Turkey's Revenue Administration has announced the publication of Presidential Decision No. 5189 on 13 February 2022, which entered into force on 14 February 2022 and provides for the application of a reduced VAT rate of 1% on supplies of foodstuffs in general, with the removal of the wholesale-retail distinction. Previously, the 1% rate was limited to wholesale supplies. With the changes, all supplies of qualifying foodstuffs are generally eligible for the 1% VAT rate, including wholesale, retail, import, packaged, and unpackaged. Eligible foodstuffs include, among others, legumes, rice, water, tea, sugar, salt, oils and fats, cake, pasta, meat, poultry, fish, milk, eggs, vegetables, and vegetable preparations.
The 1% reduced rate does not apply, however, for food products subject to special consumption tax where VAT is applied at a reduced rate of 8% such as soda, fruit juice, and others. Further, the 1% reduced rate does not apply to restaurant services, bakery services, etc. Lastly, taxpayers selling foodstuffs subject to the 1% rate that have inputs subject to a higher VAT rate (18% standard rate) will be able to claim a refund.