Government announces new tax cuts

ANKARA

President Recep Tayyip Erdoğan announced new reductions in the value-added tax (VAT) for some consumer products, as well as medical equipment and home sales transactions.

“We have decided to cut the VAT on necessities, such as detergent, soap, toilet paper, napkins and baby diapers, from 18 to 8 percent,” Erdoğan said on March 28 following a cabinet meeting in Ankara, recalling that the government has taken similar measures in the past weeks.

In February, the value-added tax on staple foods was slashed from 8 to 1 percent, and the government also reduced the VAT from 18 to 8 percent for electricity used in residences and agricultural irrigation.

The VAT charged on catering services, including in restaurants and hotels, will be lowered from 18 to 8 percent, according to the new measures the president announced on March 28. Furthermore, the VAT has been set at 8 percent in the sales of houses that are smaller than 150 square meters in size.

The new tax rate for home sales will ease the financial burden on the construction industry, the president added.

He noted that administrative reforms are also taking place, such as simplifying the VAT schemes.

“All those measures are part of the government’s program designed to fight against inflation and efforts to protect citizens against the high cost of living, Erdoğan said.

As far as the new regulations for the agriculture sector are concerned, the VAT rate will be lowered to 1 percent on all kinds of certified seed and saplings, while the tax rate will be 8 percent on milk collection tanks.

According to the latest data from the Turkish Statistical Institute (TÜİK), the prices of food and non-alcoholic beverages rose by 8.4 percent in February from the previous month for an annual increase of 64.5 percent.

The government also decided to slash the value-added tax on medical equipment listed on the Health Ministry’s respective legislations.

Speaking after the cabinet meeting, Erdoğan also said that the government is pursuing a program that will make Turkey one of the 10 largest economies in the world.

“While the economic crisis [in other nations] triggered by the COVID-19 pandemic and aggravated by the Russian-Ukraine conflict, Turkey continued on its path with determination through investments, creating jobs, exports and production,” the president said.