Cryptocurrency Market and Tax Regulations in Turkey: an Analysis in the European Emerging Economy

Burcu Zengin; Sahnaz Kocoglu

doi:10.18778/2391-6478.3.35.06

Authors

Burcu Zengin Ankara Hacı Bayram Veli University Turkey, Faculty of Economics and Administrative Sciences, Department of Business Administration https://orcid.org/0000-0001-5275-6748
Sahnaz Kocoglu Ankara Hacı Bayram Veli University Turkey, Faculty of Economics and Administrative Sciences, Department of Business Administration https://orcid.org/0000-0002-2061-1242

DOI:

https://doi.org/10.18778/2391-6478.3.35.06

Keywords:

cryptocurrency, bitcoin taxation, tax law, Turkish law

Abstract

The aim of the article: The purpose of this study is to provide a thorough review of the current state of cryptocurrency market and how governments perceive and deal with the threats and opportunities brought by the block chain technology. Cryptocurrencies were certainly the most popular investment in the last decade with a skyrocketing trading volume. However, cryptocurrency abilities in money laundering, financing terrorism and tax evasion overshadow the great opportunities and potential of this new technology. Therefore, the major economies in the world have been working on an efficient and effective strategy to control and tax the cryptocurrency market. In this study, the current state in Turkey regarding cryptocurrency taxation is analysed and a tax system is proposed. The authors claim that the Tobin tax, or in other words, low tax rates would be the best tax system to be applied in Turkey.

Methodology: The study is based on a detailed literature review on the subject, academic papers, news releases and legal acts of the USA, Europe and Turkey. Different attitudes of varied groups are discussed and proposed solutions in the subject are being considered.

Results of the research: Cryptocurrency market has a great potential and block-chain technology is full of opportunities. However, it is essential to control this market without harming the appeal of cryptocurrencies, yet this is not an easy task. Therefore, we argue that Turkey should extend the usage of cryptocurrencies, create a tax strategy with low tax rates and we claim that a regulation similar to the Tobin tax application would be effective here.

Downloads

Download data is not yet available.

References

Akins, B. W., Chapman, J. L., & Gordon, J. M. (2014). A whole new world: Income tax considerations of the Bitcoin economy. Pitt. Tax Rev., 12, 25.
Google Scholar DOI: https://doi.org/10.5195/taxreview.2014.32

Aramonte, S., Huang, W., Schrimpf, A. (2021). DeFi Risks and Decentralisation Illusion. BIS Quarterly Review. December 2021, pp. 21–36.
Google Scholar

Bloomberght (2017). Maliye, SPK, Merkez Bankası Bitcoin’i gözaltına aldı https://www.bloomberght.com/haberler/haber/2078046-maliye-spk-merkez-bankasi-bitcoini-gozaltina-aldi [Accessed 02.03.2022]
Google Scholar

Bloomberght (2021a). Merkez Bankası'na göre Türkiye'de kripto paraların 9 riski https://www.bloomberght.com/merkez-bankasi-na-gore-turkiye-de-kripto-paralarin-9-riski-2281193 [Accessed 02.03.2022]
Google Scholar

Bloomberght (2021b). Dijital Türk Lirası https://www.bloomberght.com/dijital-turk-lirasi-2022-de-uygulamaya-konacak-2290731 [Accessed 03.03.2022]
Google Scholar

BRSA. (2013). 25 November 2013 Statement https://www.bddk.org.tr/Duyuru/EkGetir/510?ekId=530 [Accessed 02.03.2022]
Google Scholar

Capital Markets Law (2007). Capital Markets Board of Turkey, Capital Markets Law No. 2499 https://www.cmb.gov.tr/Sayfa/Dosya/64 [Accessed 01.03.2022].
Google Scholar

CBRT (2021). 16 April 2021 ödemeler alanına ilişkin basın duyurusu https://www.tcmb.gov.tr/wps/wcm/connect/tr/tcmb+tr/main+menu/duyurular/basin/2021/duy2021-17 [Accessed 05.04.2022]
Google Scholar

Çelen, M. (2018). Türk Vergi Mevzuatına Göre Paraların Vergilendirilmesi. Bilimevi İktisat Dergisi. Blok Zinciri Ekonomisi ve Kripto Paralar. Yıl 1, Sayı 2, İstanbul.
Google Scholar

CFTC (2019). An Introduction to Virtual Currency https://www.cftc.gov/sites/default/files/2019-12/oceo_aivc0218.pdf [Accessed 02.04.2022].
Google Scholar

Chen, Y. and Bellavitis, C. (2020). Blockchain Disruption and Decentralized Finance: The Rise of Decentralized Business Models. Journal of Business Venturing Insights. Volume 13, pp. 1–8.
Google Scholar DOI: https://doi.org/10.1016/j.jbvi.2019.e00151

Choo, K. K. R. (2015). Crypto currency and virtual currency: Corruption and money laundering/terrorism financing risks?. In Handbook of digital currency (pp. 283-307). Academic Press.
Google Scholar DOI: https://doi.org/10.1016/B978-0-12-802117-0.00015-1

CMB (2018). Sermaye Piyasasi Kurulu Bülteni. https://www.spk.gov.tr/Bulten/Goster?year=2018&no=42 [Accessed 03.03.2022]
Google Scholar

CoinGecko. Bitcoin, Ethereum and Ripple price per day (in U.S. dollars) and Statista: https://www.statista.com/statistics/807266/bitcoin-price-monthly/ https://www.statista.com/statistics/807266/ethereum-price-monthly/ https://www.statista.com/statistics/807266/ripple-price-monthly/ [Accessed 5.04.2021]
Google Scholar

Corporate Tax (2006). Article 1: Subject of the Tax. https://www.mevzuat.gov.tr/mevzuatmetin/1.5.5520.pdf [Accessed 10.03.2022]
Google Scholar

Crypto Market Sizing Report (2022). Crypto Market Sizing Report & 2022 Forecast. https://crypto.com/research/2021-crypto-market-sizing-report-2022-forecast [Accessed 10.03.2022]
Google Scholar

Dünya (2022). 2022 ilk çeyreği kripto paralarda dönüm noktası https://www.dunya.com/finans/kripto-para/2022-ilk-ceyregi-kripto-paralarda-donum-noktasi-haberi-644661 [Accessed 01.03.2022]
Google Scholar

Disguised Profit Distribution by Way of Transfer Pricing (2007). General Communiqué No 1 https://www.mevzuat.gov.tr/anasayfa/MevzuatFihristDetayIframe?MevzuatTur=9&MevzuatNo=11724&MevzuatTertip=5 [Accessed 01.03.2022]
Google Scholar

Dupuis, D., & Gleason, K. (2020). Money laundering with crypto currency: open doors and the regulatory dialectic. Journal of Financial Crime.
Google Scholar DOI: https://doi.org/10.1108/JFC-06-2020-0113

ECB (2021) What is Bitcoin? https://www.ecb.europa.eu/ecb/educational/explainers/tell-me/html/what-is-bitcoin.en.html [Accessed 10.03.2022].
Google Scholar

ECB. (2019). Crypto-Assets: Implications for Financial Stability, Monetary Policy, and Payments and Market Infrastructures. Occasional Paper Series.
Google Scholar

European Commission. (2020). Proposal for a Regulation of the European Parliament and of the Council on Markets in Crypto-assets and amending Directive (EU) 2019/1937 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020PC0593 [Accessed 10.03.2022].
Google Scholar

European Parliament. (2018). Virtual Currencies in the Eurosystem: Challenges Ahead. Monetary Dialogue.
Google Scholar

Gamble, C. (2017). The legality and regulatory challenges of decentralised crypto-currency: A Western perspective. Int'l Trade & Bus. L. Rev., 20, 346.
Google Scholar

Girgin, S. (2020). Kripto Paralardan Elde Edilen Kazançların Vergilendirilmesi. Aydın Adnan Menderes University Master Thesis. Aydın.
Google Scholar

Gowda, N. & Chakravorty, C. (2021). Comparative Study on Crypto currency Transaction and Banking Transaction. Global Transitions Proceedings. 2, pp. 530–534.
Google Scholar DOI: https://doi.org/10.1016/j.gltp.2021.08.064

Günay, H. F. & Kargı, V. (2018). Kripto Paranın Vergilendirilmesi Fikrinin Mali Yönden Değerlendirilmesi. Journal of Life Economics. Cilt:5, Sayı:3.
Google Scholar DOI: https://doi.org/10.15637/jlecon.253

HaberTürk (2021). Kripto parada vergilendirilme olasılıkları https://www.haberturk.com/kripto-paranin-vergilenme-olasiliklari-3042594-ekonomi [Accessed 04.03.2022]
Google Scholar

Haiss, P., & Schmid-Schmidsfelden, J. (2018). Bitcoin Compared on Price Liquidity and Volatility: Crypto “Currencies” or an Asset Class of Their Own?. In European Financial Systems 2018 (Vol. 128).
Google Scholar

Houben, R., & Snyers, A. (2018). Crypto currencies and blockchain: Legal context and implications for financial crime, money laundering and tax evasion.
Google Scholar

ICTA. (Information and Communication Technologies Authority). (2020). Kripto Para Araştırma Raporu. Ankara.
Google Scholar

IFRS Developments. (2019). Holdings of Crytocurrencies. Issue 150.
Google Scholar

IMF (2016). Virtual Currencies and Beyond: Inıtial Considerations. IMF Staff Team. January 2016.
Google Scholar

Income Tax Law (2003). Article 37: Commercial Income https://www.mevzuat.gov.tr/mevzuatmetin/1.4.193.pdf [Accessed 01.04.2022]
Google Scholar

Income Tax General Notification (2021). Serial 317, Article 3 https://www.resmigazete.gov.tr/eskiler/2021/12/20211221-16.htm [Accessed 01.04.2022]
Google Scholar

InfoCuria, Case-law. (2015). Judgment of the Court (Fifth Chamber) https://curia.europa.eu/juris/document/document.jsf?docid=170305&doclang=EN [Accessed 04.03.2022]
Google Scholar

IRS (2022). Internal Revenue Bulletin: 2014–16 https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21. [Accessed 01.04.2022]
Google Scholar

Kaplan, R. (2007). Vergi Usul Kanunu’nda Emtia Değerlemesi. Marmara University Master Thesis. İstanbul.
Google Scholar

Kaya, M. & Akçay, E. (2017). Digital Ekonominin Yarattığı Vergisel Komplikasyonların Değerlendirilip Zararlı Vergi Uygulamalarının Önlenmesi. Mali Çözüm Dergisi, (139), pp. 57–65.
Google Scholar

Lerer, M. (2019). The taxation of Crypto currency: Virtual transactions bring real-life tax implications. The CPA Journal, 89(1), 40-43.
Google Scholar

Marian, O. (2013). Are crypto currencies super tax havens. Mich. L. Rev. First Impressions, 112, 38.
Google Scholar

NTV (2022a). Türkiye'deki kripto para işlem hacmi ne kadar? https://www.ntv.com.tr/teknoloji/turkiyedeki-kripto-para-islem-hacmi-ne-kadar,huTLvEc7U0-qtPeZyIjRmA. [Accessed 11.03.2022]
Google Scholar

NTV (2022b). Kripto para düzenlemesinde sona gelindi https://www.ntv.com.tr/ntvpara/kripto-para/kripto-para-duzenlemesinde-sonagelindi,SVKXFDHtWUi-fk0uapKtbg [Accessed 12.03.2022]
Google Scholar

OECD (2022). Why Decentralised Finance (DeFi) Matters and the Policy Implications, OECD Paris.
Google Scholar

Paribu. (2021). Kripto Para Bilinirlik ve Algı Araştırması. [Accessed 03.03.2022]
Google Scholar

Ram, A. J. (2018). Taxation of the Bitcoin: initial insights through a correspondence analysis. Meditari Accountancy Research.
Google Scholar DOI: https://doi.org/10.1108/MEDAR-10-2017-0229

Reuters (2022). Are crypto currencies securities? https://www.reuters.com/legal/transactional/are-cryptocurrencies-securities-sec-is-answering-question-2022-03-21/ [Accessed 30.03.2022]
Google Scholar

Şahin, M. (2019). Kripto Para Yeni Bir Vergi Sığınağı mı? Bilişim Teknolojilerindeki Gelişmeler Temelinde Bir Değerlendirme. Pamukkale Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, Sayı 34, Denizli, pp. 169–181.
Google Scholar DOI: https://doi.org/10.30794/pausbed.421510

Sanchez, E. G. (2017). Crypto-Currencies: The 21st Century's Money Laundering and Tax Havens. U. Fla. JL & Pub. Pol'y, 28, 167.
Google Scholar

Sarıkaya, S. (2020). Kripto Para Birimlerinin Gelişimi ile Türkiye’de Vergilendirilmesi ve Muhasebeleştirilmesi. Ankara Hacı Bayram Veli University Master Thesis. Ankara.
Google Scholar

SEC (2022). Prepared remarks of Gary Gensler on crypto markets Penn Law Capital Markets Association annual conference https://www.sec.gov/news/speech/gensler-remarks-crypto-markets-040422 [Accessed 08.03.2022].
Google Scholar

Serçemeli, M. (2018). Kripto Para Birimlerinin Muhasebeleştirilmesi ve Vergilendirilmesi. Finans Politik & Ekonomik Yorumlar (639), pp. 33–66.
Google Scholar

Slattery, T. (2014). Taking a bit out of crime: Bitcoin and cross-border tax evasion. Brook. J. Int'l L., 39, 829.
Google Scholar

Statista (2021). How Common is Crypto? https://www.statista.com/chart/18345/cryptocurrency-adoption/ [Accessed 08.03.2022].
Google Scholar

Stoll, C., Klaaßen, L., & Gallersdörfer, U. (2019). The carbon footprint of bitcoin. Joule, 3(7), 1647–1661.
Google Scholar DOI: https://doi.org/10.1016/j.joule.2019.05.012

Solodan, K. (2019). Legal Regulation of Crypto currency Taxation in European Countries. European Journal of Law and Public Administration, 6(1), 64-74.
Google Scholar DOI: https://doi.org/10.18662/eljpa/64

The Law Library of Congress, Global Legal Research Directorate (2021). Regulation of Crypto currency Around the World: November 2021 Update https://tile.loc.gov/storage-services/service/ll/llglrd/2021687419/2021687419.pdf [Accessed 01.04.2022]
Google Scholar

The Undersecretariat of Treasury, General Directorate of Banking and Exchange (2015). Decree No. 32 on the Protection of the Value of Turkish Currency https://ms.hmb.gov.tr/uploads/sites/2/2018/12/Decree-No.32-on-the-Protection-of-the-Value-of-Turkish-Currency.pdf [Accessed 01.04.2022]
Google Scholar

Tobin, J. (1978). A Proposal for International Monetary Reform. The Eastern Economy Journal. 1978-4, pp. 153–159.
Google Scholar

Türkyılmaz, T. (2018). Kripto Para Kaynaklı Kazançlarda Vergileme. Vergide Gündem. Ocak 2018, pp. 6–15.
Google Scholar

Ünalan, G. (2019). Kripto Paraların Vergilendirilmesi. Hacettepe University Master Thesis. Ankara.
Google Scholar

Wątorek, M., Drożdż, S., Kwapień, J., Minati, L., Oświęcimka, P., & Stanuszek, M. (2021). Multiscale characteristics of the emerging global crypto currency market. Physics Reports, 901, 1–82.
Google Scholar DOI: https://doi.org/10.1016/j.physrep.2020.10.005

WEF (2021). These are the countries where crypto currency use is most common. https://www.weforum.org/agenda/2021/02/how-common-is-cryptocurrency/ [Accessed 15.03.2022]
Google Scholar

Wiseman, S. A. (2016). Property or currency: The tax dilemma behind Bitcoin. Utah L. Rev., 417.
Google Scholar

Yermack, D. (2015). Is Bitcoin a real currency? An economic appraisal. In Handbook of digital currency (pp. 31–43). Academic Press
Google Scholar DOI: https://doi.org/10.1016/B978-0-12-802117-0.00002-3