Turkey increased the rate of VAT (value-added tax) rate on the sale of new yachts in from 1% to 18% last month.
The country is currently facing its highest rate of inflation in 20 years, rising to 54.4% in February. This is due to a decline in the value of the Turkish lira and the rising cost of food and energy prices in particular.
In a bid to curb inflation, Turkish President Recep Tayyip Erdogan has announced VAT changes on several products. VAT on the sale of yachts, boats and cruise ships has jumped to 18%, while tax on basic necessities has been cut.
VAT on yachts was reduced to 1% in 2017 to encourage boaters to register their vessel under the Turkish flag. Now, buyers who have a yacht on order will have to pay 18% when the yacht passes through Turkish Customs. This unexpected additional cost will no doubt create a shock for new buyers and sellers alike.
VAT is only applied to new yacht sales and not second-hand models, but as the prices of new yachts increase, this will cause an increase in the used yacht market as well.