Turkish Tax News
Nazmi KARYAĞDI
15 September 2020Nazmi KARYAĞDI
232READS

A Tax Revolt at Authorized Luxurious Automobile Dealers in Turkey

Last night I got an email containing the following news from Turkey’s biggest luxurious automobile distributers (which include (Audi, BMW, Ferrari, Jaguar, Jeep, Lamborghini, Land Rover, Maserati, Mercedes-Benz, Mustang, Porsche …)

“On the 30th of August, cars that belong to the high-class and have a motor of 3000 cm3 that are in the auto showroom are locked to humans!”

Apparently, these cars cannot be unlocked using the remote car keys. So, the companies tried changing the battery of the remote key or even changing the key itself but the issue cannot be solved.

Therefore, I decided to investigate a possible solution to this problem.

“A lock has been put on the luxurious market of cars” is not just a figurative statement anymore, these cars had actually locked themselves to potential buyers.

I had a flash back about an article I read on the MIT Technology Review which stated that it takes more software coding strings needed for the coding of luxurious cars compared to coding the software for an airplane.

My initial thought was, this issue might be regarding the cars’ software. However, because all types of cars from different manufacturers had the same issue, this cannot be the case.

When I contacted these manufacturers, which are mostly originated in Germany, they stated, it’s the first time a problem like this had occurred. Also, they haven’t gotten a serious complaint from customers leading to this issue. 

Which made me wonder, was 30th of August a special day? Was a cyber-attack taking place? Was there a retrograde? Or was there a stream of meteors rushing to our atmosphere? However, none of these scenarios were the case.

I decided to look through news within the last 2 weeks regarding luxurious cars and I stumbled across a ruling made on the 30th on the Official Gazette. The ruling was about the Excise Tax (Special Consumption Tax) being increased for luxurious cars.

According to the ruling, automobiles motors with a cylindrical capacity over 2000 cm3 will be going through the following changes:

  • Cars that are priced below 170.000 Turkish Lira without tax, will have an increase in their tax from 100% to 130%
  • Cars priced above 170.0000 Turkish Lira without tax, will have an increase in their tax from 110% to 150%
  • And for “others” the tax will be increased from 160% to 220%.

Turkey is one of the rare vehicle sales in the country where the high Special Consumption Tax (SCT). First acquisition is the event causing to tax for vehicles subject to entry and registration such as cars, buses, trucks, motorcycles, airplanes, helicopters, ships and yachts. According to the law, land, sea and air vehicles are subject to special consumption tax at different rates. The SCT rate for automobiles ranges from 10% to 220% of the tax-free sales price. It varies between 3% and 15% in fully electric cars.

Meanwhile scrolling through Twitter, I came across my fellow college’s post stating “For car motors with cylindrical capacity of 2001 cm3 and above have….”

According to this, a car such as Mercedes-Maybach S-Class, that has a list price of 1.1470.000 TL (without tax included) will be sold at 4.348.000 TL. In other words, you will be getting the key to your brand new vehicle at this updated price. But here’s the issue, your key doesn’t work, the car already locked itself, which is still the unsolved quest of our discussion. (1 $= 7,4622 TL as of September 7, 2020)

However, this story takes a turn when an authorized dealer from Ankara calls me. They said they have plugged one of the cars to a computer to understand the issue and came across a message popping up on the screen which read:

“No taxation without representation” “Keine Besteuerung ohne Vertretung”

This slogan contained the core ideology of the Boston Tea Party which was America’s protest against Great Britain 17th of December 1773.

From this I understood that these smart cars in Turkey have formed a unity to protest against the tax changes happening in Turkey and they demand to have their right of representation.

The solution to the problem regarding these cars is still unknown however, from what I’ve heard the automobile importers and Turkish Automotive Distributers’ Association have requested an appointment from Turkish Revenue Administration.

I’m eager to hear what will come out of that meeting.

(Author’s note: This article is not science fiction, it is a tax fiction)

(* Founding Partner at Yeni Ekonomi Danışmanlık A.Ş.-New E-conomy Consulting in Turkey)

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