TAX NEWS
NO: 2021/4
Subject: The VAT General Communiqué No. 35 on VAT Withholding
The VAT General Communique series No. 35 has been published in the Official Gazette dated February 16, 2021 and numbered 31397.
As it is known, the Ministry of Treasury and Finance can hold the parties to the transaction responsible for the payment of the tax when it deems necessary in order to secure the tax receivable.
Through the Communiqué, new buyers have been added to the scope of VAT withholding, and some withholding rates have been changed.
The following Communiqué amendments will enter into force as of March 1, 2021.
1) Designated buyers in Partial Withholding Application
In the VAT General Implementation Communiqué, those who can be held liable for VAT withholding within the scope of partial withholding application are classified into two groups as “VAT payers” (1st Group) and “designated buyers (whether they are VAT payers or not)” (2nd Group).
Through the Communiqué;
- Insurance and reinsurance companies,
- Trade unions and their higher organizations,
- Foundation universities,
- Mobile electronic communication operators
have been added in designated buyers who can be held responsible for withholding VAT.
Accordingly, the buyers will apply VAT withholding in their purchases that are within the scope of partial withholding.
2) Withholding Rate in Construction works, and engineering-architecture and survey-project services conducted with these works
As it stands, VAT withholding at the rate of (3/10) is applied by the buyers in the construction works performed only against the designated buyers; as of 1/3/2021, in addition to the designated buyers, the construction works performed against VAT taxpayers (those who only pay reverse charge VAT are not included in this scope) and with a value of 5 million TL and above (vat included) have been also included in the scope of withholding.
In the case of extension of the project, update in the amount stated on the contract or the similar reasons giving rise to work amount exceeding 5 million TL later, partial withholding will be applied just after an existence of one of those cases.
The 3/10 withholding rate applied in these works and services has been increased to 4/10.
3) Commercial Advertising Services
According to the new Communiqué, VAT withholding at the rate of (3/10) will be applied by VAT payers and designated buyers for all kinds of commercial advertising services purchases. (including advisory services such as advertising consultancy, planning of advertising, preparation and design of advertising content, advertising publication).
4) Change in VAT Withholding Rates
With this Communiqué, some VAT withholding rates have been changed as follows.
|
Services subject to partial withholding
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Withholding rate
|
Withholding rate as of 1 March 2021
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Those obliged to apply withholding
|
|
Construction works, and engineering-architecture and survey-project services conducted with these works
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3/10
|
4/10
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Designated buyers
|
|
Construction works with a value of 5 million TL and above (vat included) and engineering-architecture and survey-project services conducted with these works
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-
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4/10
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VAT payers
|
|
Maintenance, modification and repair services for machinery, equipment, fixture and vehicles
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5/10
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7/10
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Designated buyers
|
|
Outsourced textile and clothing works, bag and shoe sewing works and intermediary services to these works
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5/10
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7/10
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VAT payers & Designated buyers
|
|
Cleaning, environmental and garden care services
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7/10
|
9/10
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VAT payers & Designated buyers
|
|
All types of printing and typography services
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5/10
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7/10
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Designated buyers
|
|
Shuttle bus transportation services
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5/10
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7/10
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VAT payers & Designated buyers
|
|
Freight transportation services (Cargo transportation works carried out by taxpayers who have cargo management authorization certificate are not included.)
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-
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2/10
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VAT payers & Designated buyers
|
|
Commercial Advertising Services
|
-
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3/10
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VAT payers & Designated buyers
|
5) VAT Refund in Transactions Subject to VAT Withholding
In the fulfillment of the refund requests, the condition that the VAT submitted and accrued by the buyer with the VAT return No. 2 is required to be paid.
Yours sincerely,
Deloitte Turkey
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