EXCISE DUTY SYSTEM
AND
TAXATION OF TOBACCO
IN TURKEY
Cüneyt AKSOY
Revenue Expert
Presidency of Revenue
Administration
2011
GOODS WITHIN THE SCOPE
LIST NO: I
Energy
Products
LIST NO: II
Motor Vehicles
LIST NO: III
Alcoholic
Beverages And
Tobacco
Products
LIST NO: IV
Other
Consumption
Goods
1
Excise Revenues 2010
Share in
Total Tax
Revenues
(%)
Total
(Thousand TL)
Total
(Thousand $)
Share in Total
Excise Duty
Revenues (%)
31.697.178
19.935.332
55,3
15
Motor Vehicles (II)
6.192.786
3.894.834
10,8
2,9
Alcoholic Beverages (III-a)
2.868.288
1.803.955
5
1,3
Tobacco Products (III-b)
14.784.461
9.298.403
25
7
221.356
139.218
0,3
0,1
Other Consumption Goods (IV)
1.521.043
956.631
2,6
0,7
TOTAL
57.285.112
36.028.372
100
27
Energy Products (I)
Cola Soda Pops (III-c)
*Total Tax Revenues in 2010: 210.532.315 TL (132.410.261 $)
2
TAXATION OF
VEHICLES
4
3
GOODS WITHIN THE SCOPE IN LIST (II)
VEHICLES
Subject to entry and registration
(cars,minibus,midibus,bus,
trucks, motorcyles, airplane,helicopter,
traveller and tourships, yachts)
Not Subject To Entry and Registration
(golf cars, jet-ski, vehicles
specially designed
for travelling on snow).
Proportional tax
4
TAXABLE EVENT
(Vehicles Subject to Entry and Registration)
First acquisition is the taxable event for vehicles which are
subject to entry and registration.
The term “first acquisition” means;
importation,
acquisition by auction,
acquisition from the persons trading motor vehicles,
started to be used or capitalized by persons trading of motor
vehicles or registred in the name of them,
for the purpose of being used of only those goods which have
not already been entered and registered in Turkey
There is no liability on the importation of vehicles with
commercial purposes, but liability arises on delivery of motor
vehicles to buyers who will use these vehicles in Turkey.
5
TAXABLE EVENT
(Vehicles not Subject to Entry and Registration)
Taxable event for motor vehicles not subject to entry and
registration is,
their importation,
delivery by manufacturers,
sale by auction before excise duty is applied.
6
DECLARATION, ASSESSMENT and PAYMENT OF DUTY
Vehicles Not Subject To Entry and Registration
Tax return is submitted to the tax office in place of the
transaction before completion of transaction related to first
acquisition
Duty is paid on the same day on which return is submitted.
Vehicles Not Subject To Entry and Registration
Taxation period is each monthly period of calendar year
Tax return is submitted to the tax office until 15th day of the
month following the end of the taxation period.
The duty is paid within the period of submission.
7
GOODS WITHIN THE SCOPE IN LIST (II)
VEHICLES
designed for
transport of persons
designed for
transport of goods
motor vehicles
for special purposes
8
Vehicles principally designed for transport of persons:
CN CODE NO
Type of Vehicle
87.02
Bus, Midi bus, Mini Bus
87.03
Motor cars
8703.10.11.00.00
Specially designed for travelling on snow
8703.10.18.00.00
Golf cars and similar vehicles
87.11
Motorcycles
88.02
Helicopters, Aeroplanes, Spacecraft
8901.10.10.00.11
Cruise ships not exceeding
18 gross tonality
8901.10.90.00.11
Traveller and tour ships
89.03
Yachts and other vessels for pleasure or
sports, rowing boats and canoes
Vehicles principally designed for transport of goods:
CN CODE NO
Type of Vehicle
8701.20
Wreckers for semi-trailers
87.04
Motor vehicles for the transport of goods
87.09
Self-propelled vehicles, not fitted with lifting
or handling equipment, of the type used in
factories, warehouses
Motor vehicles for special purposes:
CN CODE NO
Type of Vehicle
87.05
Motor vehicles for special purpose
breakdown lorries, crane lorries, concrete-mixer
lorries, road sweeper lorries, e.t.c. (Only for those
subject to entry and registration)
(Other than fire-fighting vehicles)
9
TAX RATES
Cars
Of a cylinder capacity not exceeding 1600 cm3
Of a cylinder capacity exceeding 1600 cm3 but
not exceeding 2000cm3
Of a cylinder capacity exceeding 2000 cm3
Cars with only electric engine
Of a engine power not exceeding 85 Kw
Of a engine power exceeding 85 Kw but
not exceeding 120 Kw
Of a engine power exceeding 120 Kw
Of a cylinder capacity not exceeding 3200 cm3
having 9 seats including the driver
Only with electric engine
Minibus
Midibus
Bus
Rates
37 %
80 %
130 %
3%
7%
15 %
15%
10%
9%
4%
1%
10
TAX RATES
Trucks
Motorcycles
Of a cylinder capacity not exceeding 250 cm3
Of a engine power not exceeding 20 Kw
Of a cylinder capacity Above 250 cm3
Of a engine power exceeding 20 Kw
Airplane-Helicopter
Traveller and tour ships
Yachts
4%
22%
3%
37%
37%
0,5%
6,7%
8%
Golf cars and similar vehicles
6,7 %
Vehicles specially designed for travelling on snow
6,7 %
Jet-ski and similar vehicles not subject to entry
and registration
8%
11
TAXATION OF
TOBACCO PRODUCTS
AND
ALCOHOLIC BEVERAGES
13
11
GOODS WITHIN THE SCOPE IN LIST (III)
LIST (III)
TABLE (B)
TOBACCO PRODUCTS
(cigars,cigarillos,cherots,cigarettes,
smoking tobacco,chewing tobacco,snuff)
TABLE (A)
ALCOHOLIC BEVERAGES
COLA SODA POPS
BEER
FERMENTED BEVERAGES
(wine, sparklıng wıne,etc.)
DISTILLED SPRITS
(Vodka,gin,liqueurs,rakı,wisky,etc)
12
CN CODES OF TOBACCO PRODUCTS
CN CODES
Type of Product
2402.10.00.00.11
Cigars containing tobacco
2402.10.00.00.12
Cheroots containing tobacco
2402.10.00.00.19
Cigarillos containing tobacco
2402.20
Cigarettes containing tobacco
2402.90.00.00.00
Others (Cigars made of ingredients deemed as a tobacco, cigars,
cheroots and cigarillos)
2403.10
Smoking tobacco (whether or not containing tobacco substitutes in
any proportion)
2403.10.10.00.19
Others (in immediate packings of a net content not exceeding 500 g)
2403.10.90.00.19
Others (in immediate packings of a net content exceeding 500 g)
2403.99.10.00.00
Chewing tobacco and snuff
* Leaf tobacco is not subject to excise duty.
13
TAXATION OF CIGARETTES AND
OTHER TOBACCO PRODUCTS
Proportional taxation method is used in
calculating excise duty on cigarettes and other
tobacco products.
Tax on cigarettes and other tobacco products
calculated on
proportional basis
can not be less than tax amount calculated
according to minimum specific tax amounts.
14
Units for minimum
specific tax amount
Cigarettes
each piece of
cigarettes
taking place in a
unit of a pack
supplied to
market
Other
tobacco products
each gram of
product
in a unit of a pack
supplied to market
15
CIGARETTES
Proportional Tax Rate 65 %
Minimum Specific Tax Amount
1 piece of cigarette
0,1450 TL (≈ 0,076 $)
1 package (20 piece) 2,90 TL (≈ 1,526 $)
16
OTHER TOBACCO PRODUCTS
Proportional Tax Rate 65 %
Minimum Specific Tax Amount
1 gram
0,1450 TL (≈ 0,076 $)
or
0,0375 TL (≈ 0,197 $)
17
LIST (III) TABLE (B) ANNEXED TO LAW
CN CODES
Type of Product
Rate%
Min. Sp. Tax(YTL)
2402.10.00.00.11
Cigars containing tobacco
65
0,1450 TL (≈ 0,076 $)
2402.10.00.00.12
Cheroots containing tobacco
65
0,1450 TL (≈ 0,076 $)
2402.10.00.00.19
Cigarillos containing tobacco
65
0,1450 TL (≈ 0,076 $)
2402.20
Cigarettes containing tobacco
65
0,1450 TL (≈ 0,076 $)
2402.90.00.00.00
Others (Cigars, cheroots and cigarillos,
65
0,1450 TL (≈ 0,076 $)
65
0,1450 TL (≈ 0,076 $)
tobacco substitutes in any proportion)
65
0,1450 TL (≈ 0,076 $)
Others
65
0,0375 TL (≈ 0,197 $)
65
0,0375 TL (≈ 0,197 $)
65
0,1450 TL (≈ 0,083 $)
and cigarettes made of ingredients deemed as a tobacco )
-Cigars, cheroots and cigarillos made of ingredients
deemed as a tobacco,
-Cigarettes made of ingredients deemed as a tobacco
2403.10
2403.10.10.00.00
Smoking tobacco (whether or not containing
(in immediate packings of a net content not exceeding 500 g)
2403.10.90.00.00
Others
(in immediate packings of a net content exceeding 500 g)
2403.99.10.00.00
Chewing tobacco and snuff
18
TAXABLE EVENT, TAXPAYER, EXEMPTION
Taxable Event for tobacco products is their
importation,
delivery by manufacturers,
sale by public auction before implementing excise duty.
Taxpayer of duty for tobacco products is their
 importers,
 manufacturers,
 sellers by public auction before applying excise duty.
EXEMPTIONS
No specific exemption to tobacco products.
19
TAX BASE AND AUTHORITY OF THE COUNCIL OF MINISTERS
TAX BASE
Tax base for tobacco products is retail selling price of these goods to final customers
including VAT.
Tax base for duty to be paid to customs office on importation of tobacco products is also
retail selling price of these goods.
AUTHORITY OF THE COUNCIL OF MINISTERS
REGARDING TAX RATES
The Council of Ministers has the authority to;
decrease rates down to zero for each products,
increase up to 50% of the determined rates,
decrease minimum specific tax amounts determined by Law
down to zero for each products,
increase up to one fold for tobacco products.
20
DECLARATION AND PAYMENT
Taxation period is each one monthly period of calendar year,
Tax return is submitted to the tax office until the 15th day of the
month following the end of the taxation period.
The duty is paid within period of submission of the return.
21
EXAMPLE
Retail selling price for a pack of cigarettes including 20 pieces of
cigarettes is 4 $. Excise duty to be paid for 2000 packs of
cigarettes:
 Proportional Tax Rate
 Specific Tax Amount for each piece of cigarettes
 Specific Tax Amount for 2000 packs of cigarettes
(20 X 0,076 $ X 2000= 3040 $)
 Tax amount calculated on proportional basis
(4 $ X 0,65 X 2000=5200 $)
:65 %
:0,076 $
:3040 $
5200 $ > 3040 $
:5200 $
excise duty to be paid
:5200 $
22
EXAMPLE
Retail selling price for a pack of cigarettes including 20 pieces of
cigarettes is 2 $. Excise duty to be paid for 2000 packs of
cigarettes:
 Proportional Tax Rate
 Specific Tax Amount for each piece of cigarettes
 Specific Tax Amount for 2000 packs of cigarettes
(20 X 0,076 $ X 2000= 3040 $)
 Tax amount calculated on proportional basis
(2 $ X 0,65 X 2000=2600 $)
3040 $ > 2600 $
excise duty to be paid
:65 %
:0,076 $
:3040 $
:2600 $
:3040 $
23
EXAMPLE
Retail selling price for a pack of cigar including 10 pieces of 5 gram
of cigars is 10 $. Excise duty to be paid for 2000 packs of cigars:
 Proportional Tax Rate
 Specific Tax Amount for each gram of
cigar containing tobacco
 Specific Tax Amount for 2000 packs of cigars
(5 X10 x 0,076 $ X 2000= 7.600 $)
 Tax amount calculated on proportional basis
(10 $ X 0,65 X 2000=13000 $ )
13000 $ > 7.600 $
excise duty to be paid
: 65%
: 0,076 $
: 7.600 $
: 13.000 $
: 13.000 $
24
SHORT HISTORY OF TOBACCO TAXATION
Until 2002
VAT + seven different types of taxes, fees
and funds
Between 2002
and 2005
VAT + Excise duty
Different types of ad-valorem and specific
excise taxes depending on price category,
tobacco blend
Since 2005
VAT + Excise duty
The ad-valorem tax with minimum specific
tax.
25
MINIMUM SPECIFIC TAX OF A PACK
(20 CIGARETTES)
SINCE 2005
(TL)
3,00
for
a pack
2,65
2,50
2,05
2,00
1,40
1,50
1,50
1,55
2008
≈ 1,667 $
1,20
1,00
0,50
0,00
2005
2006
2007
58%
58%
58%
58%
2009
2010
58%
63%
Proportional Tax Rate
26
CIGARETTES SALES
120.000
106.717
107.908
107.455
2006
2007
107.859
107.555
93.354
Piece (million)
100.000
80.000
60.000
40.000
20.000
0
2005
2008
2009
2010
27
EXCISE REVENUE FROM TOBACCO TAXATION
Excise Duty Collection (Billion TL)
16,0
14,8
14,0
6,1
6,0
1,1
2000
2001
2,0
0,7
2,0
4,5
4,0
7,1
8,9
8,0
9,6
10,0
11,5
10,9
12,0
0,0
2002
2003
2004
2005
2006
2007
2008
2009
2010
28
TAX BURDEN AND PRICES
Tax Burden on Tobacco Products
VAT
: % 18 (0,1525 of retail price)
Excise Duty
: % 65
TOTAL
: % 80,25
Total Excise Duty Burden for 1000 cigarettes (50
package) is minimum 145 TL (≈ 76,31 $)
Average price of a pack of cigarette is aprx. 5,4 TL
(≈ 2,84 $)
Average excise duty for a pack is aprx. 3,4 TL (≈ 1,78 $) in
2010.
29
TAXATION OF
ALCOHOLIC BEVERAGES
AND
COLA SODA POPS
GOODS WITHIN THE SCOPE
LIST NO: (III)
TABLE (A)
- Cola Soda Pops (1 CN Code)
TABLE (B)
- Tobacco Products
- Alcoholic Beverages (18 CN Code)
30
TAXATION OF
ALCOHOLIC BEVERAGES
AND
COLA SODA POPS
2203.00
22.04
2204.10
22.05
2206.00
Beers (made from malt)
Wine of fresh grapes
Sparkling wine
Vermouth and other wine of fresh grapes
Other fermented beverages (e.g: cider, perry, mead)
mixture of fermented beverages and mixture of nonalcoholic beverages with fermented beverages
22.08
Undenatured ethyl alcohol of an alcoholic strength
by volume of less than 80% vol.
2208.20
Beverages acquired from distillation of grapes.
2208.50
Gin
2208.60
Vodka
2208.70
Liqueurs
2208.90
Others
2208.90.48.00.11
Rakı
2208.90.71.00.11
Rakı
* Pure ethyl alcohol is not subject to excise duty
31
TAXATION OF
ALCOHOLIC BEVERAGES
AND
COLA SODA POPS
Minimum Specific Tax
For alcoholic beverages, minimum specific tax amounts are
determined in 3 different categories. These are;
1st category
2nd category
3rd category
Proportional Tax ;
On cola soda pops
On beer
On others
per alcohol degree in 1 liter of product
1 liter of product
per liter of pure alcohol contained.
25 %
63,3 %
0%
- Proportional Tax > Minimum Specific Tax
Tax to be paid
Proportional Tax
- Proportional Tax < Minimum Specific Tax
Tax to be paid
Minimum Specific Tax
32
EXAMPLE
1000 bottles of 33 cc beer is sold with a price of 3 TL for each bottle.
Alcohol degree of beer is 4. Excise duty to be paid is:
Minimum specific tax for beer: 0,53 TL (0,27 $)
4 x 0,53 x (1000*0,33) = 699,6 TL
Proportional tax for beer
3x1000x0,63 = 1890 TL
Tax to be paid is 1890 TL
: 63%
EXAMPLE
1000 bottles of 70 cc wine is sold with a price of 20 TL for each bottle.
Alcohol degree of wine is 12. Excise duty to be paid is:
Proportional tax for wine
:0%
Minimum specific tax for wine: 2,94 TL (1,54 $)
1000 x 0,70 x 2,94 = 2060,94 TL
33
EXAMPLE
1000 bottles of 70 cc vodka is sold with a price of 20 TL for each bottle.
Alcohol degree of beer is 40. Excise duty to be paid is:
Minimum specific tax for beer: 70,35 TL (37 $)
0,40 x (1000 x 0,70) x 70,35 = 19698, TL
Proportional tax for beer
:0%
Tax to be paid is 19698 TL
EXAMPLE
1000 bottles of cola with 33 cc is sold with a price of 3 TL for each
bottle. Excise duty to be paid is:
Proportional tax for cola soda pops
3 x 1000 x 0,25 : 750 TL
Minimum specific tax for wine: 0 TL
: 25 %
34
TAXATION OF
OTHER CONSUMPTION
GOODS
37
35
LIST (IV)
There are 107 CN Codes in List No: (IV).
Some of other consumption goods laid down in List No (IV) are:
Caviar, Furs, Precious stones, Cosmetics, White Goods and Other Electrical Household Machines,
Mobile phones , Revolvers
Application of proportional excise duty
(Tax rates applied are 6,7%, 20% and 25%)
One application of minimum specific tax for CN Code
8517.12.00.00.11(mobile phones) with a temporarily provision added to Law.
(100 TL [52$] for each)
36
Cüneyt Aksoy
Revenue Expert
Tel: 0312 415 33 76
e-mail: caksoy@gelirler.gov.tr