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“VAT REDUCTION THROWS A LIFELINE TO THE FOOD AND DRINK SECTOR”

The food and drink sector recorded around a 20% increase in mobility following the government’s decision to reduce value-added tax (VAT) to 1% to boost consumption and cushion the fallout of the pandemic on the industry.

Ramazan Bingöl, chairman of the Association of All Restaurants and Suppliers (TÜRES), told Anadolu Agency (AA) Sunday that restaurants and other food services had suffered considerably during the pandemic as they had to limit their services to takeout and home deliveries.

He noted that the sector had entered a recovery process along with the normalization steps and the reduction of VAT to 1% from 8% helped the sector regain lost demand.

The government also slashed VAT in passenger transportation, wedding organizations, residential maintenance and repair, dry cleaning and tradesmen services, such as tailoring, from 18% to 8%. The withholding of tax on office rent for tradesmen has also been halved from 20% to 10%.

“We have begun to see the fruits of this tax reduction on our industry, which employs more than 2 million people and has an approximate annual market size of TL 140 billion ($19.01 billion),” Bingöl stated.

Bingöl said some restaurants chose to reflect VAT reduction in their menu prices, while others canceled plans to increase food prices to compensate for losses incurred during the lockdown.

He said the occupancy rate at restaurants with open-air seating space had increased by 100% and other restaurants recorded a 60% increase in the number of customers following the lockdown and VAT reduction.

Meanwhile, Culinary Tourism Society member Ahmet Sait Tütünci said the VAT reduction had thrown a lifeline to the food and drink sector and revived domestic demand.

“The benefit of the reduction to the end consumer has prevented any future price hikes,” Tütünci said.

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About İsmail Uğural

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