VAT in Turkey: VAT rate on sales of workplace reduced from 18 percent to 8 percent

published on May 28, 2018
 
Construction sector has an important place in Turkey's economic growth of recent 10 years. Growth of construction sector also contributes to the growth of affiliated sectors. Hence, the government proposes economic incentives to construction sector during economic stagnation periods. Reduced interest rate on mortgages and reduced VAT rate on residence sales are two examples of the aforementioned economic incentives. 
 

 

Council of ministers temporarily reduced VAT rate on residence sales from 18 percent to 8 percent for the period between 8 September 2016 and 31 March 2017 with the decree 2016/9153. Due to the positive outcome of this practice, council of ministers prolonged the period up to 30 September 2017 with the decree 2017/9759.

Prominent construction companies gathered on 17 April 2018 for 16^th Real Estate Summit to discuss the construction sector. During the summit, the main discussion was on the positive impact of reduced VAT rate practice, which ended on 30 September 2017. This discussion manifested itself in the final declaration of the summit that mentioned the importance of incentives to the growth of construction sector.

Consequently, government reduced VAT rate on residence sales to 8 percent for the period between 5 May 2018 to 31 October 2018 with the decree 2018/11674. Two weeks after the issuance of the decree, government extended the scope of practice and introduced reduced VAT rate of 8 percent to workplace sales until 31 October 2018 with the decree 2018/11750.

In conclusion, workplaces and residence sales are subject to VAT rate of 8 percent until 31 October 2018. The Turkish Government aims to end the economic stagnation with this incentive.