The effects of a cryptocurrency around the world are of great interest to Turkey. Turkey, which leads the use of cryptocurrency Bitcoin, ranks fourth in the world and first in Europe. The number of cryptocurrency investors has exceeded 1 million. The government is preparing to impose a ‘tax’ on Bitcoin and similar cryptocurrencies, which will bring huge profits in the short term. However, experts who spoke to DW Turk point out that there is still no generally accepted practice in the world regarding taxation. According to experts, high taxes on cryptocurrency trading may also weaken investors’ interest in the cryptocurrency market.
It rose to $ 58K in February
Cryptocurrencies are used by tens of millions of people around the world, especially young investors. The cryptocurrency market, which is experiencing a particularly sharp rise and fall, attracts investors who want to make big profits in the short term. If in February last year the price of 1 Bitcoin was $ 8,500, today 1 Bitcoin has exceeded $ 50,000. In other words, the price of Bitcoin, the most sought-after cryptocurrency, has gained more than 500 percent in the last 12 months. Bitcoin has shown a downward trend in recent days after rising to $ 58,000 in February. However, expectations that the price of Bitcoin will rise further are maintained. According to a report by international consulting firm JP Morgan, the price of Bitcoin could rise to $ 146,000 in the long run.
There are various tax applications in the world
Different methods are used in the world in terms of taxes on cryptocurrencies. For example, in the United States, cryptocurrency owners are subject to income tax, while in Germany, values below 600 euros are not taxed. Malta, Portugal, Hong Kong and Singapore are also tax-free. In South Korea, work has begun to collect 20 percent tax on profits. There is no legal or regulatory framework, including tax legislation related to cryptocurrencies in Turkey. According to the New Economic Program (NEP) published in the Official Gazette in late September, this situation will change in the coming period. Tax regulations will be implemented between 2021 and 2023 in the “acquisition, purchase and transfer” of crypto-financial assets.
How will the tax regulation be implemented in cryptocurrency trading?
EY (Ernst & Young) Turkey Abdulkadir Kahraman Tax Office Partner
EY (Ernst & Young) Abdulkadir Kahraman, Partner of the Turkish Tax Administration, said that cryptocurrencies will not be the only tax-related regulation. Before taxes, the Capital Market Law and Payment Systems Laws need to be amended, Kahraman said, ‘First, a bill will be prepared. This bill will cover not only taxes but also other legislation, ”he said.
“There is uncertainty about taxes”
However, it is not clear what conditions will be imposed on the taxation of cryptocurrencies in this period. Abdulkadir Kahraman notes that income tax on cryptocurrencies can be taxed or directly through taxes. On the other hand, there is uncertainty as to which method will be used in the category of indirect taxes for cryptocurrency trading. For example, it is not clear whether it will be subject to Value Added Tax (VAT) or the purchase and sale of these assets. When we look at the European Union, we see a ruling by the European Court of Justice that VAT cannot be applied to the purchase and sale of cryptocurrencies. For this reason, there is no indirect tax in the EU.
Turkey, first in Europe
The World Economic Forum (WEF) has announced the countries that use the most cryptocurrencies in the world in a study. According to the statement, Nigeria is the country with the largest population of cryptocurrencies, followed by Vietnam and the Philippines. If there is a fourth Turkey in the list. With more than 1 million cryptocurrency users, Turkey ranks fourth in the world and first among European countries.
So why is there so much interest in seeing crypto coins in Turkey?
Financial Innovation and Technology Association (FINTR) Blockchain and Crypto Money Working Group President Elchin Karatay
According to Elchin Karatay, head of the Blockchain and Cryptocurrencies Working Group of the Association for Financial Innovation and Technology (FINTR), cryptocurrencies are technology-based and provide high incomes, especially among young people. “This is one of the most important reasons for these people to have stronger technological literacy. Interest in cryptocurrencies,” said Karatay, who said the Generation Y, born in 1981-1996, was more visible than people who traded in cryptocurrencies.
“High taxes can reduce interest rates”
Messenger Karatay says that crypto-currency trading intermediaries in Turkey are not regulated, so it is not possible for many to have access to transparent and comprehensive information in the market. On the other hand, Karatay says that the volume of daily transactions will exceed $ 1 billion by 2021, and it is possible to obtain information that more than 1 million people use cryptocurrency. Defenders that the cryptocurrency in Turkey is so high that this tax can not be applied to investors, Karatay, ‘Higher taxes for investors who want to generate income, buying only through sales, can complicate the tax declaration process,’ he said.
“The existence of the state is growing”
Faruk Fatih Ozer, founder and CEO of THODEX
On the other hand, there are those who think that the cryptocurrency tax will not reduce investor interest, but rather increase it. Faruk Fatih Özer, founder and CEO of the Bitcoin trading platform thodex, points out that about 25 million young people in Turkey, and especially the traditional Y and X generations, are turning to alternative investments. Contrary to popular belief, the cryptocurrency tax will not reduce investor interest rates, Özer said, ‘If the state starts collecting taxes on cryptocurrency trading, the state’s presence in cryptocurrencies will increase with taxation. This helps to dispel negative perceptions about cryptocurrencies, that is, an uncertainty about the future. “
ECB: It should not be seen as a currency
European Central Bank (ECB) President Christine Lagarde recently announced a new regulation on cryptocurrencies. Warning investors about cryptocurrencies, Lagarde stressed that cryptocurrencies, which have recently been in high demand, are highly ‘speculative’ and should not be seen as ‘currencies’.
Aram Ekin Duran
© Deutsche Welle Turkish