No increase in VAT in restaurants, step from Ministry of Treasury to prevent exploitation
The Ministry of Treasury and Finance has published a notification against tax exploitation in restaurants and cafes, where products subject to a 10% VAT are misrepresented as 1%.
The Ministry of Treasury and Finance announced through a communique that it won’t allow tax exploitation by restaurants and cafes, where items subject to a 10% VAT can be declared as 1%. The General Application Communiqué on Value Added Tax Amendment was published in the Official Gazette. The introduction section of the communique stated that the adjustments to the increased VAT rates made by last year’s legislative changes were implemented.
It was mentioned that food items produced or procured externally and sold in restaurants and cafes, which were service enterprises, were subject to 10% VAT. The examples were given in the communique regarding the types of businesses for products subject to 10% VAT:
Example 1: (K) coffee shop, which also sells cakes procured from (T), its supplier. A customer orders coffee and also purchases a wet cake to take away. The coffee shop, categorized as a cafeteria, will apply a 10% VAT to all these transactions.
Example 2: (G) customer dining at a restaurant (D) purchases 1 kg of baklava upon leaving. The restaurant will apply a 10% VAT to both the meal service provided to the customer and the sale of baklava.
All sales made by these businesses via phone or internet for delivery or takeout are subject to the same VAT.
Example 3: (A) pastry shop receives a phone order for an 8-person birthday cake, which the customer decides to pick up after work. Along with the cake, the customer purchases 1 kg of dry cake and 2 bottles of lemonade. The pastry shop, holding a business license, will apply a 10% VAT to all these sales.
Moreover, businesses that provide food and beverage services in areas where they can serve customers “without having a permit for such activities”, such as tables, seating areas, or counters, are also subject to a 10% VAT for the sale of food items under Annex (II) of Decree No. 2007/13033.
Example 4: (B) beachside kiosk operates without a permit for food and beverage service but sells toast, tea, and soft drinks to customers sitting at tables and chairs set up in front of the kiosk or those lounging on beach chairs. The kiosk, as it provides food and beverage services, will apply a 10% VAT to the sales of both items prepared on-site and those procured externally.
