Turkey: Turkey increases special consumption tax on alcohol and tobacco by 47.4%

The Special Consumption Tax (ÖTV) levied on alcoholic beverages and tobacco products in Turkey has been increased by 47.4 percent. That being the case, the amount of tax to be paid for a pack of cigarettes has been increased from 9.76 to 14.39 lira, the Bianet reported on January 3.

The List of Special Consumption Tax (ÖTV) updated based on the Domestic Producer Price Index has been published on the website of the Revenue Administration of the Ministry of Treasury and Finance.

According to the updated list of the Administration, the minimum fixed amount of Special Consumption Tax to be levied on alcoholic beverages and tobacco products has been increased by 47.4 percent, which accounts for the 6-month change in the Domestic Producer Price Index.

While the amount of Special Consumption Tax on beer has been increased from 2.39 to 3.52 lira, the tax on wine has been increased from 11.76 to 17.34 lira and that on sparkling wine from 79.50 to 117.19 lira.

Tax specialist Ozan Bingöl has commented on the increasing Special Consumption Tax on his social media account briefly as follows:

"The Special Consumption Tax on a litre of rakı has increased by 47.4 percent from 326.99 lira to 481.98 lira. This situation no longer has anything to do with protecting public health. An income-oriented taxation attitude has formed; the Special Consumption Tax levied on alcohol has even stopped being a tax policy tool and has turned into an interference with lifestyle."

Sharing details about the calculation of the Special Consumption Tax, Bingöl has indicated that with the recent increase, 216.89 lira of tax will be collected from a liter of rakı with 45 percent of alcohol.

When cigarettes are concerned, unlike alcoholic beverages, the Special Consumption Tax is calculated both as a minimum fixed tax and a fixed tax. Accordingly, with this recent increase in taxation, the minimum fixed tax has been increased from 0.48 to 0.7197 lira for a pack of cigarettes and the fixed tax has been increased from 0.48 lira to 0.7150 lira.

That being the case, the tax to be levied on a pack of cigarettes has increased from 9.76 lira to 14.39 lira. In other words, regardless of the price of cigarettes, 14.39 lira will be levied as tax with an increase of 4.36 lira. The minimum price of a pack of cigarettes will be 22.85 lira.

Alcoholic beverages and tobacco products account for 4.88 percent of the inflation index and 4.57 percent of this rate is that of cigarettes.

In the past five years, the weight of cigarettes and alcoholic beverages in the inflation index has changed as follows:

2017 - 5.87 percent
2018 - 5.14 percent
2019 - 4.23 percent
2020 - 6.06 percent
2021 - 4.88 percent

How much the prices of alcoholic beverages and tobacco products affect the inflation rate is as follows:

Rakı - 0.1065 percent
Scotch - 0.0209 percent
Wine - 0.0264 percent
Beer - 0.1572 percent
Cigarettes - 4.5656 percent
It remained unchanged in July-December

As per a Presidential decision published in June, the Special Consumption Tax (ÖTV) levied on cigarettes and alcoholic beverages remained unchanged in the period of July-December 2021.

With this decision, the Article 12 of the ÖTV Law, which foresees that the ÖTV shall be set every January and July based on the changes in the produce price index shared by the Turkish Statistical Institute (TurkStat) in the past 6 months, was not implemented in July-December.

However, such a Presidential decision was not released before this January. If no such decision is issued, the increase of 47.4 percent set for the January-June 2022 period will remain in force.

03 January, 2022