Scotch in Glencairn glass

Tax harmonisation in Turkey achieved

Dr. Chris Kauer

22 May 2018

It may have been a long time in coming but finally, in early May, excise taxes for spirits in Turkey were harmonised. The same duty rate now applies to the Turkish national spirit raki as to Scotch Whisky.

The abolition of the long-standing tax discrimination against Scotch Whisky is of course welcome news!

For a long time a three-tiered excise system put Scotch Whisky and a number of other, mainly imported spirits in the highest tax category, gin and vodka in the middle category, and raki in the lowest - despite the fact that they are all spirit drinks and as such in direct competition with each other in the market place.

In 2009 Turkey and the EU had agreed on an "Action Plan" for the gradual equalisation of excise rates for all spirit drinks. Significant steps were taken in 2012 and 2015, and as of May 2018 the same excise rate is applicable to both raki and Scotch Whisky.

The SWA has consistently campaigned for the removal of discriminatory taxation and continues to do so. It is good to see that this has now been achieved in Turkey.

Regrettably, however, preferential tax treatment for certain types of spirits, usually a country's national drink or local spirit, persists elsewhere - despite clear EU and WTO rules and jurisprudence against discriminatory taxation within the spirits category. Case studies can be found around the globe.

In Europe, for example, there is Serbia where Scotch Whisky pays 2.5 times more excise tax than the local spirit rakija. In Greece illegal tax preferences for the domestic products tsikoudia and tsipouro exist. The Commission has referred the Greek Government to the Court of Justice of the European Union, the case is pending. Hungary's preferential treatment of its local spirit palinka is another case where action is being taken against the blatant discrimination against Scotch Whisky and other imported spirits.

The SWA will continue to fight tax discrimination where it exists in Scotch Whisky's many export markets. Our aim is to prevent distortion in the market, ensure a level playing field and, ultimately, increase consumer choice.

Dr. Chris Kauer is the SWA's Head of Market Access (Europe & Africa)