Turkey Halts Plans for New Taxes on Stock and Crypto Investments Amid Market Concerns

• Turkey halts tax plans on stock and crypto investments to calm investors and market concerns.
• Treasury hinted earlier that taxes on stock market profits were reconsidered due to public backlash.
• Turkey remains the largest crypto market in the MENA region, with over $136.8B in transactions.

Turkey has officially decided to halt plans for new taxes on stock trading and cryptocurrency profits, a move aimed at calming investors’ concerns. Vice President Cevdet Yilmaz confirmed this decision, emphasized that taxing stock market profits is no longer on the government’s agenda. 

This change in direction is expected to restore confidence among investors, especially given the recent decline in trading volume on Turkey’s stock exchange. Notably, daily trading volume has fallen to $2.3 billion in the past month, down from $4 billion earlier this year.

Turkey is grappling with high inflation, currently at 52%, and is working to implement strategies to control it. The government aims to bring inflation down to single digits within the next three years. To achieve this goal, officials are focusing on narrowing tax exemptions rather than introducing new taxes. 

Moreover, public spending has increased, partly due to recovery efforts following recent earthquakes and pre-election expenses. Yilmaz highlighted that significant improvements have already been made in managing public finances.

Additionally, Turkey is also considering easing offshore swap regulations, which have restricted the flow of Turkish lira abroad. These regulations were initially put in place to prevent investors from betting against the national currency.

According to Yilmaz, loosening these rules will be a possibility when conditions allow, a decision closely watched by global investors.

Despite the challenges, Turkey has emerged as a leader in cryptocurrency adoption. Between July 2023 and June 2024, Turkey processed $136.8 billion in crypto transactions, making it the largest crypto market in the MENA region and the seventh-largest globally. 

Furthermore, stablecoin trading has been particularly popular, with nearly $6 billion worth of purchases made using Turkish lira in March 2024 alone.

Turkey has taken measures in recent months to try to bring some sort of order to the rapidly growing crypto industry. New changes to the Capital Markets Law relate to crypto assets and crypto asset service providers (CASPs) to set legal requirements.