Amendment to the VAT General Implementation Communiqué (Serial No: 42) has been published.
On May 28, 2022 dated 31849 numbered and 31849 numbered Official Gazette published the “Communiqué (Serial No: 42) Amending the Value Added Tax General Implementation Communiqué”.
The important provisions of the Communiqué are summarized below:
1- VAT Exemption for Purchases of National Security Organizations:
With the addition made to the section (II/B-7.6.) of the VAT General Implementation Communiqué (II/B-7.6.), “In case it is determined that the goods and services included in the exemption certificate issued by the national security institutions and the list approved by the national security institutions do not meet the exemption conditions, the national security institutions will be responsible for the tax forfeited and the related penalties, interest and increases”. The effective date of the amendment is 28.5.2022. The regulation will be implemented as of May 1, 2022.
2- Exemption Application in the Delivery of Housing and Workplaces:
With the amendment made in Article 13 of the VAT Law with Article 10 of the Law No. 7394, the retention period of the residence or workplace delivered to Turkish citizens and foreigners living abroad for more than 6 months by obtaining a work or residence permit within the scope of VAT exemption has been increased from 1 year to 3 years.
The new regulation regarding the aforementioned deliveries has been included in the Communiqué and the period of “one year” before the amendment of the relevant law regarding the disposal of the residence or workplace has been changed to “three years” in sections (II/B-12.) and (II/B-12.3.) of the Communiqué. The amendment regarding the newly determined periods entered into force as of 1.5.2022.
3- Construction Works within the scope of Investment Incentive Certificate for Manufacturing Industry and Tourism:
The arrangement regarding the refund of the value added tax incurred due to the construction works related to the investments made within the scope of the investment incentive certificate for the manufacturing industry in the provisional Article 37 of the Value Added Tax Law has been transformed into an exemption arrangement as a result of the amendment made by Law No. 7394, the exemption period has been redefined as 31.12.2025 and tourism investments with incentive certificates have also been included in the scope of the arrangement.
With the 4th article of the Communiqué, phrase changes were made regarding this new exemption provision and a new section numbered 7.A was added to the II/E section of the VAT General Implementation Communiqué and the scope and application principles of the said exemption were explained.
Accordingly, investors with incentive certificates in the fields of manufacturing industry and tourism will be able to supply their goods and service needs related to construction works within the scope of these certificates without VAT as of May 1, 2022 in accordance with the provisional Article 37 of the VAT Law. (The exemption provision in Article 13/d of the VAT Law will continue to be applied for non-construction machinery-equipment purchases in the global list linked to the incentive certificate).
Within the scope of Provisional Article 37, the sellers who provide VAT-free goods or services to the manufacturers and tourists for the constructions within the scope of the incentive certificate by applying VAT exemption within the scope of the provisional article 37, can deduct the VAT burden related to these sales, and the VAT burden that cannot be eliminated by deduction can be refunded according to the principles in Article 4 of VAT Communiqué No. 42.
4- Exemption for Engineering Services Provided for the Development of Electric Motor Vehicles:
With the provisional article 42 added to the VAT Law with the Law No. 7394, the engineering services provided to the taxpayers who are decided to benefit from the incentives in the Law No. 6745 and who manufacture electric motor vehicles in Turkey, which they have developed as a result of R&D activities carried out exclusively in Turkey for the development of technologies that will completely eliminate the emission of exhaust gases that create greenhouse effect, and which are included in the scope of the investment incentive certificate, are exempt from value added tax until 31/12/2023. Article 5 of VAT Communiqué No. 42 regulates the scope and application principles of this new exemption.
The relevant Communiqué is available here.
Sincerely,
BİLGENER
