Record inflation prompts temporary VAT cut to basic foodstuffs
Turkey has become the latest country to temporarily cut VAT to combat inflation. The cut from the reduced rate of 8% to 1% will apply to:
- Fruit and vegetables
- Dairy
- 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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