Türkiye has decided against implementing an additional tax package this year, including a levy on profits from stock trading or cryptocurrency transactions, according to Vice President Cevdet Yılmaz.
“We don’t have a stocks tax on our agenda. It was discussed previously and fell from our agenda,” Yılmaz told an interview with Bloomberg News on Monday. He added that officials would now focus on "narrowing" tax exemptions.
Earlier in the year, initial discussions about taxing gains from stock market investments, which many use as a hedge against inflation, caused a dip in equities. Treasury and Finance Minister Mehmet Şimşek announced in June that the proposal would be “reevaluated” at a later date.
Yılmaz’s remarks are expected to ease concerns for stock investors.
Data from Bloomberg showed that the trading volume on the country’s main stock has dropped to $2.3 billion (TL 78.52 billion) in the last month, down from over $4 billion earlier in the year.
Restoring public finances is a key goal in Türkiye's economic strategy, aimed at reducing inflation to single digits from its current rate of 52% within three years.
Investors are closely monitoring government plans to curb spending, especially after last year's surge in expenditures, mainly due to the devastating earthquakes that struck the country's southeastern region.
Yılmaz noted a “serious improvement” in the ratio of public spending to national income.
Among others, the vice president said offshore swap regulations, which limit lira liquidity abroad to deter short-selling, will be lifted "when the conditions are right."
The government initiated a study on reopening swap channels but has not announced any progress yet.
"We consider our financial stability very important here, and a prudent approach is being taken. In other words, I think that these studies will be completed on a schedule that will not harm us," Yılmaz said.
He also said there may be "short-term challenges" in balancing economic growth and inflation, but “in the long run, they are not contradictory.”
"If you pursue consumption-weighted, domestic demand-focused growth, it becomes inflationary. However, if you achieve investment, production, export-oriented and external demand-driven growth, it will not be inflationary. One of the most important elements of our policies is this balanced growth," he noted.
Asked about whether the lira is overvalued, Yılmaz said: “It is natural in countries fighting inflation for their currencies to strengthen.”
"Many debates are taking place, but the numbers are clear. How does this appreciation of the Turkish lira reflect on our macroeconomic balances? Our exports are increasing, imports are decreasing, service revenues are rising, and our current account balance is improving," he noted.
"As inflation continues to decline, these debates will naturally fade away."
The government will review inflation accounting’s impact on investments and decide how it will continue to be applied for next year, Yılmaz also said.
