Page 10 - EY-VG_Eylul_2017

0% VAT rate in British model and
transactions in scope of exemption and
comparison of Turkish VAT model

Principal deliveries and services and VAT implementations applicable in Turkey
for such transactions are provided within the table below in order to evaluate the
position of %0 VAT or delivery and services, which are in scope of exemption under
British VAT system, in VAT system of Turkey.

Goods and services VAT rate in UK VAT rate in Turkey
Foods and beverages Overall 0% Overall 8%
Animal feed 0% Exemption
Sports activities Exemption 18%
Betting and games of chance Exemption 18%
Funeral services Exemption 1%
Devices for the handicapped 0% Exemption
Nursing and healthcare services supplied by
public institutions like hospitals, poorhouse Exemption Exemption
and care centers
Prescription drugs given by licenced 0% 8%
pharmacists
Health services supplied by licenced
physicians, dentists, opticians and Exemption 8%
pharmacists
Education, occupational training and related
services supplied by authorized educational Exemption 8%
institutions such as schools, academy and
universities
Residential water transmission 0% 8%
Expeditions of vehicle, ferry and plane
carrying 10 passengers or more 0% 18%
Books 0% 8%
Newspaper and magazines 0% 1%
Printed or copied music 0% 18%
Infant, child clothing and shoes 0% 8%
Motorcycle helmets meeting safety criteria 0% 18%
Financial services Exemption Exemption
Loan allocation Exemption Exemption

As the table above is examined; divergence in VAT implementation over food,
health, transportation, publishing and clothing sectors are remarkable. In case
regulations parallel to the implementations in British VAT system are introduced in
Turkey, impacts to be expected for the concerning sectors are indicated below.

• In the circumstance that a VAT rate of 0% is implemented over food products
within our VAT system as well, a decrease in food prices and a parallel increase on
the demand for those products may be expected.

• If a VAT rate of 0% or exemption is implemented for health services and medicine
deliveries in our VAT system, access to these deliveries and services will become
easier through the removal of VAT burden on consumers.

• Through implementing a VAT rate of 0% on transportation services in our VAT
system, encouraging the attraction of public transport and relief in traffic will be
possible.

• If a VAT rate of 0% for the publishing sector is adapted in our VAT system,
access to knowledge will become easier and it will be possible to reduce informal
economy within this sector.
• If a VAT rate of 0% is implemented on infant and child clothing products in our VAT
system, it shall be possible to better support families with children financially.
Explanations in this article reflect the writer's personal view on the matter. EY and/or Kuzey YMM ve Bağımsız Denetim A.Ş. disclaim any responsibility
in respect of the information and explanations in the article. Please be advised to first receive professional assistance from the related experts before
initiating an application regarding a specific matter, since the legislation is changed frequently and is open to different interpretations.
10 Eylül 2017 Eylül 2017