Turkish Government Increases VAT and Taxes on Personal Loans

Among other things, VAT and taxes on personal loans are affected, as the government announced in the Official Journal on Friday.

Accordingly, the VAT was increased by two percentage points to 20 percent. For certain goods and services, for example in the catering trade, the tax rate was adjusted to 10 percent – an increase of two percentage points. Fees for visas, notaries and passports have even increased by around 50 percent, while taxes on bank loans have risen from 10 to 15 percent.

The increase in taxes will affect millions of Turkish households, which are already struggling with the highest inflation in over two decades. This is likely to be reflected in higher food and rent prices and lower purchasing power, among other things.

The reason for the increase is, among other things, the campaign expenses for the presidential election in May, after which the re-elected Recep Tayyip Erdogan began his third term. Erdogan is looking for ways to finance his campaign promises, such as raising salaries or bonuses. In addition, funds are needed for reconstruction after the severe earthquakes in the south-east of the country in February, which killed more than 50,000 people. Overall, the government estimates the cost of the earthquake damage at up to $100 billion.

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