With the VAT decision announced by President Recep Tayyip Erdoğan, significant increases in second-hand car prices are at the door.
In the current dynamics of Turkey, where the zero kilometer vehicle market continues to decline, bad news has come to those who turn their eyes to the second-hand automobile side. Tax increase, which has been on the agenda for a while, that it will be evaluated within the scope of the new tax regulation, Official newspaper announced by President Recep Tayyip Erdogan. After the decision was published in the Official Gazette, the VAT rate paid in second-hand purchase and sale transactions increased from 1 percent to 18 percent with a sudden jump.
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Used car prices will increase with tax regulation
After this decision, inevitable increases await users in the second-hand market, where prices increase in parallel with the monthly increases that have become traditional for new vehicles. Industry representatives who made statements about the process Otomerkezi.net CEO Ali Karakaş; “With this notification, auto dealers and the automotive market were shaken. We are of the opinion that this increase, which is thought to seriously disrupt the balance of the market, is made in a single item, and this will block the way for corporate companies, such companies that receive purely official and cash payments.
With this decision, we anticipate that the informal economy will increase and money transfers from notary publics will increase. At the same time, it was a decision that we thought would individualize the buying and selling of automobiles rather than institutionalizing them. It is a decision that will increase unregistered sales. Such a high 17 percent VAT increase is not a decision that we have come across in any sector until today.
However, in the last 3 months, the stagnation of the sector, the high interest rates in the markets despite the 70 percent loan opportunity that came with the new decisions of the BRSA, the continuation of the chip crisis and raw material crises, the supply problems due to the supply problems, these days, the 17 percent VAT increase, as well as the 17 percent VAT increase. It will further increase both new and second hand prices. Considering that it will increase the prices in the market, both for the buyer and the seller, we think that this article of the law is completely wrong.
As a result, since VAT is a taxation paid by the end consumer, a heavy burden has been placed on the final consumer. For these reasons, it is our demands to withdraw this decision/to go for a lower taxation. Adding 18 percent VAT on top of the 20 percent income tax rate on profits from trading, the tax on total profitability in the used car trade will be 38 percent. This rate will be reflected in the prices seriously, and the budget of the citizen will be even more insufficient to buy second-hand cars.” he said.