Turkey will not cut VAT

ANKARA (Reuters) – Turkey is not working on any new value-added tax cuts for particular sectors, Deputy Prime Minister Abdullatif Sener said yesterday, knocking down a newspaper report of a planned tax cut for the struggling tourism sector. Newspaper Dunya reported yesterday that Tourism Minister Atilla Koc had promised tax on accommodation would be cut to 8 percent from 18 percent to help the sector, which has seen visitor numbers decline due to bird flu and bombings. «At the moment there is no work on value-added tax cuts for any sector or area,» Sener told reporters. «There could be statements from our ministers about their own sectors and these are decisions and evaluations which will be looked at in the next budget period.» Sener has said previously that sector-based VAT cuts could be considered in the 2007 budget. In May the number of foreign tourists visiting Turkey fell 17 percent year-on-year, returning to a negative trend seen in the first quarter. Tourism is major source of foreign currency, needed to offset a large trade deficit, and an important employer.