Turkey Cancels Crypto Tax Plan to Prevent Capital Flight

Turkey's parliament has finally canceled its plan to impose taxes on crypto transactions. Initially, the government wanted to implement a Transaction Fee of 0.3% and a Withholding Tax of 10% on investment profits every three months. According to Turkish media outlet Hürriyet, on Saturday (28/03) local time, the plan was immediately withdrawn after strong protests that the regulations were impractical and could trigger capital flight or the outflow of capital abroad.
The main concern was that investors would transfer their assets to foreign exchanges due to the very low crypto transfer fees. Crypto and financial experts warned that overly heavy tax regulations could actually cause the country to lose revenue sources, especially amid the declining Turkish Lira and high inflation. The government chose to remove the regulation to keep assets circulating domestically and support local blockchain innovation.
Although it has been canceled for now, Turkey's parliament plans to reintroduce a revised draft of the tax law through a separate legal process later. The government still views the crypto market as a significant revenue source due to the sharp increase in user numbers. Currently, authorities are focused on finding ways for the country to generate income without causing investors to flee and abandon domestic crypto platforms.