Turkey raises tax on cars but lifts lower rate thresholds

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Turkey increased its special consumption tax on mid-range and expensive cars on Sunday, but also lifted the lower thresholds at which the duty is imposed, meaning that more vehicles could be taxed at unchanged lower rates.

A statement in the official gazette said the lower-tier tax brackets, which cover the bulk of the car market, were increased by 15,000 lira ($2,045) and 10,000 lira ($1,360), with tax rates remaining at 45 percent and 50 percent.

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Taxes for all other cars, overwhelmingly imports, were increased by between 20 and 60 percentage points. VAT on all car purchases remained unchanged at 18 percent.

After contracting by 50 percent in two years as the lira depreciated, interest rates rose and consumer confidence fell, Turkey's car market bottomed out last year. Sales increased
sharply this year due to falling interest rates and deferred consumer demand over the past two years.

In a separate announcement, VAT on private schools was cut from 8 percent to 1 percent.

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