Turkey - cutting very heavy mobile taxes

Turkey plans a 200 mln YTL tax redemption in mobile sector in 2009

Turkey plans to reduce the heavy tax burden on the mobile sector, which would cost 200 million YTL ($167 million) income loss in the budget, a minister was quoted as saying on Friday.

Turkey plans a 200 mln YTL tax redemption in mobile sector in 2009

“We are going to reduce the taxes. The reduction would start latest in early 2009,” the Transportation Minister Binali Yildirim was quoted as saying by Referans.

The reduction is expected to reduce the tax income but this loss is likely to be compensated by rise in the sales, Yildirim said, adding the taxes will be cut gradually.

The Turkish government imposes three different kinds of taxes on the GSM usage. Mobile phone users have to pay a Special Communication Tax (OIV), the Treasury Share Premium and Value Added Tax (VAT) on each mobile phone call they make.

The taxes consist 58 percent of the bill. This is three times more than the European Union standards, Referans said, citing a report prepared by Istanbul Economics Research Center for the GSM company Vodafone.

The government had an income of 4.2 billion YTL in 2007 only from the OIV, Referans said.

There are three companies operate in Turkish mobile phone market, which have a total 62 million subscribers and a penetration of 88 percent as of end-2007. Turkcell leads the mobile sector with a market share of 57 percent in Turkey where it competes with Vodafone and Avea.