03.04.2023/49
Taxpayers with a Timely Prepared Independent Auditor’s Full Audit Agreement May Not Be Subject to Special Procedures Due to the Detection of Using False or Misleading Documents.
With the publication of the Circular No. 46 in the Official Gazette dated 01.04.2023, changes have been made to the sections of the General Application Circular on Value Added Tax (VAT) related to the special procedures, specifically the sections governing those detected to have used false documents (IV/E-3.5.) and those detected to have used misleading documents (IV/E-4.5.).
Special Procedures Regulation
As is well known, the special procedures regulation aims to prevent the fraudulent refund of VAT amounts that have not been transferred to the Treasury and/or are artificially created, not based on a real acquisition, under the guise of VAT refunds by determining the authenticity of the refundable VAT amount to protect against it.
In this context, taxpayers who have been found to use false or misleading documents are subject to the special procedures, and VAT refund procedures are carried out accordingly.
It is possible for taxpayers to be detected using false or misleading documents, even when their purchases are real. This situation often arises when a report is prepared stating that the individual or company from whom the purchase was made is a document forger. In such cases, taxpayers may be subjected to special procedures even for small amounts due to these detections.
To prevent this, changes have been made to the aforementioned sections of the General Application Circular on Value Added Tax. Accordingly, if taxpayers with a full audit agreement prepared on time for the calendar year in which the detection of using false or misleading documents has occurred, and if the purchase amount detected as false or misleading does not exceed 5% of the total purchases for the same period, they will not be subject to the special procedures due to the detection of using false or misleading documents.
Impact of the Regulation on the Invitation to Explanation Procedure
On the other hand, it has been stated that the impact of the regulation on the invitation to explanation, which is made for preliminary determinations within the scope of Article 370(b) of the Tax Procedure Law (VUK), and the special procedures applied accordingly, will not be affected.
The invitation to explanation allows taxpayers to provide explanations regarding preliminary determinations made by the relevant authorities indicating that there is evidence of tax loss before the tax audit begins or before being referred to the assessment committee.
In the aforementioned article, which also includes the use of false documents among the crimes listed in Article 359 of the VUK, it is not possible to benefit from the invitation to explanation for such crimes. However, it has been stipulated that taxpayers who use false or misleading documents and whose document amounts do not exceed 100,000 Turkish Lira (320,000 TL as of January 1, 2023), or even if they exceed this amount, but the amounts do not exceed 5% of the total goods and services purchases in the related year, can be notified of the preliminary determination.
In this regard, taxpayers with a timely prepared full audit agreement, if the purchase amount in the detected false or misleading documents does not exceed 5% of the total purchases for the same period, should not be subject to the special procedures due to the detection of false documents. However, they may still be invited to explain, and depending on the situation, may be subjected to the special procedures.
You can access the relevant Circular here.
Sincerely,
BİLGENER
