NEWSLETTER-2020-metin

306 NEWSLETTER 2020 in Turkey, and faced very high levels of interest during the 1990s. As a result, the interest on special consumption goods and, eventually, importation of those goods increased. The foreign currency loss of the country kept increasing while the foreign currency reserve of the Central Bank (“CBRT”) was inadequate. At that time, Turkey faced a significant liquidity crisis, and the overnight interest rates reached above 100% in November and December. This period prompted for- eign investors to exchange Turkish Liras to United States Dollars and to exit the Turkish market. Even though the CBRT showed efforts to control the exchange rate by selling foreign currency took the situa- tion under control until February of 2001, the meeting of the National Security Council on February 19 caused the withdrawal of 7.5 billion United States Dollars from the CBRT, the interbank market overnight rates rose to 7500% levels, which also resulted in the passing flowing rate on February 21, which brought on the 2001 crisis. The Turkish Lira lost against the Unites States Dollar by 40% in one day, and ap- proximately 60% in two days. In September, that ratio reached to an almost 150% level. Firstly, with the amendment 1 that entered into force on No- vember 26, 1999, the Special Communication Tax was entered into force for a limited period of time 2 to recover the great losses that the massive earthquake caused. However, the liquidity crises of the second half of 2000, the 2001 February crises, devaluation, the loss of value of the Turkish Lira, the blockage of the banking system, and the extreme adverse effects on commerce, necessitated new precautions and the restructuring of the economy and the banking industry. Turkish tax law was also affected from that restructuring. With the amendments made in 1985, six indirect taxes were abolished and value added taxes began to apply in Turkey. Another radical change similar to this one was the special consumption tax (“SCT”). The en- deavors as to the SCT started in 1993, and the related proposal was 1 The Law to Recover Economic Losses Caused by the Earthquake in Marmara Region and Surroundings in 17.8.1999 and 12.11.1999 on Taxation of Some Ob- ligations and Changes in Some Tax Law (Law No. 4481) entered into force by publication of the Official Gazette dated 26.11.1999. 2 At first, Special Communication Tax was designated to stay in force until 31.12.2003. It became permanent by the amendment made in 2005.