Türkiye has activated a special "sliding scale" system that adjusts the special consumption tax (ÖTV) on fuel products in line with changes in oil prices to prevent excessive price increases, according to a decision published in the country's Official Gazette on Thursday.
According to the decision, in the case of a surge in refinery exit prices of fuel products, the ÖTV amount can be reduced by up to 75% of the increase, and in the case of decreases in prices, it will be increased by the same rate.
The decision comes amid concerns over rising global energy prices following the U.S.-Israeli war on Iran and its aerial response targeting key infrastructure across the Gulf nations, major producers of crude and natural gas. It also aims to limit the impact of rising oil prices on inflation and to reduce their effects on citizens.
The regulation will be based on the domestic refinery exit prices used as the basis for fuel dealer sales prices announced by the Energy Market Regulatory Authority (EPDK) as of March 2.
Increases in the ÖTV rates cannot exceed the ÖTV rate applied on March 2.
"To limit the impact of geopolitical developments on the economy, we have taken an important step by prioritizing disinflation in public finances. To mitigate the impact of the oil price shock, which we consider temporary, we are temporarily activating the sliding scale system and covering up to 75% of fuel price increases through taxes," Treasury and Finance Minister Mehmet Şimşek said in a post on X.
"We will continue to support disinflation without compromising fiscal discipline," he added.
Annual inflation rate in Türkiye ticked up slightly in February to 31.5% while monthly inflation cooled to 2.96%, compared to the higher-than-expected 4.84% increase in January, official data showed earlier this week.
Brent was up 3.2% at $84.01 per barrel early Thursday, while West Texas Intermediate rose 3.6% at $77.38 per barrel, extending gains over the past week.
