49% inflation prompts VAT cut to domestic heating following cut to basic foodstuffs
President Erdogan announced yesterday a cut from 18% standard rate to 8% reduced rate for domestic electricity.
Foodstuffs zero-rated announced mid-February.
The cut from the reduced rate of 8% to 1% will apply to:
- Fruit and vegetables
- Cooking oil
This change should be applied by retailers from 14 February 2022.
Turkey’s inflation reached 49% in January as the country’s low interest rates meant continuing rising rates. Fitch, the rating agency, has just downgraded Turkey’s debt from BB- to B+. The Turkish lira lost 40% of its value in 2021 following repeated interest rate cuts despite rising inflation.
Many other countries are cutting VAT on electricity and food as global inflation rises due to supply chain problems caused by COVID-19 pandemic disruption.
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