TAX NEWS NO: 2014/4

Jun 16, 2014

Value Added Tax Application General Communique has been put into effect.

The Communique which repealed all of the VAT General Communique has been published in the Official Gazette dated 26 April 2014.

Notes on the Amendments

1. In the refund requests resulting from transactions in the scope of withholding application, the limits in the refunds to be performed without requiring tax inspection report or Sworn-in Certified Public Accountant report have been increased from TL 4.000 to TL 5.000. Guarantees will be released with tax inspection report in case a guarantee is provided for an amount over TL 5000.

However regarding to;

  • Deliveries of metal ingots,
  • Deliveries of copper, zinc, aluminum and lead products,
  • Deliveries of metal, plastic, rubber, paper, glass scrap and waste
  • Deliveries of metal, plastic, rubber , paper and glass scrap and wastes resulting from delivery of raw materials,
  • Deliveries of cotton, mohair, wool and fleece delivery of raw hides and skins,
  • Deliveries of wood and forest products

requests will be executed without the requirement to submit a tax inspection report, Sworn Financial Consultant (“YMM”) report and guarantee in case the refunds are exercised through offsetting against other tax liabilities.

2. Documents evidencing exemptions shall be submitted to the tax office with tax return even if no refund is claimed.

3. In case the VAT refund sourced by service export deliveries is claimed through offset against other tax liabilities, a tax inspection or a YMM report will be requested by the Tax Office. In the event that the VAT refund is claimed in cash, the application will be processed only via a tax inspection report.

4. Agricultural producers will be allowed to benefit from the application of cancellation-deferment where deliveries destined for exportation are concerned.

5. In case of deliveries destined for exportation, if the export transaction is not realized within the specified time limits, the VAT to be paid by the exporter to the manufacturer will be deductible in the month covering the day following the last day for the export. At the latest VAT shall be deductible within the related calendar year.

6. As per the previous legislation, in application of the VAT exemption granted on deliveries and services regarding exploration, operation and enrichment activities for gold, silver and platinum, VAT was required to be paid in advance. However, under the new legislation, the VAT will not be applied by the sellers to the buyers based on the VAT exemption certificate for the mentioned deliveries and services. Sellers who delivered goods or performed services in the scope of the exemption may claim refund of the taxes they have incurred due to these transactions.

7. Under the former application, tax payers were subjected to special principles in case negative findings or negative reports were available for their suppliers that were involved in the previous stage of the provision of the goods or services transaction, even though no negative finding or report was available for the concerning tax payer. Under this communiqué, these taxpayers will be subjected to general principles rather than special principles, with no additional procedures to follow from the effective date of the Communique, 01.05.2014.

8. Reduced Guarantee Application System (“RGAS”) has been renewed with the new regulation stipulating that the taxpayers may benefit from the system via providing the required general and special conditions stated in the VAT General Application Communique.

Taxpayers who meet the general and special conditions will be able to take their VAT refunds by showing a 4% or 8% guarantee rather than 100%.

In case the VAT refund claims are processed under the RGAS, YMM report should be submitted within six months from the date the refund processes has been finalized. Unless the YMM report is submitted within this period, the guarantees will be released via a tax inspection by revenue administration.

9. The conditions required to benefit from the “Accelerated Refund System (ARS)” has been softened. As such, the tax payers that fulfill 3 out of the 4 conditions (i.e. asset size, cumulative balance of fixed assets, amount the equity, net sales volume) will be allowed to benefit from ARS. Furthermore, threshold regarding the number of employees has been reduced from 350 to 250. The purpose of ARS is to enable the large-sized tax payers to finalize their VAT refund applications in 5 days without being subject to a tax inspection. With the enforcement of this communiqué, the number of tax payers that can benefit from this system shall increase.

10. The communiqué has entered into force effective from May 1, 2014 and its provisions shall be applicable over the transactions to take place after the concerning date. 

Yours sincerely,

Deloitte Turkey

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