A recent legislative proposal to fix the Special Consumption Tax (SCT or ÖTV in Turkish) rate at 80% for vehicles with engine sizes up to 1600 cc has raised questions in Turkey.
What is Changing?
In Turkey, the most significant tax affecting car prices is the Special Consumption Tax (ÖTV). This tax is added to the car’s base price, and then a 20% Value Added Tax (VAT) is applied on top of the ÖTV-inclusive price.
The AK Party’s new proposal suggests eliminating the tiered SCT system (which ranged from 45% to 80%) and setting a flat 80% rate for all passenger vehicles with engine sizes up to 1600 cc. However, in practice, most vehicles were already taxed at 80% due to outdated tax brackets.
Will Vehicle Prices Change?
Since the current practice already involves applying the 80% SCT on most sub-1600 cc vehicles, prices for these cars will remain largely unchanged. While the legislative change is mostly formalizing the existing reality, speculative market rumors have caused some volatility in the used car market. However, with demand already sluggish, price hikes in used cars may not be accepted by consumers.
Which Vehicles Will Become More Expensive?
- Hybrid vehicles with engine sizes of 2000 cc and above will be impacted. Their SCT rate will rise from 130% to 150%, potentially increasing their prices by around 30%, since the VAT is calculated after the SCT.
- Luxury pick-up trucks—which have become popular due to low SCT rates of 4–15%—will see the biggest increases. These will now be taxed at 50% SCT.
Example: Luxury Pick-Up Price Hike
- Base price (pre-tax): 2.3 million TL
- Current SCT (15%): 92,000 TL
- New SCT (50%): 1.15 million TL
- New price without VAT: 3.45 million TL
- VAT (20%): 690,000 TL
- Final price: 4.14 million TL
This means the total price increase will exceed 42%, drastically changing the appeal of luxury pick-ups in the Turkish market.
Conclusion
While the SCT change won’t affect small-engine vehicles already taxed at 80%, hybrid vehicles over 2000 cc and luxury pick-ups will see significant price hikes—potentially making them less attractive to buyers in the near future.
