UPDATE 1-Turkey raises a forex sales tax in another lifeline for lira

(Adds revenue estimates, policy context; updates lira)

By Can Sezer and Nevzat Devranoglu

ISTANBUL, May 15 (Reuters) – Turkey has raised to 0.1% from zero a tax on some foreign exchange sales, marking the country’s latest policy change to discourage a months-long trend of Turks selling the beleaguered lira for more stable dollars and euros.

Analysts said the presidential decision on the so-called BSMV tax, announced in the Official Gazette on Wednesday, could roughly boost government revenues by between 1 billion and 4 billion lira ($165-$660 million) annually.

The BSMV bank and insurance forex transactions tax would remain at zero for transactions between banks, those to the Treasury, and for those repaying to banks foreign currency loans.

The move comes after days of intervention by state banks that have spent billions of dollars in foreign markets to support the lira. In a separate budget-boosting measure on Tuesday, Turkey raised taxes on lower-valued packages from abroad.

The Turkish lira weakened to 6.0670 against the dollar by 0833 GMT from a close of 6.0355 on Tuesday, as investors worried about possible U.S. sanctions over a Turkish plan to buy a Russian S-400 missile defence system.

The forex tax rise did not appear to have an effect on the lira on Wednesday.

“This step appears to be aimed at both raising revenues and to deter people from foreign currencies,” said Garanti Securities Coordinator Tufan Comert.

Since last year’s currency crisis, when at its worst the lira shed half its value against the dollar, a loss of confidence among local investors has pushed up forex deposits and funds including precious metals over the last six months.

Forex holdings of local individuals and institutions was $179.18 billion as of May 3.

Brokerage Deniz Invest estimated tax revenues could rise by as much as $600 million and said the move was meant to “make speculative trade more costly.”

The BSMV tax had been set at 0.1% under a cabinet decision published in 1998. But in 2008 it was reduced to zero.

The lira has shed some 15 percent of its value this year, sparking a multi-pronged government reaction.

On Tuesday, a U.S. House of Representatives committee released an early version of a spending bill that seeks to prevent the shipment of F-35 fighter jets to Turkey, as U.S. officials press Turkey not to buy the S-400 system.

The currency had firmed on Tuesday as investors weighed up reports that Ankara was evaluating Washington’s proposal to delay delivery of Russian defence systems and state banks continued to sell dollars to support the currency. ($1 = 6.0430 liras) (Writing and additional reporting by Daren Butler; Editing by Jonathan Spicer)

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