The government has announced that the Value Added Tax (VAT) will be lowered until the end of the year for some sectors, while the rental withholding will be cut in half for all businesses to the economy weather the coronavirus pandemic, Treasury and Finance Minister Berat Albayrak has said.
“I have good news for all citizens, especially the tradesmen, before the Eid,” Albayrak announced the tax cuts on his Twitter account late July 30.
“We reduced the rental withholding from 20 percent to 10 percent, and VAT from 18 percent to 8 percent in services such as passenger transport, wedding, wedding organization, residential maintenance, repair, dry cleaning and tailoring,” the minister said.
He added that VAT has been reduced to 1 percent from 8 percent in accommodation and catering services and cultural activities such as cinema, theater and museum entrance fee.
“We do our part to support tradesmen in every field. These discounts will be beneficial to our tradesmen and nation,” Albayrak said.
A decree on the tax cuts was published in the Official Gazette on July 31.
The incentives will take the form of tax relief and refunds in both corporate taxes and VAT, customs exemptions, free land for investors, grants to start new businesses, support for social security contributions, discounted energy prices for producers, assistance for employing qualified workers, and capital contributions.
Sector representatives welcomed the decision to lower VAT.
Ramazan Bingöl, head of All Restaurants and Restaurant Suppliers Association (TÜRES), told Anadolu Agency that the tax cut would be reflected as a 7 percent discount on restaurant prices.
“Thanks to this discount, we expect a 20-30 percent increase in our turnover,” he said.
Our sector, which employs 2 million people and reaches a volume of approximately 140 billion Turkish Liras annually, has been provided with a tremendous support in this difficult process.”
United Brands Association Chairman Sinan Öncel praised the decision to lower the rental withholding from 20 percent to 10 percent and the VAT for rentals to 8 percent from 18 percent.
“We expect the same sensitivity from the owners of this issue, which concerns street stores closely,” Öncel said.
“We consider that the ownership of solidarity with their tenants until the end of the year is of great importance for our economy.”
İlker Önel of the Merchants Club Association of Istanbul said the decision will help small and medium-sized enterprises (KOBİ).
“I think that the steps taken for the rapid normalization of the businesses affected by COVID-19 will be very useful,” he said.
“While these tax reductions provide a serious reduction in costs, they will contribute to the inflation program as they will cause price reductions in services and products depending on market conditions.”
Hurriyet Daily News