NEWSLETTER-2020-metin

322 NEWSLETTER 2020 Non-Physical Gold Sales and BITT* Att. Canan Doksat Introduction Previously, the RevenueAdministration’s approach was to impose 5% Banking and Insurance Tax (“BITT”) over the earnings that banks received for non-physical gold transactions based on the understand- ing that non-physical gold transactions are not in the nature of foreign exchange transaction. However, through the Revenue Administration’s letter dated 21st May 2020 sent to Turkish Bank Association, the above-mentioned ap- proach is amended, and it is stated that non-physical gold sales should be accepted to be in the nature of foreign exchange transactions. This amendment of the Revenue Administration’s opinion has also changed the BITT application over non-physical gold sales transactions. Within the scope of this Article, the evaluation of non-physical gold sales as foreign exchange transactions, and our evaluations re- garding the issue, is provided. Former Opinions As per the first opinion, gold should be evaluated as an invest- ment tool instead of a commodity. Accordingly, gold sales should be accepted to be in the nature of foreign exchange transactions. As per the second opinion, gold is in the nature of precious metals, and gold sales cannot be evaluated as foreign exchange transactions. Therefore, the BITT should be calculated based on the earnings that banks receive for non-physical gold transactions. * Article of July, 2020