump­tion tax

Kuwait Times - - BUSINESS -

ANKARA:

Turkey in­creased its spe­cial con­sump­tion tax on cars yes­ter­day, a move that will be ap­plied to all but the cheap­est mod­els in what the fi­nance min­is­ter said was a re­sponse to de­mands from the in­dus­try. Speak­ing to re­porters in Ankara, Naci Ag­bal said that no in­creases would be ap­plied to cars that cost less than 40,000 lira ($11,578). Mod­els cost­ing 40,000-70,000 lira would see a price rise of around 3 per­cent, he said.

The change, which Ag­bal said would con­trib­ute around an ad­di­tional 3 bil­lion lira to the bud­get, is seen as po­ten­tially pos­i­tive for sales of mass-mar­ket cars made in Turkey as it would drive up the cost of lux­ury com­peti­tors, many of which are im­ported. “The goal is not to ob­tain rev­enue, it is to amend the sys­tem’s bro­ken struc­ture and move to a just and new tax­a­tion sys­tem,” Ag­bal said. Un­der the cur­rent sys­tem, im­ported lux­ury cars with smaller en­gines are in the same tax bracket as mass-mar­ket mod­els, many of them made in Turkey by firms in­clud­ing Toy­ota and Re­nault, or Ford Otosan and To­fas , lo­cal joint ven­tures with Ford and Fiat. The new sys­tem will make even smaller-en­gine lux­ury cars more ex­pen­sive.

The changes will not be wel­comed by car im­porters in­clud­ing Do­gus Au­to­mo­tive, which sells brands in­clud­ing Volk­swa­gen, Audi and Bent­ley in Turkey.

“New taxes for higher-priced cars are neg­a­tive for pre­mium car sales and Do­gus could take a hit,” Oyak Se­cu­ri­ties said in an e-mailed note. “For Ford Otosan and To­fas, the neg­a­tive im­pact would be softer as pas­sen­ger car do­mes­tic sales have a smaller share in their to­tal sales and light com­mer­cial ve­hi­cle tax rates will stay un­changed,” it said. Ford Otosan and To­fas both ex­port mod­els pro­duced in Turkey as well as sup­ply­ing the do­mes­tic mar­ket. — Reuters

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