Turkey VAT reduction from 18 to 8% due to Covid-19 til end of year for events

Aug 3, 2020 | COVID-19, VAT Updates

VAT Updates Asian

31 Jul – VAT has been reduced to 8% from 18% until 31 December 2020 on the following: events and conferences; cultural events; domestic repairs; accomodation services; hospitality services

24 April – all other businesses (see sector exceptions below) may delay Value Added Tax payments and filings for the months of February and March, or Q1 2020. The new filing deadline is 28 April instead of 24 April.

9 April update – goods intended for export enjoy VAT payment deferrment for the exporters purchasing them (to avoid VAT credits). This deferment period has been extended.

The dealine for the upload of electronic ledgers and books has been moved from 31 March to 30 April 2020.

The Turkish tax office on 24 March introduced VAT payment reliefs in addition to last week’s measuers. Several sectors will have their VAT returns for April, May and June delayed until 27 July 2020. VAT payments for April to June are delayed six months out to October to December.

The sectors include: automotive; accomodation; cinema; heath; publishing; pubic exercise facilities; and professional services.

The VAT measures already announced, in place until November, include:

  1. The VAT rate on airline travel is to be cut on domestic flights from 18% to 1%.
  2. Hotel accommodation and services are to be zero-rated.

Other measures include suspension of national insurance payments on employees.

Ankara had imposed the tax cuts on goods in 2018 to help tame inflation, which topped 25% in September that year amid high fluctuation in exchange rates. It has since eased significantly to settle around 10.56% year-on-year in November. The Turkish Statistical Institute (TurkStat) will announce the December inflation data on Friday.

Speaking at a meeting with business people in the northwestern province of Çanakkale, Albyarak said there was a serious demand by the furniture industry for tax reduction. He added that they discussed the issue with the representatives from the industry and relative authorities during their recent visit to the central province of Kayseri, an important manufacturing base.

“I would like to announce today the news that we have reduced the VAT on furniture from 18% to 8%,” the minister said. “In the same way, we need to set a rate increase target in furniture exports. In Kayseri, they promised that these costs would be reflected in the domestic market and that we would increase exports, production and employment in this sense.”

Industry representatives welcomed the reduction, saying it would bring relief and would enable the industry to invest more in job creation.

“This provides relief to the industry … We want the VAT rate to be fixed at 8% throughout 2020,” Mustafa Balcı, head of the Turkish Furniture Manufacturers Association (MOSDER), said in a written statement.

Balcı pointed to the furniture sector as one of the leading industries in Turkey that supports many side industries and creates jobs.

“With the announced VAT reduction, the furniture sector will be able to invest more in job creation,” he added.

The furniture industry exports goods to 179 countries around the world, he said, adding that exports to foreign markets rose 9% in 2019. Balcı noted that the industry looks to increase its exports by 25% in 2020. The industry has an export target of $10 billion for 2023, Balcı said.

Albayrak also touched upon close cooperation with all stakeholders and sectors to solve the problems that are on the agenda of the real sector.

Albayrak announced last week that Turkish public banks would cut mortgage loans interest rates to 0.79% from 0.99% in first sales as of Jan. 1, 2020, a move to further revive the property market. He said this would have an important effect on the construction sector and subindustries.

Residential property sales across Turkey jumped 54.4% year-on-year in November and reached 138,372, according to TurkStat.

The surge came after the Central Bank of the Republic of Turkey (CBRT) kicked off an easing cycle in its monetary policy in July. The bank began aggressively lowering rates in July, after having raised the key rate to 24% in September 2018 in the face of rising inflation. It cut the main policy rate by 12% between July and December to 12%.

Source – Avalara

Source – dailysabah.com

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