Turkey might very well be described as a sanctuary for those trading in cryptocurrency, though this status may not last much longer. The Turkish government has proclaimed that starting in 2024, individuals engaging in virtual asset transactions will be subject to taxation, though this is not the first instance such intentions have been voiced.
Turkey’s tax system adheres to a simple rule: every potential source of income, be it monetary or in-kind, needs to be declared, evaluated, and taxed.
However, cryptocurrencies present a conundrum as they are not yet legally recognized within the country. Periodically, we hear whispers and announcements about potential crypto taxation, and recent statements reveal that the Ministry of Finance, in collaboration with the Capital Markets Board, is actively working to address this issue, with solutions seemingly on the horizon. This progress was confirmed on October 25th with the publication of the "Decision on the Approval of the 2024 President's Annual Plan (No. 7739),". Within it, you can find the following: “Efforts will be made to define these digital virtual assets within the Turkish legal system for the purpose of their taxation.”
Currently, cryptocurrencies inhabit a gray area in the regulatory landscape. They aren’t banned outright, yet they lack official recognition and legal protection from Turkish authorities.
Article 37 of the Income Tax Law asserts that revenues from all commercial and manufacturing activities are taxable, classifying them as commercial income. Yet turkish tax legislation does not acknowledge cryptocurrencies as assets, hence making it currently unfeasible to impose taxes on activities like trading, mining, staking, or NFT sales.
This intricate legal situation has led to a significant influx of cryptocurrency exchanges establishing their presence in Turkey. The country now proudly stands as the leader in transaction volumes across the Middle East, boasting a staggering $34.91 billion in trades within the first half of 2023 alone. Impressively, more than half of the adult population there now invests in digital assets.
Notable names among Turkey's thriving exchanges include:
- WhiteBIT
- Binance
- Huobi
- ByBit
- Bitget
- Poloniex
- KuCoin
- OKX
- MEXC
- Bitmex
And a dozen of smaller-scale platforms.
The correlation between the increasing inflation of the Turkish Lira and the growing interest in cryptocurrencies is evident, as people seek refuge for their assets in the digital domain. Even though local regulatory bodies have put a ban on operations of platforms opened by residents of the country, several local crypto exchanges such as CoinTR, BtcTurk PRO, Paribu, and Bitexen persistently continue their services, with the fiscal authorities turning a blind eye to these activities.
Furthermore, CoinTR has made a bold move, announcing its plans to recruit government officials for high-ranking positions within the company. This trend of ex-government financiers embracing such opportunities suggests that the anticipated cryptocurrency regulation laws in Turkey might not be overly restrictive.
Given the country’s challenging economic climate, the government is treading carefully, aiming not to scare off crypto companies from the Turkish market.
