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[1][5]. 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[2]. A bill submitted by the AK Party also proposes an increase in the corporate tax rate to 25% [3]. Furthermore, the government has increased taxes and levies for banks[4]. 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[1][4].
Citations:
[1] https://www.reuters.com/world/middle-east/turkey-hikes-tax-rates-reduce-budget-deficit-2023-07-07/
[2] https://www.reuters.com/world/middle-east/turkey-issue-additional-motor-vehicle-tax-corporate-tax-earthquake-finance-needs-2023-07-05/
[3] https://www.bloomberg.com/news/articles/2023-07-05/turkey-ruling-party-plans-tax-increases-on-banks-and-companies
[4] https://www.bloomberg.com/news/articles/2023-07-07/turkey-hikes-taxes-fees-to-pay-for-spending-pledges-quake-toll
[5] https://www.nasdaq.com/articles/turkey-hikes-vat-consumer-loan-tax-other-fees
[6] https://news.bloombergtax.com/daily-tax-report/turkey-ruling-party-plans-tax-increases-on-banks-and-companies
Turkey’s inflation rate over 108 percent, says ENAG