ISTANBUL, July 7 (Reuters) – Turkey on Friday hiked value-added tax (VAT) by 2 percentage points and also raised the tax collected on bank consumer loans, in moves intended to tackle a growing budget deficit and also likely to fuel already high inflation.
The VAT rate charged on goods and services rose to 20% from 18%, while that on basic goods such as toilet paper and detergents increased to 10% from 8%, effective immediately, the Official Gazette said.
According to several sources, Turkey has increased its value-added tax (VAT) by 2 percentage points and raised the tax collected on bank consumer loans. Additionally, the ruling AK Party has presented a draft law that envisages issuing additional motor vehicle tax and corporate tax due to earthquake-related finance needs. A bill submitted by the AK Party also proposes an increase in the corporate tax rate to 25% . Furthermore, the government has increased taxes and levies for banks. These tax hikes are aimed at reducing the budget deficit, paying for spending pledges, and funding the recovery from major earthquakes that struck the country in February.