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Turkey increases VAT rates
Summary
Turkey has announced a hike in its value-added tax (VAT) rates as part of its efforts to cope with the economic crisis triggered by the COVID-19 pandemic and the depreciation of the Turkish lira.
Content
According to Presidential Decree No. 7346 published on July 7, 2023, the general VAT rate in Turkey has increased from 18% to 20% and the reduced VAT rate from 8% to 10%. The applicable VAT rate on cleaning products (excluding toothbrushes, pastes, and dental floss) has also been increased from 8% to 20%. The reduced VAT rate of 1% remains unchanged.
These new rates are effective July 10, 2023, and will apply to all goods and services subject to VAT in Turkey, except for those that are exempt or zero-rated.
The government expects to generate additional revenue of 50 billion Turkish lire ($5.8 billion) from the VAT increase, which will be used to finance public spending and reduce the budget deficit.
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