Increase in Value Added Tax and Special Consumption Tax Rates in Türkiye

The Ministry of Finance of the Republic of Türkiye introduced an increase in the VAT and Special Consumption Tax (“SCT”) rates as of 10 July 2023.

According to the Presidential Decree published in the Official Gazette, the 18% (eighteen percent) VAT applied to the goods and services specified in paragraph (a) of the Decree on Determination of Value Added Tax Rates to be Applied to Goods and Services has been increased to 20% (twenty percent), and the 8% (eight percent) VAT applied to the goods and services specified in paragraph (c) has been redetermined as 10% (ten percent).

Further, the VAT rate on soap, shampoo, detergent, disinfectants, wet wipes, toilet paper, paper towels, paper towels, tissues and napkins increased from 8% (eight percent) to 20% (twenty percent). Yet, toothbrushes, toothpaste, and dental floss will be subject to the new rate of 10% (ten percent). Additionally, the VAT rate for pharmaceuticals was increased to 10% (ten percent).

In respect of SCT, with the amendments, the tax amounts applied on petroleum products will be automatically increased in line with the six-month Producer Price Index (Üretici Fiyat Endeksi) increase announced by Turkish Statistical Institute. The President of Türkiye is now authorized to increase the lump sum tax amounts for petroleum products up to five times the highest tax amount, to reduce it to zero and to determine different amounts within these limits.

Regarding SCT on tobacco products and alcoholic beverages, the President of Türkiye is now authorized to increase tax amounts up to three times for tobacco products and up to two times for alcoholic beverages, and to reduce them to zero. The President of Türkiye may also determine different tax rates and minimum lump sum tax amounts within the thresholds indicated above.

For more information on the new VAT rates and their impact on your company or business, please contact your CMS partner or your local CMS expert: Dr. Döne Yalçın.