The Challenge
"Our standard VAT rate is 20%, our restaurant bills carry 10%, and even a loaf of bread can attract VAT depending on the bracket – by the time we account for it all, a fifth of our turnover on ordinary sales is gone before we've paid a single lira of profit tax."
Business owners in Turkey operate inside one of the more complex VAT structures in the region, with standard supplies taxed at 20% and FMCG items sitting anywhere between 1% and 20% depending on classification, and food specifically taxed at 1-10%. For retailers, restaurateurs, and service providers alike, this variability means constant reclassification work, tighter margins on everyday goods, and a standard rate that is four times higher than what a comparable business would pay in the UAE.
Our Approach
- Standard-rate gap — Turkey's standard VAT sits at 20% against the UAE's flat 5%, a difference that alone reshapes gross margins on most trading and services activity.
- FMCG and food complexity — Turkey taxes FMCG and food goods on a sliding 1-20% scale (food at 1-10%), while the UAE applies a single 5% standard rate that includes food, with none of the bracket-by-bracket reclassification.
- Real estate treatment — Turkey taxes commercial property at 20% with residential resale exempt, whereas the UAE splits it more favourably: commercial at 5%, first-supply residential at 0%, and resale/lease and bare land exempt.
When we assess a move for a Turkey-based owner, we look at the whole picture, not just the headline rate: the correct trade licence and activity classification, genuine economic substance in the UAE, VAT registration thresholds, and how existing supply chains and contracts would sit under UAE rules from day one.
The Result
On the UAE side, the same FMCG trading business that faces 1-20% in Turkey settles into a flat 5% standard rate that also covers food, restaurants (dine-in and takeaway), household services, salons, and general services consumed within the country. Exported services remain zero-rated with full input VAT recovery, government (sovereign) services stay out of scope entirely, and the real estate rules are structured to reward first-time residential supply and long-term holding rather than penalise every transaction. For an owner used to Turkey’s 20% standard rate and multi-tier FMCG brackets, the UAE’s single, predictable 5% rate materially simplifies both pricing and compliance.
The Takeaway
"The VAT gap between Turkey and the UAE is real and substantial, but a move only pays off with genuine substance, the right licence, and proper registration – get advice before you relocate, not after."
