IMPORTS ARE NOT FALLING AS DESIRED

To get out of the economic crisis as soon as possible, the foreign trade deficit must be rapidly reduced to lower levels. Of course, imports must be made for the input needs of the industry, 63% of our imports consist of energy and input imports. In addition, control of consumer goods imports is also gaining importance.

According to the data of the Ministry of Trade, in July 2024, our exports increased by 13.8% compared to the same month of the previous year, reaching 22.5 billion dollars, while our imports increased by 7.9%, reaching 29.7 billion dollars. In the same year, our cumulative January-July exports increased by 4.1%, reaching 148.8 billion dollars, while our imports decreased by 8.4%, reaching 198.6 billion. In the same period, the export-import coverage ratio was 74.9%.

If the process proceeds in this way, it would not be misleading to say that our cumulative imports for the 12 months to 2024 will be around 340 billion dollars.

One of the biggest advantages that the Customs Union established between Turkey and the EU in 1996 provided to our citizens was the possibility of importing "fast cargo goods", which can be called "individual imports". In particular, the cheap production in China and other Far Eastern countries created an environment for consumers in Turkey to easily access these cheap products through "fast cargo". Today, we even witness a housewife importing "baby pacifiers" from China via phone order for her baby in her arms. 

All of these fast cargo imports are carried out through the ETGB (Electronic Trade Customs Declaration), which does not require a paper printout. According to Article 126 of the "Decision on the Implementation of Certain Articles of the Customs Law No. 4458", which was put into force with the decision of the BBK numbered 2009/15481, these fast cargo companies were also allowed to follow and finalize the activities related to all customs procedures, including the customs declaration of goods of commercial quantity and nature coming to a real person whose value does not exceed 150 EUR. In 2023, it is estimated that approximately 20 thousand fast cargo products were imported with ETGB.

According to Article 62 of the same Decree, it was stated that goods arriving to a natural person via mail or fast cargo transportation and having a value not exceeding EUR 150 would be subject to a "Single and Lump Sum Tax" at a rate of 20% if arriving from the European Union and 30% if arriving from other countries.

With Presidential Decree No. 8787 dated August 5, published in the Official Gazette dated August 6, these limits were changed. The limit of goods that can be imported by persons through "fast cargo" specified in paragraph 1 of Article 62 of the aforementioned Decree No. 2009/15481 was reduced from EUR 150 to EUR 30. On the other hand, the "Single and Lump Sum Tax Rates" applied for these goods were also increased. Accordingly, if these goods with a value not exceeding EUR 30 come from European Union countries, the Single and Fixed Tax will be collected at a rate of 30% instead of 20%, and if the goods come from other countries, the Single and Fixed Tax will be collected at a rate of 60% instead of 30%.

On the other hand, with Decree No. 8787, the limits for fast cargo companies to perform customs clearance of incoming goods were also reduced. With the amendment made to Article 126 of Decree No. 2009/15481, the authorization of fast cargo companies to perform customs clearance of goods up to 150 EUR was reduced to 30 EUR. In other words, if people order goods worth 31 EUR and above from abroad by using digital media, they will either import these goods themselves by following them through customs or they will give a power of attorney to a customs brokerage company.

It is difficult to predict to what extent this regulation will reduce individual import attempts. A housewife, who previously made a shipment of 90 EUR, may divide it into three and make one shipment on behalf of her husband, one shipment on behalf of her son over the age of 18, and one shipment on behalf of herself.

However, the most striking provision of the regulation put into force by Decree No. 8787 is the one regarding imports from the European Union. From now on, the following provision will be applied: "A single and lump sum tax at the rate of 30% shall be levied on the value of the goods coming to a real person through postal or fast cargo transportation, which does not have a commercial quantity and nature, the value of which does not exceed EUR 30, and the value of the goods in the form of medicines, the value of which does not exceed EUR 1500; a) If it comes directly from the European Union countries, ...".

The single and lump sum tax rate collected from the products coming from EU countries mentioned in this paragraph was the same as the general VAT rate in Turkey. In other words, there was no difficulty in explaining this 20% tax to EU officials. In other words, the European Union was being told that "when we collect 20% Single and Fixed Tax from your goods, we are not collecting customs duty, but the VAT in force in Turkey".

However, when this rate is increased to 30% with the new regulation, for the first time since the establishment of the Customs Union between Turkey and the EU in 1996, Turkey will impose a 10% Customs Duty on goods in free circulation in the EU. 

 Article 4 of the "Association Council Decision No. 1/95 Establishing the Customs Union between Turkey and the EU" reads as follows: "Customs duties and equivalent taxes and duties on imports and exports between the Community and Turkey shall be completely abolished on the date of entry into force of this Decision. The Community and Turkey shall refrain from introducing new import and export duties and taxes and duties with equivalent effect from that date. These provisions shall also apply to customs duties of a fiscal nature."

It is no secret that Turkey's relations with the European Union are strained. No matter how much it has been eroded, the "Customs Union" continues to be the only anchor that binds Turkey to the European Union.

When it comes down to it, most of the goods arriving via fast cargo were shipped from Far Eastern countries. In other words, the European Union does not produce low-priced goods attractive to Turkish consumers. In this respect, it is difficult to predict to what extent imposing such a tax on goods shipped from the EU will limit goods traffic. 

Especially after the COVID-19 pandemic, there was a boom in e-commerce. After the pandemic is over, we will be able to evaluate how our people, who have become accustomed to the convenience of e-commerce, will change their attitudes after this new regulation.