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Consumption Tax Trends in Turkey – OECD


Consumption Tax Trends in Turkey – OECD

According to the report published by Organization for Economic Co-Operation and Development (OECD), the Turkish standard VAT rate is 18.0%, which is below the OECD average. The average VAT/GST¹ standard rate in the OECD was 19.3% as of 1 January 2019. The previous standard VAT rate in Turkey was 17% in 2000. It changed to the current level in 2001. Turkey applies reduced VAT rates of 1% and 8% to a number of goods and services. VAT was introduced in Turkey in 1985 at a standard rate of 10.0%. Since then the minimum and maximum standard rates have been at 10.0% and 18.0% respectively.

VAT Revenue Ratio

The VAT Revenue Ratio (VRR) for Turkey was 0.40 in 2016, below the OECD average of 0.56. The VRR is a measure of the revenue raising performance of a VAT system. A ratio of 1 would reflect a VAT system that applies a single VAT rate to a comprehensive base of all expenditure on goods and services consumed in an economy – with perfect enforcement of the tax. Relative to the pre-crisis level of 2007 (0.38), the Turkish VRR position has increased by 0.02 percentage points. The Turkish VRR remained stable at 0.40 between 2014 and 2016. The lowest VRR was recorded in the year 2009 at 0.36 and the highest level in 2000 at 0.46.

Source: Organization for Economic Co-Operation and Development (OECD) / link: http://www.oecd.org/tax/consumption/consumption-tax-trends-turkey.pdf
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