Value-added tax on goods and services hiked

ANKARA

The value-added tax (VAT) on good and services have been hiked from 18 percent to 20 percent, according to a decree published in the Official Gazette.

Also, the bank insurance and transaction tax (BSMV) collected on consumer loans was increased from 10 percent to 15 percent.

The VAT, which was hiked to 20 percent, applies to a wide range of goods, including white goods, furniture and electronic goods.

Earlier this week, the government submitted an omnibus bill to parliament which foresees increases in the motor vehicles tax and corporate taxes.

According to the legislation, there will be a one-off increase in motor vehicle tax this year. Corporate tax will be hiked from 20 percent to 25 percent.

Also, earlier this week, the special consumption tax on alcohol and cigarette was increased by 14.8 percent.

The budget needs additional financing due to the costs stemming from the February earthquakes, said Abdullah Güler, group chairman of the ruling Justice and Development Party (AKP), on July 5.

“It is obvious that some measures should be taken to meet the need for those additional financing,” he said.

The central government budget posted a surplus of 119 billion Turkish Liras in May, down 17.4 percent from a year ago.

Expenditure increased by 148 percent year-on-year to 431 billion liras, while revenues grew at a slower rate at 73 percent to 549 billion liras.

In the first five months of the year, tax revenues amounted to 1.4 trillion liras, with VAT collection rising 96 percent to 129 billion liras. Revenues from the special consumption tax grew by 99 percent to 251 billion liras.